Dow Jones Industrial Average , S&P 500 and Nasdaq rally on second consecutive day of October 2022 . US markets made new low at end of September 2022.
US market rally in October 2022.
Dow jones industrial average 2.8%, S&P 500 3.06% and Nasdaq 3.34% rallied on 04 October 2022. The rally has come after a rally of about 2% on Monday. The reason for the stocks run up has come under speculation that going forward, Fed may not increase interest rates aggressively.
What our research and market survey found reasons for speculation are:
Change in approach by Fed on Monetary policy.
Speculation is built in brokers, trades and investors that Fed may not take aggressive monetary tightening stand. Fed may not aggressively increase interest rate to control inflation to 2% target. As 10 years treasury has now declined to 3.62% from just above 4% at end of September.
Job opening and labour turnover survey.
Job opening is one of measure of industrial capex investment. Lower job opening as on last day of August 2022, dropped from expected 11.1 million to 10.1 million jobs. This August 2022 decline in job is largest since April 2020. Lower job opening in manufacturing is due to high interest rates. Industries are holding on to there fresh investment to keep there debt burden under control. Fed which will try to increase demand for labour and bring the inflation to the target of 2% will not increase interest rate aggressively.
Surge in demand of crude oil.
OPEC+ decided to reduce the crude output. Due to which crude prices rose by 4.9% to $83.35 a barrel and Brent crude to $88.79 a barrel.
Manufacturing Slowdown
Manufacturing in United State is growing at very slow pace, as low pace as in pandemic COVD 19. Lower manufacturing is causing the inflation. In order to support manufacturing growth Fed is likely to take lenient view on rate increase.
Elon Musk Twitter deal.
Elon Musk finally decided to buy the twitter, at a per share price of $54.25. That resulted into 22% jump in price of twitter share and all index jump to rally the stock market.
Conclusion
The past history of New York stock exchange show that 57% of times in October markets rally. At last trading day of September 2022 Dow, S&P 500 and Nasdaq has fallen to bellow two year low. After such huge fall a bounce back is expected in market. Reducing 10 year United States treasury rate, August month job data triggered the speculation.
