Big Movers In September 2022
Biogen (BIIB): The biotechnology company’s Lecanemab drug met its primary endpoint against Alzheimer’s disease. The antibody treatment improved cognitive abilities and reduced plaque in the brain, according to a phase 3 trial.
FedEx (FDX): The delivery company preannounced weak quarterly results and withdrew full-year guidance as volumes slowed and inflation squeezed profits.
Regeneron (REGN): The biotechnology company released positive data for its eye drug Eylea, drawing upgrades from firms including Morgan Stanley and Jefferies.
Adobe (ADBE): The software maker plunged after buying web-design company Figma for $20 billion. Some analysts considered the price too high after a contraction in technology-sector valuations.
Twitter (TWTR): The social-media company gained on hopes of a legal settlement with Elon Musk.
VF (VFC): The apparel company lowered fiscal-year guidance after cutting prices to clear unsold inventories. Management cited a “softer consumer environment and inflationary pressures.”
Key Economic Events Last Month
Hot Inflation Crushes Stocks
The Consumer Price Index (CPI) rose 0.1% in August from July. It was 0.2 percent point higher than expected. Core inflation was twice the forecast amount, triggering more worries about interest-rate hikes. (13/9)
Housing at a crossroads?
NAHB’s homebuilder sentiment index fell more than expected to an eight-year low of 46. Almost one-quarter of builders lowered prices to counter higher mortgage rates. The index has dropped every month this year. (19/9)
Fed Hikes Rates, Gives Hawkish Guidance
The Federal Reserve raised interest rates by 75 basis points, as expected. However, guidance for upcoming meetings was more hawkish than anticipated. Policymakers also gave consistently hawkish guidance throughout the month. (21/9)
Consumers Optimistic as Prices Ease
Consumer confidence rose more than expected to a seven-month high thanks to plentiful jobs and lower petrol prices. Americans expressed a desire to buy cars and appliances but are less interested in purchasing homes. (27/9)
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESZ22(Sep) | 16 Dec 2022 | ESH23(Jan) | -9.4% |
| S&P 500 E-Mini Micro (@MES) | MESZ22 (Dec) | 16 Dec 2022 | MESH23 (Jan) | -9.4% |
| Nasdaq-100 E-Mini (@NQ) | NQZ22 (Dec) | 16 Dec 2022 | NQH23 (Jan) | -10.7% |
| Nasdaq-100 E-Mini Micro (@MNQ) | MNQZ22 (Dec) | 16 Dec 2022 | MNQH23 (Jan) | -10.7% |
| Dow Jones E-Mini (@YM) | YMZ22 (Dec) | 16 Dec 2022 | YMH23 (Jan) | -8.9% |
| Dow Jones E-Mini (@MYM) | MYMZ22 (Dec) | 16 Dec 2022 | MYMH23 (Jan) | -8.9% |
Events to Watch This Month
| Date | Event | WhattoWatch |
|---|---|---|
| Fri, 7-Oct | Employment Report for August | Will the strong labor market cool, potentially giving the Fed reason to slow rate hikes? |
| Wed, 12-Oct | Fed minutes | Minutes from the last central bank meeting may be watched for signals on monetary policy. |
| Wed, 12-Oct Thu, 13-Oct |
Inflation reports for September | Producer prices are due 12 October, followed by consumer prices on 13 October. |
| Fri, 14-Oct | Earnings reports begin | Earnings season begins as major banks like JPMorgan Chase and Citigroup report. |
| Week of 25-Oct | Big tech earnings | Major technology stocks like Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN) and Advanced Micro Devices (AMD) are projected to announce results. |
Sector Watch
Health Care stocks fell the least as investors favored their safe-haven status. Biotechs were strong.
Real estate stocks fell the most as higher interest rates reduced the appeal of income investments.
Technology stocks fell again as economic concerns hurt semiconductors and higher interest rates weighed on software makers.
Communications stocks fell amid selling in telecom and media companies.
Noteworthy Calls & Predictions
Investment portfolios using the common blend of 60% stocks and 40% bonds are having their worst year since 1936, according to B of A. The strategy, intended to limit volatility, fell 19.4% through the end of August as interest-rate hikes weighed on both asset classes.
Stocks & BondsStocks will continue to decline through December because of the Fed’s hawkish policy, Morgan Stanley Chief Investment Officer Michael Wilson said. He expects the S&P 500 to bottom between 3,000 and 3,400 this year.
StocksOnly 9% of respondents in a Deutsche Bank survey believe the market has bottomed. Most investors expect new lows in 2023.
StocksDeflation risks are rising, according to three prominent business leaders cited on CNBC. Tesla CEO Elon Musk noted falling commodity prices while DoubleLine Capital CEO Jeffery Gundlach said bonds were more attractive. Cathie Wood of Ark Invest said technological innovations will lower prices.
InflationThe Federal Reserve should apologize to the U.S. for “such poor monetary policy … over the last few years,” according to Wharton Business School Professor Jeremy Siegel. He said rates stayed low too long in 2021 and now rapid hikes are risking a recession.
Federal ReserveDisclosure
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