Trish: Dow Tanks Amid Growing Uncertainty – But, Here’s Why Investors Are Getting it Wrong

U.S. stocks opened the month of September lower Tuesday amid growing uncertainty about the global recovery. Investors worry that the Federal Reserve’s promised taper will burst the stock market bubble. 

But, as usual, investors are overreacting.

After all, the Fed is less likely to taper if the jobs market is as bad as the Labor Department reported on Friday with just 235,000 jobs being created instead of the expected 720,000.

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The Fed has repeatedly made it quite clear how much it was seeking direction from employment data — and Friday’s jobs report couldn’t have been more clear.

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If anything, investors would be more likely to see the Fed double down on its bond-buying stimulus efforts. Washington, meanwhile, may also get in on the act, with more stimulus efforts from Congress itself. Don’t be surprised, for example, to see a fourth stimulus check in Americans’ mailboxes.

If the bond-buying stays on, or decreases less than expected, then the Fed gets to kick the can even further down the road. It’s conceivable therefore that the Fed can “band-aid” the situation enough to keep the markets on track.

Meanwhile, in October, companies with report earnings. So far, the expectation is for nearly a 30% increase. Not as much as last quarter’s roughly 95% increase but, nonetheless still a tremendous amount of expected growth to help support valuations.

Bottomline? Investors may be worried about nothing. The Fed is unlikely to rashly pull back its stimulus. So, with an accommodative Fed, and a congress that wants to spend more money, there will be plenty more liquidity in the system to help lift valuations.

Equities

U.S. stock futures were little changed after trading resumed following Labor Day holiday.  

Level Chg. Chg. %
DOW 35,391.00 -262 -0.74%
S&P 500  4,537.25 2 -0.32%
Nasdaq Futures 15,651.50 +.09 +0.09%

U.S. Dollar and Treasuries

U.S. Treasury yields rose. The yield on the 10-year Treasury rose four basis points. The dollar strengthened against a basket of major currencies.

Price Chg. Chg. %
U.S. Dollar Index (DXY): 92.37 +0.33 +0.36%

 

Yield Change Previous close
U.S. 1 Year Treasury Bill 0.070% 0.004 0.066%
U.S. 2 Year Treasury Note 0.212% 0.004 0.208%
U.S. 5 Year Treasury Note 0.813% 0.026 0.787%
U.S. 10 Year Treasury Note 1.368% 0.042 1.326%
U.S. 20 Year Treasury Bond 1.904% 0.036 1.867%
U.S. 30 Year Treasury Bond 1.979% 0.033 1.946%

Stocks To Watch

Stocks of an oil and gas producer Camber Energy rose in premarket trading after gaining over 50% in the last five days. The stock’s momentum comes from the market’s bullishness in the energy industry. The company has recently announced the purchase of an exclusive license for patented carbon-capturing technology. 

Medical company RenovoRx announced it has received FDA’s 510(k) clearance for its RenovoCath Delivery System. The company specializes in improving the delivery of chemotherapy in cancer patients, delivering it straight to the tumors. 

Stocks of a Russian mining company Mechel surged after being featured in an article on Investopedia on “Top steel stocks.”  

Symbol Price Chg. Chg. % Volume
Camber Energy Inc CEI $0.91 +0.0829 +10.02% 6.11M
RenovoRx Inc RNXT $11.45 +3.56 +45.12% 2.71M
Mechel OAO MTL $4.37 +1.170 +36.56% 1.41M

 

Commodities To Watch

Oil dropped after Saudi Arabia cut crude prices. Investors are anticipating weaker demand growth in the future due to a possible slowdown in the global recovery. Gold dropped as the dollar strengthened. 

Price Chg. %
WTI Crude Oil $68.45 -1.21%
Brent Crude Oil $71.86 -1.03%
Natural Gas $4.59 -2.55%
Gold $1,811.30 -1.22%
Silver $24.31 -1.98%
Copper $4.28 -1.30%
Soybeans $1,300.75 0.68%

Crypto

El Salvador’s Bitcoin experiment dominated crypto news this week. The country bought Bitcoins as it prepared for adopting the cryptocurrency as legal tender. Bitcoin surged to $50,000 ahead of the formal announcement but traded back under 50k in Tuesday’s session.

 

 

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Trish Reganhttps://trishintel.com
Trish Regan is an award winning financial journalist, an American television talk show host and author who interprets political events through an economic lens.

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