Oil Prices Rise as Market Probes OPEC-Plus’ Strategy
October 5, 2022
Class CNBC Interview 10/6/22
October 6, 2022The New York Stock Exchange ended sharply higher for the second day in a row, driven by falling bond rates as Elon Musk’s renewed interest in Twitter led the session.
The Dow Jones rose 2.80% to 30,316.32 points, the Nasdaq climbed 3.34% to 11,176.41 points and the broader S&P 500 index rose 3.06% to 3,790.93 points.
Over two days, the indices rebounded by more than 5% after a disastrous month of September.
Risk appetite was back, with bond yields falling as investors reassessed the pace of future Fed rate hikes in light of the latest weaker US economic data.
The rate on 10-year Treasury bonds fell to 3.62% and especially the dollar fell considerably by 1.66% against the euro and 1.43% for the Dollar index (around 8:00 p.m. GMT ) which measures the US currency against a basket of currencies.
“We have recovered well. The fall in bond yields and the withdrawal of the dollar are the main causes,” summed up Peter Cardillo of Spartan Capital.
The analyst, however, remained unconvinced that the market, which experienced a disastrous month of September and a lowest of the year for the indices at the end of last week, had not touched bottom. “How long will this rebound last? That’s the question,” he said.
The fact that Australia’s central bank raised its interest rates on Tuesday less than expected also had a positive effect.
The RBA brought its main key rate to 2.6%, its highest level in nine years, an increase of 0.25 points, where analysts expected a rise of 0.50 points.
Paradoxically, the rise in values was also explained by the poor US economic indicators published in recent days, such as manufacturing activity (ISM) which fell to its lowest level in more than two years in September or the drop in construction spending published on Monday.
These poor performances “are seen as a positive element with regard to the monetary policy of the Fed”, underlined Art Hogan of B. Riley Wealth Management.
Investors were thus once again hoping that the Federal Reserve would moderate its monetary tightening if the economy showed clear signs of slowing down.
In addition, they seemed to applaud the fact that job openings in the United States fell much more than expected, answering the concerns of the American Central Bank which seeks to cool the employment market.
“The market is starting to reassess how many times the Fed will raise rates as some numbers point to a recession,” Cardillo told AFP.
“Investors in the bond market today believe that the increases may not total 125 basis points by the end of the year, but rather 75”, which sent bond yields lower and higher stocks, he continued.
On the side, the Twitter saga has taken center stage, the listing of the title of the social network having been interrupted several times on rumors of a new offer to buy from Elon Musk.
Shortly before the market closed, Twitter confirmed that it had received this offer and wanted to complete the transaction at the original price of 54.20 dollars per share, or 44 billion dollars.
This reversal of the wealthy and whimsical boss of Tesla, who had offered to buy the network in April before withdrawing, comes two weeks before the opening of a trial where Elon Musk was attacked for breach of promise to purchase.
Twitter concluded on a jump of 22.24% to 52 dollars while Tesla also benefited from the announcement grabbing 2.90% to 249.44 dollars.
In a market where all the S&P sectors were largely in the green, starting with energy (+4.34%) in the wake of the increase in the price of a barrel of oil and banks (+3.79% ), electric vehicle maker Rivian gained almost 14%.
The Tesla rival said it delivered a record number of vehicles in the third quarter and intends to maintain its production target of 25,000 units
