U.S. Market Trends and Federal Reserve Insights Update

The market remains optimistic despite economic uncertainties, with all major indices showing upward trends today.

### Market Overview: Indices Rise Amid Economic Concerns and Fed Speculations
* 📈 Today, all three major U.S. stock indices experienced gains, with the S&P 500 rising by **0.71%** to **5,792**, Nasdaq up by **0.6%** to **18,21**, and Dow Jones climbing over **1%** to **42,51**.
* 💰 Conversely, gold prices fell by **0.38% to $2,625**, continuing a downward trend for the week, while international oil prices also dropped by **0.38% to $73.2 per barrel** due to demand concerns amid an approaching hurricane.
* 📊 The 10-year U.S. Treasury yield stood at **4.07%**, with a recent auction showing a bid-to-cover ratio of **2.48%**, indicating **lukewarm demand for new bonds**.
* 💬 "The volatility index decreased by **2.61% to 20.86**," reflecting a slight calm in market fluctuations, while the dollar index remained at **10.92**, with the Japanese yen weakening to **149.33**.
* 📅 Notably, market movements today were influenced by **mixed signals from the Federal Reserve** regarding potential rate cuts, with Chairman Powell hinting at **possible reductions by year-end** amidst ongoing **inflation concerns**.
* 🏦 As the Consumer Price Index data is set to be released tomorrow, the market remains cautious, particularly with **geopolitical tensions** and the impact of **Hurricane Milton on economic growth** in affected regions.
* 📉 Despite some negative news surrounding companies like Google, which saw a **decline of 1.59%**, tech stocks such as Amazon and Apple showed upward trends, while financial and pharmaceutical stocks also **maintained momentum**.
* 🔍 Looking ahead, the upcoming earnings season and significant events, including Tesla's **Robo-Taxi event**, are expected to shape market dynamics, with analysts predicting a **potential recovery in sectors impacted by interest rate changes**.

일상을 채우는 품격 매거진 아르떼네 시청 여러분, 안녕하세요. 한경 글로벌 마켓 김중학입니다. 뉴욕 특파원입니다. 오늘 장 10분만 시작하겠습니다. 오늘 3대 지수는 상당히 좋은 흐름을 보여주었습니다. 어제에 이어 3대 지수 모두 올랐고, S&P 500 지수는 0.71% 올라 5,792를 기록했습니다. 나스닥은 0.6% 상승세를 유지하며 18,21을 기록했고, 다우 지수도 1% 넘게 오르면서 42,51을 기록했습니다. 오늘 지수들이 모두 상승했습니다. 

반면 금값은 0.38% 하락하여 일주일 내내 하락세를 이어가며 2,625달러 선까지 하락한 상태입니다. 국제 유가는 허리케인이 다가오고 있지만, 수요 감소에 대한 우려가 계속해서 반영되면서 오늘도 0.38% 하락해 배럴당 73.2달러까지 내려왔습니다. 반면 10년물 미 국채 금리는 3.6B 비율로 4.07%를 기록했는데, 오늘 10년물 미 국채 입찰도 있었습니다.

Above all, there was significant controversy regarding the Federal Reserve's FOMC meeting in September, which highlights the sluggishness of the Fed's actions and has slightly pushed up government bond yields. On the other hand, the volatility index has calmed down a bit today, decreasing by 2.61% to 20.86. The dollar index stands at 10.92, and the Japanese yen continues to weaken, reaching 149.33. Overall, the market has maintained an upward trend since the morning. All three major indices have risen, with the Russell 2000 up by 0.2%, indicating that all four major indices have increased today. 

Looking at the factors for the rise and fall, the rise today can be attributed to the earlier statements from the Federal Reserve, which could be viewed negatively. However, the fact that Chairman Powell has indicated the possibility of rate cuts by the end of the year can be seen positively. Additionally, in Wall Street...

What we are continuing to observe is that in October, there is a seasonal volatility that allows for a rally based on the earnings of companies from the third quarter and expectations for the fourth quarter. On the other hand, it appears that many Federal Reserve officials supported a 25 basis point increase at the September FOMC meeting. Additionally, tomorrow, the Consumer Price Index for September data is set to be released. Despite a sudden phone call between Biden and Netanyahu, the conflict between Iran and Israel continues to be a potential negative factor for the market. Furthermore, Hurricane Milton is currently attracting attention across the U.S. economy, as it is making its way through the Florida region. If local residents are evacuated, there are concerns that economic growth could be affected. Overall, despite these variables related to the Federal Reserve's FOMC decisions, the market has managed to maintain an upward trend.

Google faced some negative news, causing a decline of 1.59%. Meanwhile, Meta, Nvidia, and Tesla seem to be taking a break, but Amazon, Apple, Microsoft, and Broadcom are generally showing an upward trend in technology stocks. Additionally, financial stocks, insurance stocks, and pharmaceutical-related stocks are all maintaining their upward momentum today. 

The 10-year international bond yield was one of the key indicators to watch today, with a total issuance of $39 billion and a bid yield of 4.06%, which is slightly higher than before the auction. The bid-to-cover ratio was around 2.48%, a bit lower than usual, while indirect bids were confirmed to be high at 77.6%. With lukewarm demand observed, the yield on new bonds is still trending upwards. However, what's more important to note are the comments from Federal Reserve officials and the release of the Fed's meeting minutes. The Fed's minutes are expected to come out soon.

Among the key statements made earlier, the remarks by Lori Logan, President of the Dallas Fed, stand out. She emphasized the importance of gradually lowering the federal funds rate to normal or neutral levels without rushing. In other words, she believes that a step-by-step reduction of 25 basis points, rather than 50, is necessary. Furthermore, while there is a strong demand in the overall U.S. economy and the effects of easing policies are being felt, there are also upward risks to inflation that must be monitored closely. Ultimately, a balance in policy is required, as there is an increasing risk of the labor market cooling more than necessary. This concern is also reflected in her comments. Now, the service price index, which will be released tomorrow, is crucial. Although the prices of energy and food are expected to slow down, there is a possibility of increases in other areas, particularly in housing services.

There are still concerns regarding the policies, so there was a somewhat hawkish opinion expressed today about monitoring with flexibility. Raphael Bostic, the president of the Atlanta Federal Reserve, has also been making similar statements recently, maintaining a consistent tone regarding the labor market and inflation. The labor market is slowing down but is not in a weak state. Achieving 2% inflation is ultimately the most important point of focus, and since it has not yet been achieved, there is still a long way to go. This indicates a cautious stance. If the economy continues to remain strong, the recalibration of monetary policy may proceed more slowly. Similarly, the comments from the committee members have been somewhat more hawkish than expected.

The comments are leading to a dovish stance, which can also be confirmed in the FMC minutes from September. According to the content, some participants, around three or four, preferred a 25 basis point (0.25%) cut, while several others were able to support the final decision. Given the situation where inflation is becoming entrenched and the instability in the labor market continues, a rate cut decision was made, but despite substantial support from many committee members, there was controversy. Further examination of the details reveals that some participants argued that reducing rates by 25 basis points repeatedly, rather than making larger cuts of 50 basis points multiple times, is the normal process. There were significant disagreements among the committee members regarding the extent to which policy should be loosened.

Ultimately, Chair Jerome Powell decided to cut rates by 50 basis points at once, and it appears that there were still two committee members at that time who were hawkish and argued for a 50 basis point cut. Additionally, regarding the neutral interest rate, it is recognized among Federal Reserve members as an abstract concept. Because of this, the range of 2.4% to 3.8% is somewhat ambiguous in terms of stimulating or cooling the economy. Therefore, there is a call for more clarity on this matter in future meetings or indicators. With these indicators emerging, the probability of a 25 basis point cut has increased today to 21%, up from yesterday. The possibility of a hold has also risen; I mistakenly wrote that down. The probability of holding rates is now at 21%, while the likelihood of a 25 basis point cut is recorded at 78.8%. If we look at this, even if a 25 basis point cut occurs in November, the possibility of another gradual 50 basis point cut in December seems to be completely off the table.

The market is reflecting a gradually slowing monetary policy, which is becoming evident in the bond and stock markets. However, despite these macroeconomic concerns, the market remains optimistic about corporate performance and the year-end rally. Citigroup has reported that expectations for a soft landing have been reignited, identifying sectors such as media, energy, semiconductors, and consumer goods as noteworthy for the future. Since August, market volatility has significantly increased, yet the stock market remains at peak levels. Even if the overall returns may appear flat until the end of the year, this refers to index levels; at the individual stock level, there may be greater volatility. Similar to the second quarter, it is essential to focus on companies that can exceed expectations positively.

I am watching. On a negative note, the EPS forecasts for companies are being revised downward, making it easy to exceed expectations. However, on the other hand, the slight slowdown in performance is concerning and raises long-term worries. As I mentioned, instead of sectors like media, the industries to avoid are automotive parts and software. Bank of America has a similar opinion. They adjusted their annual earnings per share and next year's forecasts. The annual earnings per share for the S&P 500 has been revised down from $250 to $243, a decrease of $7. Negative factors such as interest rate hikes and inventory pressures are still present, so there is a suggestion to diversify into sectors like essential consumer goods, technology, healthcare, and utilities. However, if in the fourth quarter...

If we shift our focus, the sales of the Magnificent Seven, the seven large stocks, are expected to increase by 18 to 20% compared to last year, while the remaining 400 global stocks are anticipated to recover with a growth rate in the 10% range. This narrowing gap between large and small stocks could lead to a virtuous cycle in the market, allowing for renewed momentum. Historically, investment activities tend to resume significantly after presidential elections, which is why sectors such as energy, utilities, and raw materials are being highlighted as areas to watch until the end of the year. For next year, we are forecasting earnings per share to be around $275. As the impact of interest rate cuts becomes more pronounced, we expect to see a recovery in sectors that have been quite sluggish, such as housing and manufacturing. Companies are projected to reduce the burden of interest expenses and improve their performance. Additionally, today, according to U.S. time...

기준으로는 밤에 허리케인 밀턴이 플로리다를 정중앙을 가로지르는 관통하게 됩니다. 4분기 경제 성장에 대한 우려가 나오고 있는데, 언스 영의 그레고리 수석 이코노미스트의 의견을 들어보면 노스 캐롤라이나와 플로리다주 같은 지역들이 지금 타격을 입고 있으며, 실질적으로 미국의 국내 총생산이 0.2에서 0.4% 포인트 하락할 수 있다고 보고 있습니다. 플로리다 지역만 보더라도 3분기와 4분기에 3에서 4% 포인트 정도 성장의 타격을 입을 수 있습니다. 지금 주민들이 이미 대피하고 있으며, 폭풍 피해로 인해 이러한 경제 규모가 상당히 큰 지역도 영향을 받을 것이라고 보고 있습니다. 그리고 재건을 이제 시작해야 하는데, 그 과정에서 정부 지출이 늘어나고 어느 정도 경제 성장을 자극할 수는 있겠지만, 이번 피해 규모가 너무 크기 때문에 단기간 내에 회복하기는 어려울 것입니다.

There are concerns that it will be difficult to do a lot. Additionally, a point to focus on today is that Netanyahu urgently called President Biden, leading to a phone conversation for the first time in months. They spoke starting at 10:30 AM Eastern Time. Currently, Israel is conducting airstrikes against Hezbollah without listening to the U.S., and Defense Minister Gallant unilaterally canceled his plan to visit the U.S. After that, the situation has become quite serious, prompting the U.S. to consolidate its position. There are significant speculations that the U.S. might target Iran's nuclear facilities and at least its energy facilities, including refineries. However, it is still uncertain whether President Biden and his administration will accept this stance. This uncertainty continues to be reflected in the market. Moving on to specific stocks, today’s hot topic is...

Among the major companies, one of them is Google. It seems that Alphabet will eventually be split up. The U.S. Department of Justice is reportedly considering a plan to separate the company into its Chrome and Google Play Android divisions, depending on the court's ruling. Rather than focusing on competitors or new companies, Google will first emphasize its own search services. Using Google products, such as its search engine and expanding artificial intelligence, will likely lead to restrictions on practices that connect products in a way that favors Google. Features like search and location services embedded in Apple iPhones or Samsung Galaxy devices will all become limiting factors, ultimately reducing advertising revenue. In terms of search-related income, Alphabet generated about $48.5 billion in the second quarter alone, and it will inevitably have to cut this revenue, which accounts for nearly half of its total sales.

As concerns grow, today the stock market initially dropped about 2% during the day, but by the end of the session, it had settled in the high 1% range. There is another issue at play; the U.S. courts are expected to provide additional remedies regarding search monopolies and are continuing to apply pressure. Given the unfavorable situation, Google plans to appeal, and its regulatory affairs vice president, Leanne Mulholland, has issued a statement indicating that the U.S. Department of Justice is proposing overly radical measures that lack rationality. She emphasized that this is merely a search contract for one year and that the regulations are excessive, asserting that they will continue to defend their position. However, even if they overcome this, another issue remains. If this happens, Google's business, which operates on the Android OS and app-based services, will be significantly impacted, particularly following the lawsuit that Epic Games filed against Apple in 2020.

As a result of losing a lawsuit against Google, starting next month, November, for the next three years, the release of exclusive apps on Google Play by Alphabet will be restricted. Additionally, in order to protect competition, any acts of providing monetary compensation to the opposing party will be completely prohibited. Furthermore, the practice of pre-installing Google Play on new devices, such as Apple products or Galaxy phones, will also be restricted. The ability to unilaterally force Google payments will be limited, which means that overall revenue is likely to decline. However, according to the founder of Epic Games, all developers and manufacturers can actually expand this ecosystem, which may benefit other software companies.

It seems that profits will return to companies. Tomorrow, Tesla will hold a Robo-Taxi event, which many investors and people involved in related technologies are looking forward to. Based on the current predictions, the vehicle known as the Cybercab, which will be officially named tomorrow, is expected to be unveiled. It is anticipated to have dual-wing doors and seating for two. Instead of actual driving on the road, there will be a demonstration in a studio designed to closely resemble real streets. Elon Musk is expected to make several remarks during this process. There is anticipation for explanations regarding the fully autonomous driving features that will be included in the semi-truck, as well as the announcement of additional production schedules for the limited humanoid robot. These points are viewed as potential catalysts for stock prices, and there are further expectations in the market.

The part we are discussing is about the low-cost, entry-level electric vehicle. This will cover the topic of when the Cybertruck will be produced, but it is expected that information on this will be quite limited for now. More specific information is anticipated from Goming GTF International, which usually provides insights on Apple’s suppliers. Analysts from Tesla's Robotech predict that mass production will begin in the first quarter of 2027, which is later than expected. There is still a considerable amount of time needed before mass production can commence, and they believe that the short-term expectations for the rally seem overly optimistic. Of course, long-term investors might overlook these points, but there are concerns expressed regarding the anticipation of Tesla's events in the short term. Additionally, there are discussions about separate autonomous vehicles or...

It is still uncertain whether Tesla will use existing vehicle owners for its robotaxi business. However, even if they proceed with the robotaxi service, full autonomy is currently in a situation where it has surpassed version 12, going up to version 5 or 6. This will require actual government approval. Therefore, in some states, there are stricter requirements, demanding level 4 autonomy, which must be met. This variable is seen as a major concern for future stock performance.

Looking at other stocks, cruise operators Norwegian Cruise Line and Royal Caribbean Group both saw increases today, rising by 10.9% and 5.26%, respectively. Citigroup has raised its investment ratings for both companies, with Norwegian Cruise Line's rating being upgraded from neutral to buy. They are focusing on cost management while maintaining significant pricing power, leading to increased profitability.

There is a report indicating that an upside surprise is expected in the upcoming earnings season, and it has become more likely that there will be continuous growth of over 6% annually. Additionally, there are issues related to Boeing and Pfizer. Boeing is still facing a strike, and negotiations have ultimately failed to find a consensus. Amidst this situation, the strike by workers is preventing the production of aircraft, which is leading to additional costs for the company. As a result, there is a high risk that the company's credit rating could be downgraded to speculative grade. If this downgrade occurs, Boeing will have to bear an additional interest cost of over $100 million, which is more than a 0.2% point increase. Currently, about 72% of its long-term debt, which amounts to $53 billion, is being set aside as reserves. This situation could make it difficult for the company to recover in the long term, which is why the stock price has dropped by 3.4% today.

Pfizer has been reported exclusively by the Financial Times. CEO Albert Bourla is said to be meeting with a company that has invested over $1 billion in Starboard Value, an activist fund, next week. It is expected that Santanu Narayan, the CEO of Adobe, will also attend the meeting. Following Albert Bourla, Pfizer is expected to move towards a more royal status, but since it has not achieved clear clinical results or commercialized any products, addressing these concerns will be crucial moving forward. The stock price has risen by 3.48%. Tomorrow, the U.S. Consumer Price Index will be released, which is once again gaining importance as a market variable. Additionally, there will be weekly new unemployment claims, a U.S. 3-year bond auction, and several comments from Federal Reserve officials, including Lisa Cook and John Williams from New York.

The chairman is expected to speak again. Also, the earnings season is about to begin, with Progressive, Delta Airlines, and Domino's Pizza being set. The most important event, the Tesla RoboTaxi event, is scheduled for 10 PM Eastern Time, which is 10 AM Korean Time on the 11th. That's all for today. I will come back tomorrow to summarize everything. Thank you.

[오늘장 10분만-10월10일] 테슬라 “로보택시 생산 2027년” | 9월 FOMC, 갈라선 연준 위원들 | 바이든-네타냐후 통화 | 법무부, 구글 해체안에 무게

한경 특파원들이 전하는 잠들지 않는 투자 뉴스

한경 글로벌마켓

뉴욕 증시 상승세와 주요 경제 지표

3대 지수가 모두 상승하며 S&P 500은 0.

38% 하락하며 하락세를 이어갔다.

07%로 상승했으며, 시장은 Federal Reserve의 발언과 10월의 계절적 변동성에 영향을 받아 상승세를 유지하고 있다.

Gradual Approach to Federal Funds Rate Reduction

Lori Logan, President of the Dallas Fed, advocates for a gradual 25 basis points reduction of the federal funds rate, citing strong U.

economic demand and upward inflation risks.

The upcoming service price index release is crucial, with concerns about rising housing service prices.

The Federal Reserve committee members have shown significant disagreement on the extent of policy loosening, leading to a controversial 50 basis points rate cut decision by Chair Jerome Powell.

The market is showing signs of a slowing monetary policy, with increased volatility since August, yet remains optimistic about corporate performance and a year-end rally.

Citigroup highlights sectors like media, energy, semiconductors, and consumer goods for future growth, while Bank of America has revised down S&P 500's annual earnings per share forecast.

The impact of Hurricane Milton is expected to negatively affect economic growth in North Carolina and Florida, with a challenging recovery process ahead.

Netanyahu's urgent call to President Biden marks their first conversation in months, amid Israel's unilateral actions against Hezbollah and speculations of U.

Google's potential split, driven by the U.

Department of Justice, could impact its search services and advertising revenue, leading to a significant cut in income.

The lawsuit from Epic Games against Google will restrict the release of exclusive apps and limit its business operations on the Android OS, potentially benefiting other software companies.

Tesla's Upcoming Robo-Taxi Event and Market Impact

Tesla's Robo-Taxi event is highly anticipated, with the unveiling of the Cybercab and demonstrations of its features.

Elon Musk is expected to provide insights on fully autonomous driving and production schedules for the humanoid robot.

Analysts predict mass production of the low-cost electric vehicle will begin in 2027, raising concerns about short-term stock expectations and the challenges of achieving full autonomy for the robotaxi service.

Upcoming Earnings Season and Company Challenges

An upside surprise is expected in the upcoming earnings season, with continuous growth of over 6% annually becoming more likely.

Boeing is facing a strike and failed negotiations, leading to production delays and a potential credit rating downgrade, while Pfizer's CEO is meeting with an activist fund's representative to address the company's challenges.

Consumer Price Index, weekly unemployment claims, and a 3-year bond auction are upcoming market variables, with the Tesla RoboTaxi event being the most significant highlight.