Wednesday's Market Recap - Fed/FOMC Minutes Shows Rate Hikes & Shrinking Balance Sheet Are Coming.
- cashtonsaunders
- Apr 5, 2022
- 2 min read
What is The Premarket Telling Us?
Wednesday, April 6, 2022, 7:15 AM.
Stock index futures trended lower throughout the premarket session with Dow futures at this hour down 214 points, Nasdaq futures down 203 points, and S&P futures down 38 points. This suggested that Tuesday's sell-off was still in progress, as investors grapple with the fallout of new punishing sanctions on Russia, and the hawkish comments from Fed Governor, Lael Brainard yesterday.
On The Bond Desk:
The US 10 Year Bond Yield ticked up to 2.637%, up 8.3 basis points.
Currency Desk:
Eurodollar: 1.09
UK Pound: 1.30
Crude Oil:
WTI crude oil futures also moved higher, up 1.39%, to $103.38/barrel.
On the Earnings Calendar:
None to report
In M&A News:
JetBlue Airlines announced a $3 billion bid for rival Spirit Airlines, after the close of trading yesterday evening. Further complicating the matter, Spirit is also currently evaluating an earlier bid from Frontier Airlines.
What About The Asian And European Markets?
Major Asian markets finished their session mostly lower. Japan (Nikkei 225) was down 1.58%, Shanghai up 0.02%, Hong Kong (Hang Seng) down 1.87%.
Major European markets closed convincingly lower in today's session. German (DAX) down 1.89%, France CAC 40 down 2.21%, London FTSE 100 down 0.34%.
Market And Sector Dynamics
US markets were markedly lower at the open today. The Dow lost 229 points, Nasdaq lost 178 points, and the S&P fell 36 points. WTI crude oil was slightly higher at the start, up 0.6%, to $102.57/barrel, and the US 10 Year Bond Yield ratcheted up 7.7 basis points, to 2.631%.
Markets were under pressure for the entire session as investors were spooked by increased sanctions on Russia, including Putin's daughters, and the increasingly aggressive stance of the FOMC. Most market watchers now expect a 50 basis points hike in at each of the next two meetings. Markets sank to the intraday low after minutes of the last Fed meeting were released just after 2:00 PM, in the afternoon, which showed the members had also discussed shrinking the balance sheet. The Dow fell nearly 350 points, on the release of that news.
Six of eleven S&P sectors ended in negative territory today, led by Consumer Discretionary, Technology, Communication Services, Basic Materials, Industrials, and Financials. Utilities, Real Estate, Healthcare, Consumer Staples, and Energy ended with solid gains.
Factors Influencing Today's Market
Fed/FOMC minutes of the last meeting showed they discussed shrinking the balance sheet by $95 billion a month. That news sent stocks tumbling lower.
Major Asian and European markets ended lower in their sessions.
US 10 Year Bond Yield jumped higher, to close at 2.598%, up 1.69%.
WTI crude oil closed today at $97/barrel, down 4.86%.
Last week's EIA Petroleum Status Report showed US crude oil inventories grew/build by 2.4 million barrels vs a drawdown of 3.6 million barrels in the prior week.
Market Close Volume Traded And Advance Decline Ratio
Major US indexes were down big again today. The Dow fell 144.67 points, Nasdaq dived 315.35 points, and S&P lost 43.97 points. Total NYSE volume traded was a modest 4.98 billion shares. Declining shares outpaced Advancing shares by 2.53:1.
Data Sources: Bloomberg, CNBC, CNN Money, Google Finance, Market Watch, TD Ameritrade, Yahoo Finance.
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