The Q4 Kickoff. The first trading day of the last quarter of 2023 was marked by a mixed performance on Wall Street. The Dow Jones lost 74 points, indicating a cautious start to the quarter. In contrast, the S&P 500 finished slightly higher, and the Nasdaq gained nearly 0.7%, showing signs of resilience in the market. The day’s trading activity was influenced by a complex interplay of factors, offering insights into the current state of the economy and investor sentiment.

One of the positive signals came from the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI), which rose to 49 in September from 47.6 in the previous month. This figure, while below the 50-point threshold indicating expansion. Pointed to the slowest contraction in the US manufacturing sector in ten months.

The data revealed that the sector was still grappling with the impact of higher borrowing costs, but there were notable improvements. Production rebounded significantly, new orders fell at a slower pace, and employment showed signs of stability after periods of contraction. Additionally, the decline in prices for the fifth straight month raised hopes of improved margins for manufacturers, offering a glimmer of hope amidst challenges.

Despite these positive indicators, the stock market continued to face pressures. Concerns about prolonged elevated interest rates and a rise in Treasury yields weighed on investor sentiment. The yield on the US 10-year Treasury rose to nearly 4.7%, reaching a level not seen since July 2007.

The Federal Reserve’s hawkish stance and calls for sustained high-interest rates by key officials added to the market’s apprehension. However, a momentary relief came after US lawmakers managed to avert a government shutdown by passing a funding bill, keeping the government operational for 45 more days. This intervention provided temporary relief to investors, underscoring the market’s sensitivity to political developments.

In the tech sector, Tesla shares rebounded, gaining 0.5% after an initial dip of 2.5% following lower-than-expected Q3 deliveries. Apple and Nvidia also performed well, with Apple gaining 1.5% and Nvidia advancing 2.9%. Goldman Sachs’ addition of Nvidia’s stock to its conviction list further bolstered investor confidence in the chipmaker.

Commodity markets, especially copper futures, experienced fluctuations. Copper prices fell toward $3.6 per pound, influenced by the outlook of a hawkish Federal Reserve, which lifted the US dollar and dampened demand for industrial inputs. However, concerns about supply shortages mitigated the downturn, reflecting the delicate balance between demand, supply, and market dynamics.

Currency markets exhibited volatility, with the Norwegian Krone, Mexican Peso, and Russian Ruble facing declines, while the Dollar Index made gains, reflecting global currency shifts influenced by market sentiment and economic indicators.

In the realm of cryptocurrencies, the Securities and Exchange Commission (SEC) delayed decisions on spot Bitcoin ETFs and spot Ether ETFs, further highlighting the regulatory uncertainties surrounding digital assets.

The first trading day of Q4 2023 presented a nuanced picture of the market. Positive signals from the manufacturing sector were juxtaposed against concerns about interest rates and Treasury yields. Government intervention provided temporary relief, underlining the market’s sensitivity to policy decisions.

The performance of key sectors and commodities, along with currency dynamics and cryptocurrency challenges, underscored the multifaceted nature of market influences. As investors navigate this complex landscape, the ability to adapt to changing market dynamics and make informed decisions will be crucial in the coming months.

So, my dear investor, the fear in the markets shows no sign of abating, and even good news isn’t helping — stock prices continue to plummet. Where can one find profit when not only the weather but also the markets are freezing cold? We observe that the Technology and Consumer Goods sectors are still holding up against the bearish pressure. We keep a close eye on these sectors.

At the same time, we are very interested in sectors where prices are dropping significantly. These are the Utilities and Healthcare sectors. It’s possible that the stock prices in these sectors might find their bottoms sooner…