Market Update – September 16, 2022

Another Week of Declines

Stock index futures point to another decline this morning. This is hot on the heels of a tough past four sessions, with the market set to record its fourth down week out of the last five.

The benchmark S&P 500 (SP500) is 4% lower going into the last trading day of the week, while the Nasdaq (COMP.IND) and Dow (DJI) are off 4.6% and 3.7%, respectively.

It’s also quadruple witching day. This name refers to the simultaneous expiration of market index futures, stock futures, market index options and stock options. The event can lead to higher volatility, which is not the greatest recipe in the current environment.

FedEx Signals Continued Weakness

FedEx (FDX) sounded the alarm on macro weakness and withdrew its full-year guidance. CEO Raj Subramaniam said he expects the economy to enter a worldwide recession, and would have to implement cost-cutting initiatives (closing 90 offices and five corporate locations, freezing hiring, reducing flights, etc.) to deal with softer global shipment volumes. FDX shares tumbled nearly 20% in response, and the sentiment was seen elsewhere, with the company serving as a barometer for “everybody else’s business.”

“The [Federal Reserve] might have a hard choice to make,” noted Anastasia Amoroso, Chief Investment Strategist at iCapital. “Before they were saying, we’re going to try to have a soft landing and bring down inflation. Now they may have to make a choice. It’s either a soft landing or bringing down inflation. In other words, they may have to engineer more of a crackdown on economic growth to bring down inflation.”

S&P 500 Levels See Support

The Bulls defended the important S&P support level of 3,900 again on Thursday, but a close below that level today could open the gates for further drawdowns.

Consumer Sentiment

The University of Michigan is set to release its preliminary measure of September consumer sentiment at 10:00 a.m. ET, which could shift direction shortly after the start of trading. Economists expect the index to rise to 59.7 from 58, and inflation expectations will be watched to see if they drop from 4.8%.