Benzinga - by Shanthi Rexaline, Benzinga Editor.
The market remains lackluster, with index futures slightly in the red. The 10-year Treasury yield is approaching 5%, dampening sentiment. Concerns in the Chinese property market are affecting global markets, creating a negative mood that might spread. Unless there’s significant positive news, the market is likely to remain in this subdued state unless bargain hunting provides support.
Cues From Last Week’s Trading:
A hawkish Federal Reserve impacted the market negatively in the week ending in September. Rising bond yields added pressure to stocks. Inflation concerns were exacerbated by surging crude oil prices. The major averages closed lower in four out of five sessions, with the Nasdaq Composite and the S&P 500 hitting their lowest levels in 3.5 months. The Dow Industrials saw its lowest level since July 10, and the Russell 2,000 Index, comprised of small-cap stocks, hit a four-month low.
US Index Performance For Week Ended Sept. 22
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -3.62% | 13,211.81 |
| S&P 500 Index | -2.93% | 4,320.06 |
| Dow Industrials | -1.89% | 33,963.84 |
| Russell 2000 | -3.82% | 1,776.50 |
Analyst Color:
The S&P 500 is down nearly 4% on the month, and technical damage is beginning to mount, said LPL Financial’s Chief Technical Strategist Adam Turnquist. “While weak September seasonality is capturing the blame, selling pressure has primarily been driven by a jump in interest rates,” he said.
The 10-year U.S. Treasury yield has risen about 40 basis points, surpassing resistance off the October 2022 highs, the analyst said. “The recent breakout raises the question of how high yields will go — an important question that could continue to weigh on risk sentiment,” he added.
Technically, the S&P 500 has broken to the downside of a symmetrical triangle formation, Turnquist said. He flagged the sub-4,330 level as downside support in the 4,200-4,300 area, followed by the 200-day moving average at 4,189.
Despite the recent pullback, there have been no major signs of a sustainable flight to safety, the analyst said. “Overall, we believe the market is down but not out,” he said, adding, “Pullbacks are completely normal within the context of a bull market, and while the jump in rates is concerning, the S&P 500 remains in an uptrend, and above its rising 200-DMA.”
Source: LPL Financial
Futures Today
Futures Performance On Monday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.16% |
| S&P 500 | -0.10% |
| Dow | -0.07% |
| R2K | -0.46% |
In premarket trading on Monday, the SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.13% to $429.87 and the Invesco QQQ ETF (NASDAQ:QQQ) moved down 0.15% to $357.37, according to Benzinga Pro data.
Upcoming Economic Data:
Fed speeches, the final second-quarter GDP report, August personal income and spending report, August durable goods orders data, a regional manufacturing activity reading, two separate consumer confidence data, and the routinely scheduled weekly jobless claims data are among the economic reports that will likely be on investors’ radar.
The Chicago Fed’s national activity index for August is due at 8:30 a.m. EDT on Monday. In July, the index came in at 0.12.
The Dallas Federal Reserve’s manufacturing business index for September will be released at 10:30 a.m. EDT.
The Treasury is due to auction three-month and six-month bills at 11:30 a.m. EDT.
Minneapolis Fed President Neel Kashkari will make a public appearance at 6 p.m. EDT.
Stocks In Focus:
- Stocks of studios such as Walt Disney Co. (NYSE:DIS), Paramount Global (NASDAQ:PARA), Warner Bros. Discovery, Inc. (NASDAQ:WBD), Amazon, Inc. (NASDAQ:AMZN), and Netflix, Inc. (NASDAQ:NFLX) rose in premarket trading after Hollywood’s writers union reached a preliminary labor agreement with major studios.
- Amazon also said it has agreed to invest up to $4 billion in the AI startup Anthropic
- Recreational vehicle maker Thor Industries, Inc. (NYSE:THO) is due to announce its quarterly results after the market close.
Crude oil futures rose 0.37% to $90.36 in early European session on Monday after closing the week ended Sept. 22 down 0.82%. The commodity had rallied to a nearly one-year high of $93.74.
The yield on the 10-year T-note rose 0.055 percentage points to 4.495%.
Asian stocks ended mixed on Monday, with the Japanese and Taiwanese markets advancing solidly. Stocks in Australia, New Zealand, India, and Singapore ended slightly higher, while the Hong Kong market came under intense selling amid a sell-off in the property space. The Chinese market also saw moderate losses.
Chinese property giant Evergrande said it could raise financing through debt due to an investigation into its principal subsidiary.
European stocks moved to the downside in late-morning trading on Monday.
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