An hour ago
According to Jeffrey Gundlach, the bond market is sending a recession warning
Jeffrey Gundlach, CEO of DoubleLine Capital, alerted investors to a phenomenon in the bond market that he said represents a recession warning.
The gap between two-year and 10-year Treasury yields narrowed to 35 basis points, compared to a gap of 108 basis points a few months ago, Gundlach pointed out. This “de-inversion” of the central part of the yield curve could be a tell-tale sign that an economic downturn is imminent.
“Everyone should be on recession warning, not just recession watch,” Gundlach said in a post on X, formerly known as Twitter. “If the unemployment rate increases by just a few tenths, there is a recession alarm. Buckle up.”
The 2-year and 10-year Treasury yield curve initially inverted in March 2022, a phenomenon that has been a reliable recession predictor in the past. It usually takes almost two years for a recession to occur.
— Yun Li
An hour ago
Bill Gross says the rising 10-year Treasury yield could test 5%
2 hours ago
There was a sell-off in stocks and bonds on Tuesday, and the 60/40 portfolio took a hit
Both bonds and stocks experienced a sell-off on Tuesday, and the 60/40 portfolio felt the pain keenly.
The iShares Core Growth Allocation ETF (AOR), which reflects a portfolio allocation of 60% to stocks and 40% to fixed income, fell 1.14% on Tuesday.
The portfolio posted a total return of -15.6% in 2022 as both stocks and bonds declined sharply.
See grafic…
AOR year to date
A difficult day in the market – or a difficult year like 2022 – doesn’t necessarily negate the long-term prospects of the 60/40 model.
Rather than offering blockbuster returns, the portfolio is designed to provide investors with diversification and smooth out the price volatility that would otherwise be seen in stocks. However, on a day when both stocks and fixed income suffer, the 60/40 portfolio will also falter.
– Darla Mercado
3 hours ago
Cal-Maine loses nearly 12% after weaker-than-expected financial report
Cal-Maine Foods fell nearly 12% in extended trading after the company released an earnings report that disappointed analysts.
The egg retailer said it earned 2 cents per share in its fiscal first quarter, well below the consensus estimate of 33 cents per share from analysts surveyed by FactSet. Cal-Maine also fell short of Wall Street’s revenue expectations for the quarter, coming in at $459.3 million, while the average analyst had forecast $479.5 million.
Management cited “dynamic” market conditions and noted that egg prices had normalized as supply had begun to recover.
—Alex Harring
3 hours ago
Dow Transports closes below its 200-day moving average, the first time since June
The Dow Jones Transportation Average ended the day below the 200-day moving average on Tuesday, a move that could signal a downtrend from here.
It was the first time since June 1 that the Dow Transports closed below that threshold. The 20-stock Dow Transports fell 0.78% amid a broad selloff in stocks and a rise in bond yields on Tuesday.
In total, 13 of the stocks included in the index are below their 200-day moving average, including Union Pacific, CSX, Norfolk Southern and Southwest Airlines.
The 200-day moving average is an important indicator for market technicians because it details long-term trends for a particular asset or index. In this case, a close below the 200-day level could indicate further declines.
—Darla Mercado, Gina Francolla
3 hours ago
The probability of a quarter-point rate hike at the next Fed meeting rose to 31% from 16% a week ago
According to CME FedWatch, the probability of a quarter-point increase in the Fed’s key interest rate to 5.50% to 5.75% at the central bank’s next policy meeting on Nov. 1 rose to 30.9% on Tuesday, up from 16.4% last Week tool.
The likelihood that interest rates will rise from the current range of 5.25% to 5.50% – derived from 30-day Fed Funds futures prices – increased after the Bureau of Labor Statistics reported stronger-than-expected job openings numbers for August had reported.
– Scott Schnipper
3 hours ago
Stock futures have barely changed
Stock futures traded almost flat on Tuesday evening.
Dow futures slipped nearly 0.1% shortly after 6 p.m. ET, while S&P 500 and Nasdaq 100 futures were both slightly below levels.
—Alex Harring