US Stock Weekly Report (US 9/22 to 9/28)
This week's main flow (US 9/22 to 9/28)
The Dow average continued to fall compared to last weekend in the US stock market until 9/28, and both the S&P 500 and NASDAQ continued to fall for 4 weeks. On the 25th of the week, while all 3 major indices turned to a backlash for the first time in 5 business days, in response to comments from the rating company Moody's that the closure of US federal agencies would resonate with US credit ratings, the increase was limited in all 3 indices. On the 26th, US long-term interest rates temporarily set a high level of 4.56% for the first time in about 16 years, and the fact that the dollar index hit a high since the end of November last year became weighty, and the three major indices all fell, and the decline in the Dow average temporarily exceeded 430 dollars. $Apple (AAPL.US)$High-tech stocks such as high PER were sold. While long-term US interest rates remained high, NY crude oil futures began to fall for the first time in 3 days on the 28th. Buybacks of high-tech related stocks, economy-sensitive stocks, etc. came in due to a sense of affordability, and the Dow average on the 28th turned positive for the first time in 3 days, and both the S&P 500 and NASDAQ continued to grow. The 11 major S&P 500 sectors were a mix of buying and selling. The resources sector was at the top of price increases of 3.31% compared to last weekend, followed by the telecommunications sector with 0.72% higher and the materials sector 0.39% higher. On the other hand, the public utility sector came out on top with a price drop of 7.18 percent from last weekend, while the real estate sector continued to depreciate 1.93%, and the consumption stability sector fell 1.84%. In individual stocks, $Advanced Micro Devices (AMD.US)$It continued to grow until the 28th, and rose 7%. As the presence of AMD graphics cards increased over the next few years, comments from Microsoft's Chief Technology Officer were viewed as positive material. On the other hand, the full-year earnings forecast was drastically reduced $NextEra Energy (NEE.US)$It continued to fall until the 28th, and the decline for 4 business days reached 15% or more.
Forecast for next week
In addition to the dollar index hovering at a high level for the first time in 10 months, US long-term interest rates temporarily rose to close to 4.69% while breaking a high level for the first time in about 16 years every day. The appreciation of the dollar and the fact that long-term US interest rates remain high will weigh on, and rough developments in price movements are expected, centered on high PER high tech-related stocks and stocks with large overseas exposures. The US stock market will be forced to move nervously in response to the UAW strike, concerns about the closure of US federal agencies, etc. Meanwhile, since it was confirmed that the Dow Transport Stock Index, which is a leading indicator of the Dow average, stopped falling at the 200-day moving average, it seems that the lower value of the Dow average is limited.
According to the factset summary (as of 9/22), on average, 41% of total sales of S&P 500 companies go overseas. If limited to listed companies in the S&P 500 IT sector, 59% of total sales have been knocked out overseas. For US listed companies where overseas sales account for the majority, such as the IT sector and materials sector, etc., it seems that the appreciation of the dollar and the high level of long-term US interest rates will be doubly difficult.
While stock buybacks by US listed companies have become the driving force behind the rise in the US stock market, since 20% or more of the company stock buyout scale was carried out in November and December every year, stock buybacks attracted attention this year as well as reinforcements for the “year-end appreciation of rice stocks.” According to Refinitiv's investigation, it was found that stock buybacks by US listed companies fell to 330 billion dollars from the same period last year from January to September 2023, down 140 billion dollars from the same period last year. In addition to establishing a new tax on stock purchases of rice listed companies, it seems that rice listed companies have prioritized securing on-hand liquidity against the backdrop of an economic slowdown and rising interest rates. Now that one of the drivers of rising market prices, called company stock buybacks, is missing, the earnings announcements of major US companies for the fiscal year ending 23/7-9 will hold the direction of the US market.
Over the next week, I would like to focus on the US September ISM manufacturing business climate index (10/2), US August JOLTS job openings (10/3), US September ADP employment statistics (10/4), US August trade balance (10/5), and US September employment statistics (10/6). China will have a major National Day holiday from 9/29-10/6.
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