Dow Jones rose 200 points as short-term yields fall as Fed likely to slow rate hike

Volatile trading to start options expiration day

Stocks were volatile in early trading, with the Dow rising more than 300 points at one point after opening lower.

Friday is a key day for options expiration, which may contribute to volatility.

“In key expirations, options traders keep track of situations where a large amount of open interest is set to expiration. In cases where there is a large amount of open interest expiration in money strikes (strike prices are at or very close to the current stock) ), delta hedging activity could affect the trading of the underlying shares that day, Vishal Vivek of Goldman Sachs said in a note to clients on Friday.

– Jesse Pound and Michael Bloom

Stocks open slightly lower

The major averages started lower on Friday, although far from the lows indicated by futures early in the morning. The Nasdaq was the worst performer, down about 0.4%.

– Jesse Pound

Traders raise chances of a lower Fed rate hike in December

Traders revised their expectations on the Federal Reserve’s actions after Friday’s Wall Street Journal report that the central bank will talk about the future pace of interest rate hikes.

While a 75 basis point rate hike is still highly anticipated at the November Federal Reserve meeting, traders have increased the chances that the December meeting will see a move of only 50 basis points. A base point is one hundredth of a percentage point.

The probability of a move of 0.75 percentage point in December fell to 57.4% after the Journal story, down from 75.4% at the same time Thursday, according to CME Group data. Traders raised the chances of a move 0.5 percentage point to 39.6% from 24.2%.

– Jeff Cox

Futures bounced after Wall Street Journal report

Futures rebounded from their lows after the Wall Street Journal reported that some Federal Reserve officials were uncomfortable with the current pace of interest rate increases and began to worry about the risks of over-tightening.

S&P 500 and Dow futures are now trading almost flat. Nasdaq 100 futures are down 0.4%.

– Jesse Pound

Dan Ives says Elon Musk deal on Twitter is a tough one for Tesla investors

Tesla Investors are in a difficult situation as Elon Musk could sell more of his company’s shares to fund it Twitter A bargain, according to Dan Ives, technical analyst at Wedbush.

“It’s very simple, the more investors save this deal, the more money Musk needs to contribute and thus sell more Tesla shares,” Ives said in a note on Friday.

Musk is expected to sell part of his large shares in Tesla to help fund the closing of $44 billion in a private deal. Ives said that Musk may need to sell an additional $5-10 billion of Tesla stock.

“This remains a tough situation for Tesla investors to shoulder the burden,” Ives said. “As we discussed Twitter’s $44 billion price tag, it’s just a train wreck for an asset that we associate fair value in the $30 billion best-case range in the midst of daunting growth challenges like Mount Everest.”

– Yun Lee

SVB Moderna Upgrades Citing Long Period of Poor Performance

After slipping around 54% so far, Moderna is well placed for investors to take notes and watch for a convincing entry point, according to SVB Securities.

The company upgraded the pharmaceutical company to market underperformance and raised its target price to $101 from $74.

The boosted rating comes after an “extended period of underperformance” in stark contrast to other similar companies the company covers, including Ionis Pharmaceuticals, which is up 47% so far, and Alnylam Pharmaceuticals, up 14% this year.

In addition, analyst Manny Frohar wrote in a note Friday that the comment from Pfizer “suggested significantly higher-than-expected pricing for the COVID-19 vaccine as the market shifts from large contract to largely commercial.” “Assuming that mRNA prices as a reasonable monopoly, this significantly improves the company’s ability to meet the 2023 revenue guidance.”

And according to Foroohar, there’s also a lack of obvious driving stimulus for the bears without the steering cut.

“Bulls will report PCV data in the fourth quarter of 2022, following external validation by partner MRK (OP, Graybosch), while raising doubts about the commercial viability of the influenza program, for which interim data will not be available until late 2023,” they said. .

The company has also updated its model to reflect appropriate Covid pricing.

“Since this is an insufficient downside from the current level of MRNA (~$118) near the 52-week low to justify the underperformance rating, we are turning to the sidelines and waiting for a more attractive entry point on the long or short side,” said Foruhr. . .

Moderna’s shares are up more than 3% in pre-market trading.

– Carmen Renick

Stocks may not have bottomed yet, says UBS’ Hefel

The stock market is likely to drop to new lows until investors deal with the upcoming economic slowdown and its impact on earnings, according to Mark Heffel of UBS Global Wealth Management.

“History tells us that markets don’t find a bottom until investors see Fed rate cuts or lower economic activity on the horizon, or when valuations are so low that they are pricing in a ‘downside’ scenario. Today, none of those conditions are in place.” , Hefele wrote in a note to clients.

He added that it was unclear when the Fed would start cutting interest rates, even if the central bank halts its increases in early 2023. Fed officials said they may keep rates at a constrained level until inflation drops near the 2% target. . .

– Jesse Pound

Stocks are heading for a winning week

Stocks may be looking forward to a third day of losses, but the major averages are still up for the week thanks to strong performances on Monday and Tuesday.

Here are the weekly stats through Thursday’s close:

  • Dow is 2.36%
  • The S&P 500 rose 2.31%.
  • The Nasdaq Composite Index is up 2.84%.

For all three major averages, this will be their best stretch since the average ended on September 9th.

— Jesse Pound

Snap plunge after earnings

Snap shares fell more than 25% in the primary market after the company announced its latest quarterly numbers.

Parent company Snapchat reported revenue of $1.13 billion, slightly missing expectations. Average revenue per user, a key metric for the company, fell 11% to $3.11.

“Our revenue growth continued to slow in the third quarter and continues to be affected by a number of factors that we have observed throughout the past year, including platform policy changes, macroeconomic headwinds, and increased competition,” Snap said in its letter to investors.

The results led Bernstein analysts to downgrade the stock, noting that it’s unclear where the stock goes from here.

– Fred Ambert

CNBC Pro: Goldman Sachs Says These Stocks Could Increasingly Survive a Possible Recession

“The overall picture is arguably more challenging than it has been for some time,” says Goldman Sachs, who favors the iron-on strategy in recession stress.

The bank has named several stocks rated as a buy that it believes could do well against the current overall background.

Professional subscribers can read more here.

– Xavier Ong

US Treasury yields are at their highest level in a decade

The 10-year US Treasury yield rose to 4.272% after hitting 4.2% for the first time since 2008.

The policy-sensitive two-year Treasury yield also rose to 4.639%, at a 15-year high.

return on 30 years of treasury It reached a new 11-year peak of 4.266%.

Yields and prices move in opposite directions and one basis point equals 0.01%.

Ji Lee

European markets: here are the opening calls

United kingdom FTSE 100 It is set to open 36 pips low at 6905, according to data from IG.

Germany Dax An opening of about 119 points was seen low at 12636, France kak It is set to fall by 51 points to 6026 and Italy MIB The index is expected to drop by about 205 points at 21,398 points.

– Hannah Ward Glinton

CNBC Pro: Here’s what to invest in as returns soar again, say BlackRock and others

Yields are rising again, and it looks like the rate hike path will continue.

For investors, that means they must seize the opportunity now to put their money into bonds or Treasuries — especially those with shorter durations, analysts said this week.

Wells Fargo said investors should seize the rather short-lived nature of this opportunity now.

Read more here.

– Wizen Tan

Earnings drive the engine after an hour

Companies that reported earnings after the bell on Thursday were among the biggest movers in after-hours trading.

Tech giant Snap fell 25% after its revenue came in less than expected, although the number of daily active users globally came in higher than expected. competitors dead And the alphabet slipped, too.

Snap told investors that revenue growth will likely continue to slow in the fourth quarter as platform policy changes, shifting economic conditions and increased competition weigh on the company. No fourth-quarter guidance was provided.

Robert Half International fell 7.7% after the employment agency missed expectations regarding the highest and lowest profit. The company reported earnings per share of $1.53 on revenue of $1.83 billion.

On the other hand, CSX added 4.3% after it beat higher and lower earnings expectations. The carrier posted 52 cents in adjusted earnings per share on revenue of $3.90 billion, beating analysts’ expectations for earnings per share of 49 cents on revenue of $3.74 billion.

See the full list of moving stocks here.

– Alex Haring

The Dow is up while the Nasdaq 100 is down at the open

Stock futures opened mixed in early trading an hour later.

The Dow added 51 points, or 0.2%. S&P 500 futures traded near flat.

But Nasdaq 100 futures fell 0.3%.

– Alex Haring

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