Investors fled for the exits on Friday, driving a selloff in both stocks and bonds to cap a brutal week, as the market has transitioned quickly from worrying about stubbornly high inflation to a sense of rising alarm over the Federal Reserve's aggressive tightening campaign. Benchmark indexes dipped below their year-to-date closing lows set on June 16. U.S. Treasury yields soared this week to levels not seen in more than a decade following the Fed’s moves, with the two-year yield jumping to as high as 4.26% and the 10-year yield hitting 3.82%. The three major stock market averages posted their fifth negative week in the last six, with the Dow surrendering 4%, the S&P sliding 4.6% and the Nasdaq falling more than 5%.
- Ford’s Shares Fall: On Tuesday, Ford Motor suffered the worst day in 11 years after the company warned of extra $1bn in supply costs during 3Q22 pre-announcement. In addition to higher vendor costs produced by inflation, the company is also challenged by supply chain disturbances – the parts shortages have affected 45,000 high-margin vehicles that failed to be shipped to dealers. In light of the recent macroeconomic data suggesting easing of supply side issues, the announcement struck market largely as a surprise. Importantly, this may be an industry-wide red flag rather than a company-specific problem, as illustrated by the GM stock also losing the ground on Tuesday. Ford shares fell by 15.10% for the week on the news.
- Microsoft to Increase Dividend by 10%: On Tuesday, Microsoft announced a sizeable 10% raise in dividend. As a result, stock gained almost 3%, helped further by Morgan Stanley’s analysts reaffirming their overweight rating on the company. During Wednesday trading, however, Microsoft followed the broad market dynamic and the pessimistic sentiment on techs and the stock fell sharply by approximately 3.5%. Microsoft stock price was down by 1.83% for the week.
- NVIDIA’s GPU Processors: Despite the NASDAQ selloff on Tuesday, NVIDIA stock jumped 3%+ in response to the company’s announcement during 2022 Global Technical Conference (GLC). The company CEO gave demonstrations of the new GPU processors that come with numerous upgrades over older versions. In addition, NVIDIA presented the newly launched Omniverse, a platform for developing and operating metaverse applications. Despite positive news, however, the company shares fell on Wednesday in line with the broad market. NVIDIA shares decreased by 3.84% for the week.
Some of the Earnings Next Week:
- Tuesday, September 27: Cracker Barrel (NASDAQ:CBRL), Jabil (JBL), and United Natural Foods (UNFI)
- Wednesday, September 28: Thor Industries (THO), Jefferies (JEF), and Vail Resorts (NYSE:MTN)
- Thursday, September 29: Bed Bath & Beyond (NASDAQ:BBBY), CarMax (KMX), Rite Aid (RAD), Micron (NASDAQ:MU), and Nike (NYSE:NKE)
