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Risk on rebound oil slides tields ease and growth names come roaring back
Confirmed
In Short: Stocks and bonds rallied together in a 'risk on' reaction as oil prices declined, easing inflation concerns.
Technology stocks led the charge, with the technology sector gaining 2.2% overall. The semiconductor index surged 3.1%, while disruptive tech names saw a 4.5% increase. Software, cybersecurity, memory, and quantum technology stocks also saw significant gains.
The broader market also showed positive movement, with consumer discretionary names up 1.1%, utilities up 0.9%, energy up 0.7%, healthcare and basic materials each up 0.6%, real estate up 0.3%, and consumer staples and industrials each up 0.2%. The growth trade gained 1.5%, outpacing the value trade, which gained 0.6%.
The Federal Reserve raised its target range by 25 basis points to 3.75% to 4.00% this week, signaling the possibility of another increase. However, the immediate rate shock has faded as oil prices and Treasury yields have pulled back, creating a more favorable environment for gold, which is supported by lower yields and oil prices.
In the cryptocurrency market, the latest Bitfinex Alpha report notes that the price action remains range-bound, with liquidation risks building in the near term. Ethereum and Ripple both slipped below key psychological levels, reflecting a broader trend of consolidation in the crypto market.
What's confirmed
- Technology stocks led the charge, with the technology sector gaining 2.2% overall. The semiconductor index surged 3.1%, while disruptive tech names saw a 4.5% increase. Software, cybersecurity, memory, and quantum technology stocks also saw significant gains.
- The broader market also showed positive movement, with consumer discretionary names up 1.1%, utilities up 0.9%, energy up 0.7%, healthcare and basic materials each up 0.6%, real estate up 0.3%, and consumer staples and industrials each up 0.2%. The growth trade gained 1.5%, outpacing the value trade, which gained 0.6%.
- The Federal Reserve raised its target range by 25 basis points to 3.75% to 4.00% this week, signaling the possibility of another increase. However, the immediate rate shock has faded as oil prices and Treasury yields have pulled back, creating a more favorable environment for gold, which is supported by lower yields and oil prices.
- In the cryptocurrency market, the latest Bitfinex Alpha report notes that the price action remains range-bound, with liquidation risks building in the near term. Ethereum and Ripple both slipped below key psychological levels, reflecting a broader trend of consolidation in the crypto market.
What's still developing
- Overall housing starts fell 2.6% in August vs. the expected increase of 6.7%.
- Less than 24 hrs after the traders and algos threw a fit over Kevy Warsh’s rate hike and hawkish message, investors came storming back into the market.
- Stocks and bonds rallied together in a ‘risk on’ reaction as falling oil prices helped ease the inflation anxiety.
- For gold, the setup is constructive but not clean: lower yields and oil support the rebound, while Warsh’s Fed has not removed the risk of another hike.
- The acquisition, announced Thursday, will bring OpenZeppelin’s smart contract security services, development tools and open-source libraries into S&P Global’s existing digital asset and risk assessment business.
- Although minor, the correction comes after a sharp move toward $1.50 the previous day and aligns with a lethargic outlook in the broader crypto market.
- This pullback comes on the heels of last week's failed breakout and is echoed across major altcoins, as Ethereum (ETH) and Ripple (XRP) both slip below key psychological levels at $2,500 and $1.40, respectively.
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