Stocks Sink as Treasury Yields Keep Rallying

Market Wrap: Stocks, Bonds, Commodities

On Wednesday, U.S. stocks sank as Treasury yields kept rallying. The Dow Jones Industrial Average fell 332 points (-0.98%) to 33,665, the S&P 500 dropped 58.60 points (-1.34%) to 4,314, and the Nasdaq 100 slid 212.75 points (-1.41%) to 14,909.

The U.S. 10-year Treasury Yield jumped by 7.2 basis points to 4.91%, the highest level since 2007.

Automobiles (-4.52%), transportation (-2.93%), and materials (-2.58%) stock sectors lost the most.

United Airlines (UAL) fell 9.67%, and JB Hunt Transport Services (JBHT) lost 8.85%, as both companies posted disappointing quarterly results.

Morgan Stanley (MS) declined 6.78%, as the investment bank's wealth management division posted weak third-quarter performance.

Interactive Brokers Group (IBKR) sank 4.12% after warning on accounts growth.

On the other hand, Procter & Gamble (PG) rose 2.58%, and Abbott Laboratories (ABT) gained 3.71%, as both companies reported upbeat quarterly sales.

Albemarle Corp (ALB) slid 9.79%, and Sherwin Williams (SHW) lost 4.17%, as both stocks were downgraded to “underperform” at Bank of America.

In after-market hours, Tesla (TSLA) fell over 3% as the electric vehicle maker reported lower-than-expected third-quarter earnings and operating margin.

Netflix (NFLX) surged over 12%, as the video-streaming service provider posted robust growth in subscriber numbers.

Regarding U.S. economic data, the number of housing starts increased 7.0% on month in September (vs +9.1% expected), while the number of building permits was down 4.4% (vs -5.2% expected).

European stocks also closed lower, with the DAX 40 falling 1.03%, the CAC 40 dropping 0.91%, and the FTSE 100 declining 1.14%.

U.S. WTI crude futures gained $1.50 to $88.15 a barrel. The U.S. Department of Energy reported a reduction of 4.49 million barrels in crude-oil stockpiles (vs a reduction of 0.30 million barrels expected).

Gold price jumped $26.40 to $1,949 an ounce.

Market Wrap: Forex

The U.S. dollar strengthened against other major currencies, as Treasury yields rallied to multiyear highs. The dollar index rose to 106.56.

EUR/USD fell 41 pips to 1.0536.

USD/JPY added 10 pips to 149.91. This morning, Japan's data showed that exports grew 4.3% on year in September (vs +2.9% expected), while imports slid 16.3% (vs -11.0% expected).

GBP/USD dropped 42 pips to 1.2141. U.K. data showed that the inflation rate was steady at 6.7% on year in September (vs 6.5% expected).

AUD/USD slipped 29 pips to 0.6336.

USD/CHF declined 10 pips to 0.8990.

USD/CAD gained 64 pips to 1.3712. Canada's data showed that the number of housing starts increased to 270,500 units in September (vs 203,000 units expected).

Bitcoin retreated to $28,290.

Market Analysis Snapshot 📊

Dow Jones (CME) (Z3) Intraday: Downside Prevails

• Pivot:33,880.00

• Our Preference:Short positions below 33,880.00 with targets at 33,620.00 & 33,500.00 in extension.

• Alternative Scenario:Above 33,880.00, look for further upside with 33,960.00 & 34,050.00 as targets.

• Comment:RSI below 30 level indicating bearish momentum.

EUR/USD Intraday: Under Pressure

• Pivot:1.0550

• Our Preference:Short positions below 1.0550 with targets at 1.0520 & 1.0505 in extension.

• Alternative Scenario:Above 1.0550, look for further upside with 1.0570 & 1.0590 as targets.

• Comment:RSI below neutrality area at 50.

GBP/USD Intraday: Watch 1.2115

• Pivot:1.2150

• Our Preference:Short positions below 1.2150 with targets at 1.2115 & 1.2090 in extension.

• Alternative Scenario:Above 1.2150, look for further upside with 1.2170 & 1.2190 as targets.

• Comment:Break below 1.2115 triggers drop towards 1.2090.

USD/JPY Intraday: Bullish Bias Above 149.60

• Pivot:149.60

• Our Preference:Long positions above 149.60 with targets at 150.00 & 150.15 in extension.

• Alternative Scenario:Below 149.60, look for further downside with 149.45 & 149.30 as targets.

• Comment:Support base at 149.60; temporary stabilization observed.

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