Following a truly rough week for investors, Wall Street rallied sharply on Tuesday 16 as upbeat results from corporates bolstered market sentiment. The three major indices tallied their biggest one-day percentage gains since March. The Dow jumped 2.17 percent, while the S&P 500 climbed 2.15 percent and the Nasdaq 2.89 percent.
Unfortunately, this recover was just a flash in the pan, gains being swiftly wiped out on Thursday 18 due to fears over a slowdown in China and steeper U.S. rates after a hawkish commentary in the Federal Reserve’s minutes. Hence a relatively flat week for U.S. large cap indices (S&P 500: +2bps) while Europe managed to add 32bps (MSCI EMU index). However, the sector returns were contrasted. Energy was the poorest performer (down 2.03 percent) with U.S. futures settling below $70 a barrel for the first time in a month, after the U.S. commercial crude stockpiles rose by 6.5 million barrels in the week to Oct. 12 (source EIA). By contrast, utilities and consumer staples took again the lead (+3.05 and +4.29 percent respectively).
On the interest rate front, the 10-Year US Treasury yield remained almost unchanged at 319bps. On the other hand, it should be noted that investors sold high yield bonds as risk appetite waned significantly.
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