Stocks gains for third day despite Israel-Palestine conflict

2023-10-11
Summary:

US stocks rose for a third day as expectations of the Fed ending rate hikes outweighed the Israel-Palestine conflict escalation.

Wall Street indexes closed higher on Tuesday, gaining for a third consecutive day as rising expectations that the Fed finished raising rates outweighed the escalation of the Israeli-Palestinian conflict.

The 10-year Treasury yield came off its 16-year peak. Traders put the chance of interest rates remaining unchanged in November and December at around 86% and 73%, respectively, according to CME's FedWatch tool.


If the selling revives and the S&P 500 falls below 4,200, there are few breakout levels where buyers could safely swoop in, said technical analysts. The index has never hit a new low for around a year.

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Nearly $71 billion was poured into cash-like instruments during the week ended last Wednesday, the biggest inflow since July, according to Bank of America. That means investors have lots of money that could be used to buy equities.


The companies in the S&P 500 are expected to notch the fourth straight quarter of profit declines. Big banks will kick off Q3 earnings season this Friday.


Valuations for US technology stocks may be overstretched given the current macroeconomic backdrop and tight financial condition, according to the BOE.


Many popular technology stocks such as Microsoft and Nvidia trade at a sharp premium to the S&P 500. The central bank added “some measures of U.S. equity risk premia remained well within the lower quartile of their historical distribution.”


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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