The war in Israel rages on, the Fed stated it may be forced to raise interest rates again, and stocks fall while oil rises. Earnings reports showed mixed results yesterday.
Stocks suffer as the war could extend to other areas
Rising tensions in the Middle East continued to put downward pressure on the stock market yesterday. The North American indices fell around 1%.
As the threat of the conflict spreading into other nearby areas intensifies, the market interest rates skyrocketed, and 10-year bond yields reached the level of 5%.
Comments by the Federal Reserve (Fed) Chairman Jerome Powell did not help to calm markets. He stated that if the economy continued to show signs of strength and inflation did not retreat to the 2% target level, they would likely be forced to continue raising interest rates.
The performance of the oil price has also not helped to make the situation any better. Yesterday WTI oil rose $2, surpassing the level of $89 per barrel.
Results of earnings reports were mixed yesterday
The earnings season is also doing very little to improve investors' risk sentiment with the results being mixed.
Tesla’s quarterly earnings were disappointing as its recent wave of electric vehicle price cuts hurt margins. As a result, its shares fell 9% during the session.
On the plus side, Netflix’s share price unexpectedly increased by 16% after exceeding expectations of new customers.
The company announced that subscription revenue increased by 8.76 million in the third quarter, driven by its efforts to restrict account sharing. This result is well above expectations of just over 6 million. This is Netflix’s largest quarterly rebound since the second quarter of 2020, during the early days of the global pandemic.
Oil prices surge while natural gas takes a hit
While the price of oil continues to climb, Natural Gas has been falling for ten days in a row.
Yesterday the US Energy Information Administration (EIA) published Natural Gas inventories, showing a growth of 80 bcf. The increase indicates record production in an environment of low volatility.
Natural Gas monthly chart, October 20, 2023. Source: CAPEX.com WebTrader.
Key Takeaways
- North American indices fell around 1% yesterday.
- US 10-year bond yields reached the 5% level.
- Jerome Powell said that if inflation does not reach the target of 2%, the Fed may have to raise interest rates again.
- The price of WTI Oil rose $2.
- Tesla stocks fell 9% following earnings report showing that its recent wave of electric vehicle price cuts hurt margins.
- Netflix rose 16% after reporting its largest quarterly rebound since Q2 2020.
- Natural Gas has been declining for the last ten days due to Middle East tensions.
- The EIA’s Natural Gas inventories report showed a growth of 80 bcf.
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Sources: Bloomberg, Reuters
