Article published at 8:50 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Markets still reacting to Treasury Department’s buyback program
- 30-year yield is nearing multiyear highs
- Consumer spending is holding up, but folks are choosing carefully
The markets are attempting a bounce back in early trading after Thursday’s selloff but ongoing volatility is still in play.
The S&P 500 Index is higher by 0.35% and the Nasdaq Composite is gaining 0.51% while the Dow Jones Industrial Average is advancing by 0.52%.
Investors couldn’t get their heads around the Treasury Department’s buyback program Thursday, as evidenced by the bond selloff, higher yields and the major indices that solidly fell to the downside. When the dust settled, the Dow gave back 1.32% while the Nasdaq lost 1% and the S&P 500 retreated by 0.87%.
Yields are tracking higher again today, particularly those on the long end of the curve. The 10-year yield is standing at 4.71%, edging higher than pre-market trading but still in relatively good stead for mortgage seekers. However, the 30-year yield is sitting at 5.25% in early trading, near multi-year highs.
The biggest takeaway of consumer spending this week is that folks are still buying but they’re picky about what they’re shelling out money for and where. As Walmart noted, consumers pressured by higher prices at the pump are shopping less frequently and, in many cases, purchasing lighter loads. Target said much of the same, adding that shoppers are prioritizing value and essentials. Home Depot and Lowe’s both noted do-it-yourselfers and professionals are focusing more on smaller home improvement projects rather than bigger ticket endeavors.
Meanwhile deep discounters TJX — parent of TJ Maxx, Home Goods and Marshalls — plus Ross Stores and BJ’s Wholesale Club said traffic has picked up across all income levels, but lower-income consumers are facing ongoing financial pressures. Walmart said much of the same. This is important because consumer spending accounts for some 70% of the gross domestic product (GDP), with retail sales alone generating 41.5% of GDP. Investors are keeping a close watch as we head into the holiday season, the most important spending period for retailers.
In early trading today, Walmart and Target are both hovering over the flatline, Home Depot is up 0.65%, Lowe’s is flat while Ross is higher by 7.1% and BJ’s is gaining nearly 2%.
On another front, cryptocurrency prices are moving notably higher, pushing Bitcoin up 20% for the week. That is helping boost Strategy, with its heavy crypto holdings, higher by 7.3% early on. Coinbase Global is also gaining 5%.
We’re also planning to keep track of Nvidia shares heading into next week as they report earnings on Wednesday. Wall Street is looking for data on the firm’s data center segment and artificial intelligence demand. Stay tuned.
Happy Trading!
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