Stocks Tumbled As Investors Await The Feds

STATE OF THE MARKETS

Stocks tumbled as investors await the Feds. US stocks tumbled on Monday as a strong services index (56.5% vs 53.5%) and factory orders (1.0% vs 0.7%)surprised investors who continue to weigh the Federal Reserve rate hikes plan. Markets, however, continue to see a 50 points hike next week as bonds lose bids and Dollar holds steady. The shorter 2Y yields rose to 4.40% while the 10Y benchmark climbed to 3.59% as the Dollar rebounded at the 105 handle.

In the commodity markets, global recession fears pushed crude oil lower to $76.85/bl on top of ongoing concerns over Russian oil cap that would limit supply. Gold erased earlier gains after news of strong economic data sent the Dollar higher as investors see a chance for the Feds to stick to its aggressive hike. The precious metal settled around $1,765.80/oz as New York closed. Elsewhere, Dollar strength failed to keep iron ore under the lid as buyers see potential in China reopening next year. The commodity settled higher, around $107.70/tn after flirting around the $103/tn handle for a while.

In the FX space, short term traders were quick to bid the oversold Dollars alongside Euro, Swiss and Sterling while offering Yen, Kiwi and Aussie. Medium and long term sentiments were little changed.

On Tuesday, markets expect to be defensive ahead of the Fed’s meeting next week. Earnings releases to watch includes AutoZone (AZO), MongoDB(MDB), Casey Stores (CASY), HealthEquity (HQY), Toll Brothers (TOL) and Signet Jewelers (SIG) as well as the latest figures in the US trade balance.

G8 CURRENCIES SENTIMENTS

** ST refers to Short-Term daily turnover, MT is Medium Term weekly 
and LT refers to Long-Term monthly turnover.

WALL ST MOST ACTIVE

** % Change here refers to price vs previous day price

WALL ST TOP FLOWS

** % change here refers to volume vs. 20 days average volume.

TOP 5 BLOCK ORDERS

OUR PICK – No New Pick

We stay on the sideline for now. Though services index and factory orders surprised the markets, investors still see higher probability (79.4%) of the Federal Reserve to raise 50 points next week instead of 75 points. Conflicting signals made many investors sit on the sideline right now as we do.

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