The AP on the Street 43rd Week of 2022

The AP on the Street

The AP on the Street 43rd Week of 2022

It was a tough week for the technology sector. We saw a substantial decline in tech stocks after this week’s “earnings” season. On the other hand, from different central banks of the world, we noticed a softening language concerning the quantitative tightening measures. Many investors expect a less-hawkish FED after last week’s Q3 results. However, in my opinion, FED should still be committed to its hawkish stance on soaring inflation. By the way, we had a lot of data release that affected our indicators, such as earnings, this week. So, let’s take a look at what happened this week:

  • The Japanese Yen slowed its pace of increase against the US Dollar after the Bank of Japan’s intervention in holding up the currency. And it closed the week with a -1.8%, down from its highest level since 1990. (Monday)
  • Rishi Sunak has been elected as the conservative party leader and became the prime minister of the UK. The British Pound bounced back. (Monday)
  • Natural Gas Prices in Europe went down to the lowest level since July. (Monday)
  • United States, Services and Manufacturing PMIs have fallen to the lowest level since March 2020. Which would affect our model’s macroeconomic indicators. (Monday)
  • Alphabet tumbled after worse-than-expected financial reports. Microsoft fell even after better-than-expected financial statements, partly because of weak cloud revenue growth. Both suffered the most significant drop since March 2020. (Tuesday)
  • Facebook (Meta) went down more than 20% on a worse-than-expected earnings report. Lowest since February 2016. (Wednesday)
  • Credit Suisse shares plunged more than 18% after a terrible Q3 loss. (Thursday)
  • ECB hiked the interest rate by 75 basis points as expected (the highest since 2008), and the Euro became more robust than the US dollar. (Thursday)
  • US Q3 GDP grew 2.6% at an annualized rate. (Thursday)
  • Amazon tumbled more than %20 after worse-than-expected Q3 financial reports. However, it closed the week with -14%. Its market capitalization fell below 1 trillion dollars. (Thursday)
  • Apple closed the week by going up 5.7% after better-than-expected Q3 financial reports. (Friday)
  • EXXON reported a record-breaking Q3 profit. (Friday)
Wall Street

Overall Market Indexes & Commodities Moves

DOW +5.7%
S&P 500 +3.9%
NASDAQ +2.2%
RUSSELL 2000 +6%
Gold -1.1%
Silver -1.2%
Oil +3.7%

Our 4 the most performing stocks:

What is PMI (Purchasing Managers’ Index)?

The industrial and service sectors’ current economic trends are measured by the Purchasing Managers’ Index (PMI). It consists of a diffusion indicator that highlights whether market conditions are improving, remaining unchanged, or deteriorating in the eyes of purchasing managers.


Next week’s important macroeconomic data to be released are:

The FOMC meeting at the 2nd of November. Also, the unemployment rate data on the 4th of November.

I believe next week will be more of a “correction” week. We saw good growth in GDP and surprising earnings for AAPL. However, on the other hand, the PMI indicator and various earnings, excluding the energy sector, could suggest a more bearish stance in the markets. Next week’s macro data, especially the interest rate decision, will be a decider for the rest of the week.

The consensus is that the FED will continue hiking and increase another 75 basis points. However, there are two other possibilities: first, a positive Q3 number, suggesting the US is exiting the technical recession. The FED would think that as a sign that shows the economy is healthy despite the rate hikes and can continue quantitative tightening (QT). In that case, they would decide to shock markets by 100bp and fight inflation even harder. In that case, we could see a strong decline in the markets.

The second is the FED could actually pivot because of the weak home sales reports, worse-than-expected PMIs, and worse-than-expected earnings. If the FED stays with maybe go lower-than-expected interest rate decision, the market would appreciate this and continue its current stance. Nonetheless, I do not believe it will happen, at least yet.

For the upcoming unemployment rate data on the 4th of November, the market forecasts a 0.1% increase in unemployment, thus making it 3.6%. A better-than-expected number would relieve the FED; however, it could be a bearish sign for the markets since it would lower the policy pivot chance.

Stay tuned for next week.