Small Signs Of Growth In The U.S. Service Sector Could Help Supply Lines
- Stocks Live Up to Their Roller Coaster Reputation
- Is the Service Sector Ready to Take Flight?
- Transportation Stocks Struggle to Get on the Road Again
Wall Street appears to be living up to its roller coaster reputation as stock futures point to a lower open after yesterday’s rally. Inflation continues to be a concern for investors. European markets were shaken by European natural gas prices which exploded 13% overnight. The rising prices helped to prompt selloffs in the German DAX (DAX:DBI) and the London FTSE (FTSEMIB:FTSE).
ADP Non-farm Employment was better than expected but is unlikely to change analysts’ projections for Friday’s Employment Situation report. However, the positive news helped trimmed some of the losses in the futures markets before the open. The travel and leisure sectors were among the biggest gainers for jobs.
The employment news is another positive sign for the service sector. Yesterday, the ISM Non-Manufacturing PMI report reported a better-than-expected uptick. The economy saw increased attention from consumers in the service sector. A focus from services over products should be a much-needed aid to supply lines that are struggling with bottlenecks and stoppages.
Stocks rallied on Tuesday, recovering most of Monday’s losses. The Nasdaq Composite ($COMP) dropped about 2% before closing 1.25% higher. The index failed to break Monday’s high, which some investors see as a potential signal that the selling isn’t done yet. Tech stocks were able to rally despite the rise in the 10-year Treasury Yield (TNX). However, financial stocks won the day as the Financial Select Sector Index ($IXM) rose more than 1.7% on the rising tide of yields.
Despite the congressional hearing around Facebook
Rising yields were driven in part by rising oil prices. Crude oil (/CL) rose another 1.88% on Tuesday, creating a new 52-week high. With so much attention on oil prices, Wednesday’s crude oil inventories report could draw some attention.
Rising oil and gas prices are infecting food prices. The China energy crisis is making the autumn harvest more difficult. Bloomberg reports that Beijing is scrambling to secure energy supplies to help meet electricity shortages. Corn, soy, peanuts, and cotton are at risk if the harvest falls short of production goals.
Airlines See More Turbulence
Rising oil prices is one of the higher input costs cited by Goldman Sachs
Adobe Analytics found that flight bookings fell 24% from July to August and Thanksgiving flights were down 18% compared to 2019. However, two weeks ago, U.S. travel authorities said it would be lifting its international travel ban in November. German airline Lufthansa (DLAKY) reported that, and within a week, it saw a spike in bookings.
Delta Air Lines
Final Destinations: Once you’ve flown to your location, now what? Briefing.com reported that many travel and leisure companies are struggling with labor shortages. MGM
In fact, some resorts have increased their forecasts. Caesars Entertainment
Other resorts are counting on a need for increased company meetings because of a dispersed workforce. Apollo Global Management
From the Beverage Cart: Beer and wine maker Constellation Brands
The S&P Food and Beverage Select Industry Index ($SPSIFB) is down 7% from its June highs but has remained relatively stable throughout the previous market pullback. Many of these stocks are known for their stability and relatively high dividend yields, which is what can make them appealing to investors in bearish times.
Hitting the Road: If you’re one that prefers the cupholder in your car, you’re used to seeing the big semitrucks on the highways. The cramped supply chains have increased the need for the big rigs but they’re having supply chain problems too. PACCAR
The Dow Jones Transportation Average ($DJT) has seen its growth stymied and has fallen more than 9% since its May peak. However, the problem isn’t from lack of demand but the inability to meet it. High demand for the Transportation sector services could mean this group could be back on the road again.
TD Ameritrade® commentary for educational purposes only. Member SIPC.