US Close: Whipsaw Wednesday, Mitch makes a move, ADP beat, Putin to the rescue

Wall Street has become a rollercoaster ride as investors try to navigate through inflationary pressures, debt ceiling drama that everyone knows will eventually be resolved, and as global central banks start to deliver fastening tightening cycles.  It is hard to turn bearish on US stocks as growth exceptionalism in 2022 is widely expected.  Whipsaw Wednesday at one point had US stocks giving back the majority of yesterday’s gains as surging energy prices have spooked traders.  The bond market saw inflationary fears intensify as the energy crisis was worsening, but a Russia to rescue helped thwart off the surge in natural gas prices.

Stocks are paring losses after Senate Majority Leader McConnell floated a short-term debt limit increase through November.  This just kicks the can down the road and likely will lead to further fighting amongst progressive and conservative Democrats.  If Mitch has his way, Biden’s economic plan will get delayed so much that they will have to wait till after mid-term elections.  Democrats won’t let this drag on too much further.  Wall Street still expects Biden’s economic plan to get finalized after it is slashed to something around the $2 trillion level.

Complicating global risk appetite is quicker than expected tightening from central banks.  The energy crisis abroad has forced rate hikes from the RBNZ, National Bank of Poland, and Iceland’s central bank.

ADP

The ADP report was promising and will likely increase expectations for Friday’s nonfarm payroll report.  Private payrolls rose by 568,000 jobs in September, the largest increase in three months, also beating the 430,000-consensus estimate.   Good-producing jobs increased by 102,000 and Service-producing jumped 466,000.

ADP’s Chief Economist Richardson noted, “Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months.”

If the labor market recovery takes off over the next couple of months, investors might price in a quick tapering, which should allow Treasury yields to make a run towards the highs seen at the end of March.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya