Tuesday September 27th

U.S. stock markets index futures rose Tuesday, as the Dow Jones Industrial Average and S&P 500 tried to bounce back from their lowest closing levels in nearly two years. The Dow Jones Industrial Average advanced 332 points, or 1.1%. S&P 500 futures gained 1.4%, and Nasdaq 100 futures rose 1.7%. The British pound rebounded slightly after plunging to a record low against the dollar earlier in the week. Sterling traded more than 1% higher at $1.087 per dollar after hitting an all-time low of $1.0382. Treasury yields also came off their highs, boosting sentiment. The benchmark 10-year yield dipped nearly 5 basis points to 3.823%. Chicago Federal Reserve President Charles Evans signaled some apprehension about the central bank raising rates too quickly to fight inflation. The move in futures comes after five straight days of losses for stocks, with the S&P 500 closing at its lowest level since 2020. The Dow dropped more than 300 points on Monday, putting it in a bear market after falling more than 20% below its record high. The 30-stock average also posted its lowest closing level since late 2020. Technical indicators show that the selling has been historic. According to Bespoke Investment Group, the 10-day advance decline line for the S&P 500 has hit a record low, meaning market breadth is at its worst level in at least 32 years. The latest round of selling appears to have several catalysts, including an aggressive Federal Reserve and surging interest rates, which in turn have roiled currency markets. On Monday, the British pound slid to a record low against the dollar, unnerving investors on both sides of the Atlantic. “Typically, US investors wouldn’t care too much about something like this, and especially more recently. And so this to me says that now there is this fear that is gripping investors a lot more than it did before. That in turn will lead to a capitulation moment where we really are at a bottom,” said Max  Gokhman, CIO at AlphaTrAI. On Tuesday, investors will get several new pieces of economic data, including September consumer confidence, August durable goods orders and July home prices. Wall Street has grown increasingly concerned that the Fed’s six-month-long inflation fight will push the economy into a recession. Mainland China markets popped on Tuesday afternoon while shares in the Asia-Pacific were mostly higher after seeing sharp falls on Monday. The Shanghai Composite in mainland China rose 1.40% to 3,093.86 and the Shenzhen Component was 1.939% higher at 11,175.12. The CSI 300 index, which tracks the largest mainland-listed stocks, was 1.45% higher at 3,892.30. The Nikkei 225 in Japan rose 0.53% to 26,571.87, and the Topix index gained 0.47% to 1,873.01. In Australia, the S&P/ASX 200 added 0.41% to 6,496.20. South Korea’s Kospi struggled for direction and closed 0.13% higher at 2,223.86, while the Kosdaq added 0.83% to 698.11. In Hong Kong, the Hang Seng index was flat in the final hour of trade. Oil rose Tuesday from a nine-month low a day earlier, supported by supply curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian and a slight softening in the U.S. dollar. Analyst expectations that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, may take action to stem the drop in prices by cutting supply also lent support. OPEC+ meets to set policy on Oct. 5. Brent crude rose $1.01, or 1.2%, to $85.07 a barrel. On Monday it fell as low as $83.65, the lowest since January. U.S. West Texas Intermediate (WTI) crude was up 71 cents, or 0.9%, at $77.42. Gold bounced off a 2½-year low on Tuesday as a slight pullback in the dollar and U.S. Treasury yields helped tide over some pressure from prospects of more aggressive U.S. rate hikes. Spot gold was last up 0.86% at $1,635.5837 per ounce, after falling to its lowest since April 2020 at $1,620.20 in the previous session.