US Stock Weekly Report (US 10/6 to 10/12)

The Dow average rebounded for the first time in 4 weeks in the US stock market until 10/12, and both the S&P 500 and NASDAQ continued to grow. In the US stock market on the 11th, all 3 major indices continued to grow for 4 days. In response to heightened geopolitical risks surrounding the Palestinian conflict, US 10-year bond yields fell sharply to 4.62% at one point on the 10th. The decline in long-term US interest rates was well received, and major US tech companies led the rise in market prices, and public service-related stocks with high defensibility were also reviewed and bought, boosting the recovery trend in the US stock market. In the interest rate futures market, the Fed Vice Chairman's comments on the direction of monetary tightening “through an increase in bond yields instead of implementing additional interest rate increases” also improved market sentiment while many people were forecasting the FF rate unchanged at both the November meeting and the December meeting. In response to the fact that the rate of increase in US September CPI announced on the morning of the 12th exceeded market expectations, US 10-year bond yields began to rise. Both of the three major indices were pushed by profit-making sales, and fell for the first time in 5 days. The 11 major S&P 500 sectors are generally higher than last week. The public utility sector was at the top of price increases of 2.49%, followed by a 2.30% increase in the real estate sector and a 2.21% increase in the resources sector. Meanwhile, the stable consumption sector declined 0.66%, and the healthcare sector fell 0.51%. In individual stocks, the Palestinian conflict was viewed as material, and Lockheed Martin (LMT) on the 10th continued to grow drastically with an 8.93% increase. On the other hand, Netflix (NFLX), where target stock prices were lowered one after another, continued to fall for 3 days until the 12th, and the price dropped 6.4%.

The rate of increase in the US September CPI announced on the 12th exceeded market expectations, and the strength of inflationary pressure was shown, but Chairman Powell explained at the conference of the September meeting that the index is more important than the year-on-year ratio and the month-on-month ratio. In the US September CPI compared to the previous month, the overall figure fell from 0.6% in August to 0.4% in September, and both cores were 0.3%. It can be seen that there is no change in September CPI and August CPI. Under such circumstances, I would like to pay attention to the FOMC members' statements regarding financial tightening from the summary of the US September meeting announced on the 11th. Continued bond sales (QT, quantitative tightening) and until US inflation reached the target (2%), were both “ALL,” and it was “Almost ALL” that kept the FF rate at a high level of 5.25-5.50%. As stated by the Fed Vice Chairman, future implementation of QT by the Fed will play a role in raising interest rates rather than raising interest rates one more time or not.