The futures were trading higher after a big risk-off day across Wall Street on Tuesday on the heels of some very disappointing economic data. All the major indexes finished the day lower, with the Nasdaq getting pounded to the tune of down 1.57% to finish the day at 13,063.61. With the S&P 500 finishing the day at 4,273.53, it has broken through the major support level at 4,300 and could be on the way to 4,150 or even lower. With the third quarter quickly coming to an end, and portfolio managers looking to capture some of the big gains posted over the past 90 days, more selling could be on the way.
The big impetus behind the downturn is that the song remains the same. “Higher-for-longer” interest rate scenarios, paired up with rising rates as yields hit the highest levels in years, the potential for a government shutdown, the UAW strike against the big Detroit automakers, plus a litany of additional issues, are strong headwinds for what was an already overbought market.
Treasury yields were mixed across the board, as sellers once again made their presence felt. While not the big selling we saw on Monday, the 10-year note finished at 4.55% and the two-year short paper closed the session at 5.13%. The ongoing inversion between the two has tightened dramatically since the summer, which at one point was over 100 basis points, but still signals recession in the future.
Brent and West Texas Intermediate crude continued to march higher on Tuesday, after taking a break on Monday, when the two benchmarks closed down 0.4%. Brent finished Tuesday at $94.06, up 0.83%, while WTI was last seen at $90.53, up 0.95%. The continuing strength of the dollar, plus worries over higher interest rates slowing demand, have slowed the path to $100, but many across Wall Street feel it is coming. Natural gas finished the day modestly higher at $2.65.
Gold was a big loser on Tuesday, as the December contract slid 0.91% to close the day at $1,918.90. The weak close came despite the consumer confidence numbers falling to 103.0 from 108.7 in August. Long-term consumer confidence dropped even more, as the expectations index dropped to 73.7 from the August print of 83.3. Typically, gold will strengthen into weak economic data. Bitcoin closed lower on Tuesday as well, as the cryptocurrency giant finished the day at $26,164, down 0.50%
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