The market on the eve
At the auction on September 22, American stock markets showed positive dynamics. The S&P 500 index rose 0.95% to 4,396 points. The Dow Jones rose by 1.00%, the Nasdaq added 1.02%. Energy companies (+3.17%) looked better on the market against the background of rising oil prices, as well as issuers from the financial (+1.50%) and IT sectors (+1.40%). In the red zone, only representatives of the utilities (-0.11%) and communications (-0.01%) industries were closed.
- The quarterly results of the online retailer Stitch Fix (SFIX: +15.7%) exceeded market expectations amid high demand for women's clothing.
- InnovAge Holding (INNV: -24.9%) reported revenue well in the quarter, but EPS fell short of the consensus forecast.
- Electric vehicle manufacturer Workhorse Group (WKHS: -9.5%) announced the suspension of deliveries of its flagship C-1000 electric van due to the need to conduct additional tests and modifications.
Today, we expect the positive dynamics on the stock markets to continue. As previously expected, the Fed announced on the eve of maintaining the volume of asset repurchases at the current level, but warned that the reduction of the QE program may begin soon. The regulator's September statement emphasizes that the economy as a whole, as well as the labor market in particular, have significantly approached the Fed's targets. As for the tightening of monetary policy, the updated quarterly forecasts showed that the opinions of officials were equally divided on the feasibility of raising the rate next year. It is expected that the official announcement of the reduction of the QE program will take place at the FOMC meeting on November 2-3, and the direct curtailment will begin in November of this year and will be completed by mid-2022.
The market hopes that Congress will be able to reach an agreement on the debt ceiling and, as a result, avoid a government shutdown. However, economists and strategists are increasingly warning about increased uncertainty in this issue and the associated general risks for the economy (along with the risk of additional fiscal stimulus). According to Goldman Sachs, historically, the suspension of the US government as a whole has not had a significant impact on the dynamics of stocks. At the same time, the international agency Moody's warned that if it is not possible to agree on raising the "ceiling" of the national debt, it will hit the stock market hard and lead to a sharp jump in the unemployment rate.
- Asian stock markets continued to show mixed dynamics. Hong Kong's Hang Seng rose by 1.19%, China's CSI 300 rose by 0.65%, Japan's Nikkei 225 fell by 0.67%. EuroStoxx 50 is up by 1.08%.
- The risk appetite is moderate. The yield of 10-year treasuries is 1.34%. The price for Brent futures exceeds $76 per barrel. Gold is trading around the $1,776 mark per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 4390-4450 points.
Today, the Markit PMI indices for September will be published. The market expects a slight decline from the indicator for the services sector: from 55.1 last month to 54.8 in September. The manufacturing index, according to the consensus, will also decline: from 61.1 in August to 60.6 this month.
In addition, data on the number of initial applications for unemployment benefits in the United States will be released today. The consensus suggests that they will amount to 325 thousand against 332 thousand a week earlier.
The day before, the S&P 500 index tested the resistance area near 4,400 points. The RSI indicator indicates that the "bears" still own the initiative, but their strength is fading. We believe that the broad market index will show positive dynamics at the upcoming auctions and the technical rebound will continue.