Rising Yield Weigh on U.S Stocks

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Oct 25, the S&P 500 index(SPX) finished lower after previous six-week winning streak. A slow creep upward for the 10-year Treasury note yield to near three-month highs appeared to weigh on equity buying interest. Large-cap stocks held up better than small-caps, and growth stocks outperformed value as the tech-heavy Nasdaq Composite Index gained slightly. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    Yields have moved higher since the Fed initiated its first rate cut in September and rose further this week, interrupting the stock market’s streak of gains. Bonds price keeps falling for six-week streak (Bond prices and yields move in opposite directions.) 

2.    The 10-year yield climbing from around 3.8% to 4.4%, reach its highest since last December. Yields appears to be rising for the right reasons. 1) The economy remains resilient with recession probability continuing to drop, thus leading to a more gradual rate-cutting expectation than anticipated at the September Fed meeting. 2) Concerns over U.S debt and the upcoming election. 

3.    Tesla(TSLA) outperformed the broad market and “Magnificent 7”. It was the best performer in the S&P 500 and led the Magnificent Seven, helping to keep the broad index from a steeper decline. TSLA surged 22% after its earning report, recorded its best daily gain in more than 11 years. 

4.    Upcoming two weeks important earnings and events 

SPX sectors in play

Only one out of the 11 SPX sectors posted weekly gain. Consumer Discretionary ( XLY) was the only gainer. Technology (XLK) and other large-cap techs performed relatively better. Tesla posted unexpectedly strong quarterly earnings and projected 20% to 30% vehicle sales growth in 2025. The quarterly results and bright outlook drove the stock to its best daily gain (22%) in more than 11 years on Thursday. Materials (XLB) shares lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow and SPX closed lower but the tech-heavy Nasdaq(COMP) index edged up higher after setting a new all-time intra-week high. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose as the central bank implemented more stimulus measures to shore up the economy. The Shanghai Composite Index(SSE) added 1.17%, while the blue chip CSI 300 gained 0.79%. In Hong Kong, the benchmark Hang Seng Index fell 1.03%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    The People’s Bank of China (PBOC) injected RMB 700 billion into the banking system and left the lending rate unchanged at 2%, as expected. With RMB 789 billion in loans set to expire next month, the operation resulted in a net withdrawal of RMB 89 billion from the banking system for October. 

2.    Separately, Chinese banks lowered their one- and five-year loan prime rates by 25 basis points to 3.1% and 3.6%, respectively, making it cheaper for consumers to take out mortgages and other loans. The rate cuts were in line with a broad stimulus package unveiled by the PBOC in late September aimed at reviving China’s economy. The central bank also signaled additional easing measures in the near term, including another potential cut to the reserve requirement ratio, depending on liquidity conditions. The PBOC last cut the reserve requirement ratio by 50 basis points on September 27. 

3.    China's youth unemployment rate eased in September from a record high the prior month. The jobless rate for 16- to 24-year-olds, excluding students, came in at 17.6% in September, down from 18.8% in August, according to official data.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

STI index (STI) settled the week at 3593.41 close, fell 1.29% for the week. The index retreated from its sideway consolidation range top, after cycled up previous week, the sideways has now into its 6^th week. Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.