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Wall Street Breakfast: What Moved Markets

Sep. 30, 2023 7:51 AM ETAMZN, RMD, TRMB, AMD, DXCM, STLD, NEE, NEM, KMX, NI, ES1 Comment
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The S&P 500 wrapped up a fourth straight week of losses and a nearly 5% decline for September, its worst monthly performance since December, as investors come to grips with the Federal Reserve's message of higher-for-longer interest rates. Surging crude oil prices along with fears of increased supply of government debt helped propel bond yields, with the benchmark 10-year Treasury yield reaching near 16-year highs during the week. Two of the three major stock market indexes posted modest declines for the week, with the Dow Jones down 1.3% and the S&P slipping 0.7% while the Nasdaq Composite eked out a 0.1% gain. See a preview of next week's major stock market events in Seeking Alpha's Catalyst Watch.

In the crosshairs

Amazon (AMZN) fell 4% on Tuesday after it was formally sued by the FTC and 17 states on charges that it used anticompetitive strategies to maintain its monopoly power. As widely expected, the lawsuit claimed the e-commerce giant's actions blocked competitors and sellers from lowering prices, overcharged sellers, and prevented rivals from fairly competing. "The lawsuit is wrong on the facts and the law, and we look forward to making that case in court," Amazon responded in a statement. This is a landmark antitrust suit, as Amazon controls about 40% of the e-commerce market, with SA analyst Bradley Guichard seeing three potential outcomes to the case. (373 comments)

Limited supply

The latest data out of Cushing, Oklahoma, the nation's major oil storage hub, put commodity traders on edge with a steep drop in inventories compounding worries about tight global supply. WTI crude futures (CL1:COM) even touched $95/bbl late on Wednesday, continuing a big rally that began this summer. Further drawdowns at Cushing would spell more trouble for an already tight oil market due to the supply cuts from Saudi Arabia and Russia. "The U.S. has, in essence, bailed out the rest of the world from an oil supply shortage, but that is about to come to an end," wrote Investing Group Leader HFI Research. "U.S. crude storage will not build during refinery maintenance season [in October]... and one of the bear factors was demand, but demand is holding up well." (70 comments)

Grab a pen

Hollywood writers returned to work this week after the governing boards of their unions approved a new contract with major studios. The near five-month strike still needs to be endorsed by the writers themselves in early October. Late-night talk shows were the first to resume production, but scripted episodes and films will take longer to return, with actors still on strike. Writers were able to secure some wins, including salary hikes, bonuses for high-performing shows and minimum staffing guarantees. Writers will also have the right to use AI - a major point of contention - with consent from production partners, but they can't be forced into using or incorporating AI-generated content. (33 comments)

Treasury trouble

U.S. Treasury returns are on track for the worst month this year, as the bond market selloff continued after the Fed signaled that interest rates would remain higher for longer. The recent selloff pushed the 30-year yield (US30Y) and the 10-year yield (US10Y) to their highest levels in over a decade. "The bond market sold off because that higher-for-longer message really wasn't fully discounted ahead of time," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research. Meanwhile, billionaire investor Bill Ackman's bet against 30-year Treasurys has paid off, and he expects long-term Treasury yields to rise even further amid stubbornly high inflation. (3 comments)

The final countdown

The path towards avoiding a federal government shutdown is getting slimmer with a pending deadline of 12:01 AM ET on Sunday. If a shutdown were to happen, millions of federal employees and military service members will be furloughed, the SEC will operate with minimal market oversight, and economic data releases will be delayed. The Senate currently has bipartisan support for a stopgap measure that would extend funding until Nov. 17, but hardline Republicans seeking deeper spending cuts rejected it. While budget deadlocks are not unusual - with 21 shutdowns occurring in the past five decades - the latest one would show "the significant constraints that intensifying political polarization puts on fiscal policymaking." (7 comments)

U.S. Indices
Dow -1.4% to 33,508. S&P 500 -0.7% to 4,288. Nasdaq +0.1% to 13,219. Russell 2000 +0.5% to 1,785. CBOE Volatility Index +1.9% to 17.52.

S&P 500 Sectors
Consumer Staples -2.1%. Utilities -6.9%. Financials -1.6%. Telecom flat. Healthcare -1.1%. Industrials -0.5%. Information Technology -0.1%. Materials +0.2%. Energy +1.3%. Consumer Discretionary -0.3%. Real Estate -1.6%.

World Indices
London -1% to 7,608. France -0.6% to 7,142. Germany -1.1% to 15,387. Japan -1.7% to 31,862. China -0.7% to 3,110. Hong Kong -1.3% to 17,822. India -0.3% to 65,828.

Commodities and Bonds
Crude Oil WTI +0.8% to $90.77/bbl. Gold -4.2% to $1,864.6/oz. Natural Gas +11.1% to 2.93. Ten-Year Bond Yield -0.2 bps to 4.579.

Forex and Cryptos
EUR/USD -0.75%. USD/JPY +0.68%. GBP/USD -0.3%. Bitcoin +1.3%. Litecoin +0.7%. Ethereum +4.9%. XRP +1.9%.

Top S&P 500 Gainers
ResMed (RMD) +8%. Trimble (TRMB) +7%. Advanced Micro Devices (AMD) +7%. DexCom (DXCM) +7%. Steel Dynamics (STLD) +6%.

Top S&P 500 Losers
NextEra Energy (NEE) -15%. Newmont (NEM) -9%. CarMax (KMX) -8%. NiSource (NI) -8%. Eversource Energy (ES) -7%.

Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

This article was written by

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