September 26, 2022

Markets:

U.S. equity futures fell on Monday as surging interest rates and foreign currency turmoil threatened to push the S&P 500 to a new closing low for the year.

The British pound dropped to a record low on Monday against the U.S. dollar. Sterling at one point fell 4% to an all-time low of $1.0382. The Federal Reserve’s aggressive hiking campaign, coupled with U.K.’s tax cuts announced last week has caused the U.S. dollar to surge. The euro hit the lowest vs. the dollar since 2002. A surging greenback can hurt the profits of U.S. multinationals and also wreak havoc on global trade, with so much of it transacted in dollars.

On Friday, stocks ended a brutal week with the blue-chip Dow finding a new intraday low for the year and closing lower by 486 points. The broad-market S&P 500 temporarily broke below its June closing low and ended down 1.7%. The tech-heavy Nasdaq Composite lost 1.8%.

Traders will be closely watching the S&P 500 on Monday for any break below its bear market low. The S&P’s low close for the year in June was 3,666.77. It closed Friday at 3,693.23 after trading briefly below that close. The benchmark’s intraday low for the year is 3,636.87. Any trade below those levels could drive more selling in the market.

Bond yields soared after the Fed enacted another rate hike of 75 basis points. The 2-year and 10-year Treasury rates hit highs not seen in over a decade. On Friday, Goldman Sachs slashed its year-end target for the S&P 500 to 3,600 from 4,300.

Rates were surging again on Monday with the 2-year Treasury topping 4.29%.

Portfolio:

We enter the new trading week holding positions in AA and TDOC.  We will be looking to add early on this week so please be ready as our queue is once again igniting with opportunity.  So many sectors on the edge, we either bounce or have next leg down with relative ease.  Be ready this week, should be a great one.