Why Are Stocks Down Today?

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  • Stocks are trending broadly lower today, as investor sentiment takes a bearish turn.
  • This appears to be due, in part, to an OPEC+ decision to cut production, which could result in energy-driven inflation pressure.
  • Additionally, private payroll data suggests the job market remains strong, something which doesn’t bode well for a Fed pivot thesis.
why are stocks down - Why Are Stocks Down Today?

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Today, the stock market is once again selling off, as this bear market continues. With every passing day, it appears new catalysts pop up to support continued selling. Thus, the question many are asking again is “why are stocks down again today?”

There appear to be two key reasons why investors are turning bearish once again. The first is the closely-watched OPEC+ decision, which was released today, in which this cartel of oil-producing countries agreed to cut output by up to 2 million barrels per day. Some experts have pointed out that the ultimate cuts will likely amount to around 1 million barrels per day. That’s because some oil-producing countries have already been under-producing, as per their quotas.

That said, rising oil prices and concerns around higher demand coming out of China (once lockdowns are rescinded) have investors concerned about oil-led inflation again. Various commentary from Federal Reserve officials also indicated not much has changed with their hawkish stance. Thus, this week’s rally, which was predicated in part by a slowing of rate hikes out of Australia, may not materialize in the U.S.

Secondly, U.S. payroll data from private employers was released today. These data showed that the U.S. private sector added 208,000 jobs in September. This was higher than expected and could provide the Fed with another reason to keep its foot on the economic brakes.

Let’s dive into what these data points mean for investors.

Why Are Stocks Down Today?

Higher oil prices and continued strength in the jobs market are two data points that don’t bode well for investors banking on a Federal Reserve pivot. An increasingly bullish view taken in Monday’s and Tuesday’s sessions appeared to be driven by this view. At least one other central bank is starting to slow its pace of rate hikes, so shouldn’t the U.S. as well?

Well, it’s not clear that the data points in this direction quite yet. Another surge higher in oil prices could dampen this outlook. Who knows what Presidents Putin and Xi will decide to do? However, the market appears to be guessing that they’re not necessarily going to be friendly to oil prices, at least in the near term.

For the U.S. economy, the good news is now the bad news. Excellent job numbers are not what investors want to see when they think about a path to easing rate hikes. Thus, we’re in a very interesting time in terms of this macro environment right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-are-stocks-down-today-11/.

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