Are investors on the brink of a failed recovery for the stock market this year? September is about to deliver the S&P 500's worst monthly performance of 2023 - a 5.1% drop thanks for nothing, bond yields and King Dollar.
If the index could hang onto the 11% return generated so far this year, that's better than 2022, but maybe not the rebound many hoped for. And rising fear among investors could make the next three months tough, especially as bad news is now bad news.
Over to our call of the day, where a team at HSBC, led by chief multi-asset strategist Max Kettner, says things are so gloomy, an upside surprise shouldn't be ruled out.
What's been happening around the world, explains the HSBC chart.
HSBC is on an overweight diet on U.S. equities and has lifted its exposure to energy due to attractive carry, with a nudge toward the U.K. due to its exposure to that sector.
Kettner and Co. say it is really hard to see any negative surprise in the next three to six months, and their own economists predict higher fourth-quarter and first-quarter U.S. growth and fewer rate cuts in 2024 and 2025 than consensus. Inflation will be higher in the fourth quarter.
The big changes to sentiment that has put the S&P 500 on a slide have been U.S. rates pricing, a dollar comeback, and higher energy prices. Here, HSBC pushes back on a few more concerns among investors:• rising consumer credit. The authors note that consumer credit is rising at a slower rate than 2021 and 2022, a variable that is often used as a bearish argument, regardless of the direction. HSBC explains that these repayments have temporarily risen higher since early July, but have since reverted down, and some fear this will restrain spending. The fact that debtors repaid student debt ahead of the expiration of the moratorium shows that shoppers still have money left to spend.
S. economy shows shades of 2008, top JPMorgan strategist Donald Trump warns in a statement.
The stock futures ES00, NQ00, were flat as crude CL.1, crude CL.1, briefly tapped $95 a barrel - the first time in a year. The 10-year Treasury yield, BX:TMUBMUSD10Y, is up to around 4.63%. The Hang Seng HK:HSI fell 1.3% with shares of Deep In-Debt Property Group Evergrande 3333 halted after reports its chairman is in police custody.
Fed Chairman Jerome Powell will speak at a town hall with teachers at 4 p.m. weekly jobless claims and a revision to second-quarter GDP are due at 8:30 a.m. and pending home sales at 10 a.m. Federal Reserve governor Gov. Jerome Powell will speak. Meme-stock favorite GameStop GME, the consumer electronics giant, is up 9% in premarket trading after the Consumer Electronics Retailer named Ryan Cohen president and CEO.
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Micron Technology MU is down 4% after the memory chip maker forecast more negative margins. Its CEO sees'several hundreds of millions of dollars' in 2024 data center sales, but not for a while.
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