Daily Markets: Markets Continue to React to the Latest Rate Hike

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Today’s Big Picture

Asia-Pacific equity indexes ended today’s session down as the global central bank hawkishness and recessionary fears have been dominating investor sentiment this week. China’s Shanghai Composite declined 0.66%, Taiwan’s TAIEX and Hong Kong’s Hang Seng fell 1.16% and 1.18%, respectively while India’s Sensex dropped 1.73% and South Korea’s KOSPI closed down 1.81%. Australia’s ASX All Ordinaries led the way, down 1.92% on overall market weakness headlined by Technology and Consumer Services names. Japan’s Markets are closed today to mark the Autumnal Equinox as we officially transition to Fall. By mid-day trading, European equity indices are down across the board and US futures point to a rough open later this morning.  

As we close out another tumultuous week for equities characterized by rising concerns the Federal Reserve may overstep with its plans to return inflation to its 2% target, investor sentiment has deteriorated amid falling expectations for the economy and earnings. Meanwhile, higher interest rates will weigh on valuations for both the stock market and individual equities. So far Goldman Sachs cut its target for the S&P 500 to 3,600 and Bank of America forecasts the S&P 500 to trade between 3,300 and 3,500. 

These and other revised forecasts will weigh further on investor sentiment, which is increasingly favoring cash vs. bonds and stocks as evidenced by the $30.3 billion inflows to cash vs. the $7.8 billion outflows for global equity funds for the week ending September 21. And with the CNN Money Fear & Greed Index registering “Fear,” there is further room to fall to “Extreme Fear.” As we transition from the fallout of the Fed's September monetary policy meeting to the September earnings season, sentiment is likely to give way to a “show me” mood for stocks as investors brace for weaker than expected guidance. 

Data Download

International Economy

The S&P Global Eurozone Flash Manufacturing PMI fell to 48.5 in September from 49.6 in August, missing the 48.7 consensus. This marked the third consecutive contraction in factory activity and the biggest since June 2020. The Flash Services PMI for September followed suit falling to 48.9 in September vs. 49.8 in August and the 49.0 consensus with the report showing that both input and output cost inflation accelerated.

The S&P Global/CIPS UK Flash Manufacturing PMI rose to 48.5 in September from 47.3 in the previous month and above market expectations of 47.5. However, the data was still well below the expansion-contraction line of 50 and showed continued weakness in new orders. The September Flash Service PMI fell to 49.2 vs. 50.9 in August and the expected reading of 50. Per the report, the slowdown reflected the cost-of-living crisis and rising economic uncertainty. 

Following Russian President Vladimir Putin’s call for “partial mobilization,” the European Union member is looking to the eighth round of sanctions against Russia. Indications point to a number of measures being examined, however, the key to any next steps will be a consensus across the EU’s 27 member states.

Domestic Economy

At 9:45 AM ET, S&P Global (SPGI) will publish its Flash September Manufacturing & Services PMIs and we strongly suspect the headline figures and the underlying details will be sized up against the Atlanta Fed’s GDPNow model for the current quarter and the Fed’s recently updated Economic Forecast. The latest for those respective data sets call for 0.3% GDP in the current quarter and 0.2% for all of 2022.

At 2 PM ET, Fed Chair Powell will provide opening remarks to a Fed Listens event titled Transitioning to the Post-pandemic Economy. Vice Chair Lael Brainard and Governor Michelle W. Bowman will each moderate conversations with leaders from organizations that include nonprofits, small businesses, manufacturing, supply chain management, the hospitality industry and the housing and education sectors. So soon after following the Fed’s latest monetary policy meeting on Wednesday and Powell’s post meeting comments, we highly doubt there will be any walking back of those comments, especially given the sparse data to be had in the last 48 hours. 

The U.S. Senate will vote on continuing resolution to fund the government through December 16 on Tuesday, September 27.

Pfizer (PFE) and the U.S. government agreed to reduce the number of COVID-19 vaccines the U.S. government will donate to other countries this year to 600 million doses from 1 billion.

Bloomberg reports California is committing to a plan that will make it the first U.S. state to phase out gas-fueled furnaces and water heaters in homes.


Markets continue to react to the latest rate hike and Chairman Powell’s post announcement comments as the Dow eased down 0.35%, the S&P 500 declined 0.85%, Nasdaq dropped 1.37% and the Russell 2000 fell 2.26%. Investors priced in the longer-term effects of high rates on new company development and current company expansion plans. The only positive sector was Healthcare as Eli Lily (LLY) rose 4.85% on a new FDA approval for a new lung cancer treatment and Merck & Co (MRK) gained 3.53% as they expanded a Phase 2 trial of a new Melanoma drug. Here’s how the major market indicators stack up year-to-date:

  • Dow Jones Industrial Average: -17.23%
  • S&P 500: -21.15%
  • Nasdaq Composite: -29.26% 
  • Russell 2000: -23.29%
  • Bitcoin (BTC-USD): -28.21%
  • Ether (ETH-USD): -64.04%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, no companies are expected to report their latest quarterly results and guidance. 

Costco Wholesale (COSTreported August quarter earnings of $4.20 per share, a few pennies ahead of the $4.17 consensus. Revenue for the quarter also modestly topped consensus expectations, coming in at $72.09 billion vs the $72 billion consensus. Comparable sales for the quarter, excluding the impacts from changes in gasoline prices and foreign exchange, increased 10.4% YoY with comps sales in the U.S. rising 9.6%, besting the 9.3% consensus forecast. E-Commerce increased by 8.4% on an adjusted basis. Exiting the quarter, Costco operating 838 warehouse locations and targets opening 29 new warehouses vs. 23 net new locations over the prior 12 months. 

Despite CEO Cristiano Amon sharing that its design-win pipeline has climbed to $30 billion, up from the $19 billion figure it last shared, shares of Qualcomm (QCOMshares traded off yesterday. 

American Public Education (APEI) issued inline guidance with FY2022 revenue of $600-$610 million vs. the $605.7 million consensus.

IMAX (IMAX) acquired SSIMWAVE Inc., a leader in AI-driven video quality solutions for media and entertainment companies.

Apple (AAPL) signed a multiyear deal with the National Football League to sponsor the Super Bowl Halftime Show, starting in February 2023 with the American football championship game.


Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

No companies are expected to report quarterly results after equities stop trading today. As we approach the end of the quarter, readers should be on the watch for earnings pre-announcements both positive as well as negative. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar

On the Horizon

Monday, September 26

  • Germany: 3Q 2022 GDP (Preliminary)
  • Germany: Business Expectations – September

Tuesday, September 27

  • China: Industrial Profits – August
  • US: Durable Orders – August 
  • US: FHFA Housing Price Index – July 
  • US: S&P Case-Shiller Home Price Index – July 
  • US: Consumer Confidence – September 
  • US: New Home Sales – August 

Wednesday, September 28

  • Germany: GfK Consumer Climate - October
  • US: Weekly MBA Mortgage Applications 
  • US: Pending Home Sales – August 
  • US: Weekly EIA Crude Oil Inventories 

Thursday, September 29

  • UK: BoE Consumer Credit – August
  • Eurozone: Business and Consumer Survey, Consumer Confidence, Consumer Inflation Expectations – September
  • Germany: CPI – September (Preliminary)
  • US: Weekly Initial & Continuing Jobless Claims
  • US: 2Q 2022 GDP – Third Estimate
  • US: Weekly EIA Natural Gas Inventories 

Friday, September 30

  • Japan: Retail Sales – August
  • China: Manufacturing and Non-Manufacturing PMIs – September
  • China: Caixin Manufacturing PMI – September
  • Germany: Import/Export Prices, Retail Sales – August
  • Eurozone: Consumer Price Index - September
  • US: Personal Income & Spending – August 
  • US: PCE Price Index – August 
  • US: Chicago PMI – September
  • US: University of Michigan Consumer Sentiment (Final) – September

Thought for the Day

“Don’t sell yourself short.” ~ Bruce Springsteen


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

Read Mark's Bio

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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