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  • Scott Poore, AIF, AWMA, APMA

Tech and Interest Rate Fears Pull Markets Lower

Fears were renewed last week that interest rates would stay higher for longer and equities took the hit.

With nearly all companies having reported 2nd quarter earnings results, we can now turn our attention to 3rd quarter results. According to FactSet, for the first tine sine September, 2021, analysts have increased expectations for Q3 earnings by 0.4%. Typically, earnings expectations for the coming quarter are reduced. That has been the case of the past 5 years, with an average reduction of 3.0%. In addition, the number of references to “recession” on 2nd quarter earnings calls dropped for the 4th consecutive quarter and is below the 5-year average. This provides a positive backdrop for a strong finish to the end of the year.


It is a near certainty that the Fed will keep interest rates steady at next week’s meeting.

However, the odds for another rate hike in November inched higher and that sent equities lower last week. The effect was compounded by a report that China was looking to ban iPhones from governmental use and several Chinese state agencies seemed to follow suit. This pushed Apple and tech-related shares lower last week. The job market remains solid with Initial Jobless Claims hitting a 6-month low. Consumer Credit, released late Friday, showed consumers are not loading up on revolving credit. The Fed goes into blackout mode, so inflation will be the primary driver this week.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


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