Stock market celebration halted and conjectures about interest rate adjustments
Is the Fed going to decrease interest rates in November? This question has been keeping investors on their toes, as they tread carefully on Monday. Data coming up this week might offer fresh insights. Meanwhile, the auto sector is facing a significant dip, with Stellantis seeing a major drop.
On Wall Street, the Dow Jones began the week stationary. The US's main index remained almost unchanged at 42,330.15 points. The tech-heavy Nasdaq climbed by 0.4 percent to 18,189.17 points, and the broad-based S&P 500 also registered a 0.4 percent increase to 5,762.48 points.
Robert Conzo of Wealth Alliance commented, "The market had the weekend to digest and comprehend that a 50 basis point reduction is actually a sign of a problem. We should be cutting rates at a more measured pace." The 0.5 percent rate reduction by the US central bank around two weeks back had propelled the markets upward.
Now, investors are eagerly anticipating economic data to help determine if the Fed is considering another 0.5 percent rate reduction in November. A lower-than-anticipated inflation data rise had previously sparked speculation among investors about additional rate reductions.
The spotlight will be on Friday's US employment data and the middle-week ADP's private payrolls report. Glimpses of the Fed's rate plan may emerge as early as Monday evening from US Fed Chair Jerome Powell, speaking at a financial conference in Nashville, Tennessee.
Fall in auto stocks
Individual stocks saw a downturn too. US automakers Ford and General Motors each dropped by around three percent after Stellantis withdrew its annual forecast. Struggling with full inventories in the US and weaker global demand for cars, the French-Italian automaker pulled its profit targets. This caused Stellantis shares to tumble by around 15 percent. British sports car maker Aston Martin also revised its forecast, blaming disrupted supply chains. As a result, Aston Martin shares dipped by around 25 percent. Auto stocks faced significant losses in the DAX.
However, shares of CVS Health gained around two percent after a Wall Street Journal report suggesting that Glenview Capital Management, a New York hedge fund, was in talks with CVS Health's top management to discuss operational improvements.
In the midst of this market turmoil, investors closely watch developments on Wall Street, particularly the performance of key indices like the Dow Jones, Nasdaq, and S&P 500. On Wall Street, despite the Fed's recent interest rate decrease, the Dow Jones began the week stationary, with the Nasdaq and S&P 500 showing slight increases.
Given the recent volatility in the auto sector, investors may also be paying close attention to the financial health of automakers such as Ford, General Motors, and Stellantis, which saw significant drops following Stellantis's withdrawal of its annual forecast and profit targets.
