US five- and 10-year yields hit the highest levels since 2007. Most major groups in the S&P 500 dropped, but the gauge came well off session lows, led by gains in some megacaps like Apple Inc. and Tesla Inc. Online grocery delivery business Instacart surged in its Nasdaq debut. Walt Disney Co. slid on plans to nearly double its theme-park spending to US$60 billion over the next 10 years.
In fact, after pricing in a “peak” in interest rates in November, trader bets have recently shifted out to December — suggesting that perhaps the market is giving credence to signals of a more pronounced central bank pause, according to Christopher Jacobson at Susquehanna International Group. Since the Fed’s June forecasts, the disinflationary process has stabilized somewhat — but inflation risks are increasing, said Lauren Goodwin at New York Life Investments. As a result, officials will likely keep the incremental quarter-point hike in their projections, she noted — adding that a final increase would possibly be delivered in November.
“If it turns out that this is the first crack in an otherwise bulletproof consumer, then it could change the narrative from an economy that is impervious to rapid interest rate hikes to one that is vulnerable and susceptible to a recession,” he added.Starbucks Corp. slipped as TD Cowen downgraded it to market perform, flagging “worrisome” pressures that could challenge same-store sales in China.
Royal Caribbean Cruises Ltd. and Carnival Corp. climbed after being upgraded by Truist Securities, which cited strong trends and “cooled off” stocks.