[US Market Report] September 30 | SOX +1.32% even with 10-year yield at 5.251% — Oil prices fell, but interest rates did not
WTI crude oil plunged to the $89 range. Even so, the US 10-year Treasury yield rose to 5.251%.
Good morning, this is Long-Term Investor @VOO.
Yesterday, we saw the following trend:
Rising oil prices
↓
Inflation concerns
↓
Expectations of additional rate hikes
↓
Rising long-term interest rates
which was the flow we were watching.
However, today, oil prices fell significantly.
Even so, the 10-year yield did not fall.
Moreover, with interest rates in the 5.2% range, the SOX was up +1.32%.
Today, I will consider what the market has begun to price in, starting from this slightly strange combination.
📊 Market Sentiment & Key Indicators
Fear & Greed Index: 32
→ Down from 34 the previous day. Market sentiment is more cautious than the stock price suggests.
Put-Call Ratio: 0.88 (CPC) / 0.860 (PCC)
→ The CPC rose from 0.75 to 0.88. Ahead of the PCE and employment statistics, preparations for a decline have increased slightly.
US 10-Year Treasury Yield: 5.251%
→ Rose further from 5.234% the previous day. The 5% range is becoming more than just a temporary spike.
VIX Index: 16.03
→ Still below 20. While there is caution, it is not a panic.
Dollar Index (DXY): 101.4
→ The dollar remains strong against the backdrop of high interest rates.
USD/JPY: 157.3 yen
→ Almost unchanged from the previous day. Even after the Bank of Japan’s rate hike, high US interest rates are supporting the dollar.
📈 Market Movements
NY Dow was 51,349.92 (-131.59) -0.26%
S&P 500 was 7,670.84 (-12.85) -0.17%
Nasdaq 100 was 30,339.33 (+62.52) +0.21%
Russell 2000 was 2,807.92 (-9.99) -0.35%
Philadelphia Semiconductor Index was 12,629.17 (+163.93) +1.32%
Major indices showed little movement.
However, looking at the details, it is a bit different.
The Dow, S&P 500, and Russell 2000 declined.
On the other hand,
the NASDAQ 100 was +0.21%.
The SOX was +1.32%.
Even though the 10-year yield rose to around 5.25%, buying interest returned to semiconductors.
Yesterday, the SOX fell 1.61% due to rising interest rates.
Today, despite interest rates rising further, it was +1.32%.
Clearly, the current market is not one where
“everything is sold if interest rates rise.”
that is the case.
Investors are still deploying capital while selecting areas where profit growth can be expected, even amidst high interest rates.
That trend appears to be continuing.
📰 Notable News and Factors
🛢 Crude oil at $89—yet long-term interest rates did not fall
WTI crude oil futures fell significantly from the previous day to the $89 range.
The fact that crude oil exports from the Middle East have begun to recover provided relief, causing WTI to drop by over 2%.
This is where I felt a bit conflicted.
Yesterday, I could explain it as
high oil prices → inflation → rising interest rates.
But today, oil prices fell.
However, interest rates did not fall.
Even so, the 10-year yield is at 5.251%.
In other words, the current rise in long-term interest rates is
not just about oil.
That is what it means.
Additional rate hikes by the Fed.
The stickiness of inflation.
Supply and demand for US Treasuries.
And a strong economy.
The market is beginning to look at multiple factors simultaneously.
🏠 Consumer Confidence at 81.9—Lowest level in 12 and a half years
The US Consumer Confidence Index for September was 81.9.
This is a 6.7-point drop from the previous month, marking the lowest level since April 2014. It also significantly missed the market expectation of 89.2.
What households are concerned about are
high prices,
energy costs,
mortgage rates,
and the outlook for employment.
Normally, weak economic indicators would be expected to push long-term interest rates down.
But that did not happen today.
This is where the current difficulty lies.
The economy is showing some signs of weakness. However, vigilance against inflation has not disappeared.
The market is caught between these two factors.
🏦 The Fed is also unable to decide on its ‘next move’
The remarks from Fed officials this week have not been one-sided either.
Fed Governor Barr indicated that further policy adjustments might be necessary to return inflation to 2%.
On the other hand, New York Fed President Williams has expressed the view that there is no need to rush the next rate hike.
It is only natural that the market is confused.
That is precisely why the PCE Price Index to be released today, the 30th, is important.
If the PCE is strong,
additional rate hikes → rise in long-term interest rates
will be back in focus.
Conversely, if the numbers are calm, there is a possibility that the long-term interest rates, which have risen to the 5% range, may see a slight brake.
More than the numbers themselves,
I will be watching how the 10-year yield and the NASDAQ 100 react to those figures.
That is what I will be looking at.
💱 Currency, Interest Rate, and Commodity Trends
WTI Crude Oil Futures: $89.0 range
→ Sharp drop on expectations of recovering exports from the Middle East. However, geopolitical risks have not disappeared.
Gold: $4,206 range
→ Rebounded from the previous day. Geopolitical risks and economic anxiety are providing support.
Bitcoin: $83,626 range
→ Mostly flat. Under high interest rates, moves to actively take on risk are still limited.
💬 Impressions and Summary — Perspective as a Long-term Investor —
Today, the thing I was watching the most was
the 10-year yield at 5.251%
.
However, rather than the numbers themselves,
I am looking at what was sold and what was bought in response to that 5.251%.
That is what I am watching.
Yesterday it was 5.234%,
and the SOX was -1.61%.
Today it is 5.251%,
and the SOX is +1.32%.
Interest rates are actually higher.
Yet the reaction has changed.
As I have written many times recently,
there is no fixed answer in the market that ‘if interest rates are 5%, stocks will fall.’
Is that 5% unexpected?
Has it already been priced in?
Are corporate earnings growing?
And what other factors are emerging?
Even with the same number, the meaning changes depending on the surrounding landscape.
And one more thing to keep in mind today is,
that even though oil prices fell, interest rates did not.
That is it.
It is becoming a bit dangerous to think of the rise in long-term interest rates as solely a problem of the Middle East situation and high oil prices.
Tomorrow is PCE.
Next is the employment report.
Will the 5.25% interest rate head even higher?
Or will it stop around here?
And above all,
will money continue to flow into AI and semiconductors even at the 5.2% level?
That is what I will be watching.
The more difficult the market becomes, the less I try to guess the answer every single day.
Today, I will continue my regular investments into the S&P 500 and NASDAQ 100 as usual.
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