The Market's Unexpected Recovery

A month ago, it looked like markets were going to recover most of the ground they had lost during the year.

Apple is set to announce their latest iPhone later today. Can the announcement spark a rally?  ... [+] (Photo by Justin Sullivan/Getty Images)Getty Images
Apple is set to announce their latest iPhone later today, and many are wondering if the announcement will have the same spark as previous releases. Can the new iPhone bring Apple back to the top? We'll have to wait and see.

There are a few key takeaways from this paragraph: 1.

  • As interest rates continue to climb, many Americans are feeling the pinch. With the cost of living rising and wages staying relatively stagnant, many families are struggling to make ends meet.
  • The European Union is facing a natural gas crunch as demand for the fuel increases and supplies dwindle.
  • I'm excited for the new iPhone event! I can't wait to see what Apple has in store for us.

It's amazing how quickly things can change in the market. Just a month ago, it looked like markets were set to make a comeback from their losses earlier in the year. But since peaking in mid-August, the S&P 500 has lost nearly 10% of its value, and the Nasdaq is down around 13%. Both markets are now firmly in bear territory. Although the most recent earnings reports have been better than expected, there are clearly signs that a storm is brewing.

It is remarkable to think that just two short years ago, rates in the European Union were negative. Now, rates are on the rise, with 2 year yields over 3.5% and both 5 and 10 year yields not far behind. The European Central Bank is expected to raise rates by a half a percentage point when they meet tomorrow, and then again when they meet next month. This change in rates is sure to have a ripple effect on the global economy.

The EU Commission is holding a meeting on Friday to address the growing energy concerns in light of Russia’s shutting down of the Nord Stream pipeline. The Putin Administration shut down the vital pipeline responsible for supplying Europe with natural gas. Russia said it will not reopen the pipeline until sanctions imposed as a result of the Ukraine invasion are lifted. The EU Commission is deeply concerned about this development and is working on a plan to ensure that Europe continues to have access to the energy it needs. The Commission is committed to finding a long-term solution that does not rely on Russia for energy supplies.

There's a lot of interest in what the Federal Reserve has to say these days, with markets hanging on every word for clues about the future of interest rate policy. Today, a number of Fed members are speaking, including Barkin and Mester this morning, and Brainard and Barr later on. I don't think we'll hear anything new, but with everyone so focused on the Fed, even the slightest comment can move markets.

I'm very interested to see how the market responds to any price increase that Apple might announce today at their annual event. In past market downturns, Apple has often been the stock that has emerged as a leader, and if they can stage a rally after announcing a price hike, it could be a positive sign for markets.

There are definitely some mixed feelings in the crypto community right now, with bitcoin trading below $19,000. Some people see this as a sign that the market is still struggling to recover from its lows earlier this year, while others see it as an opportunity to buy in at a lower price. Personally, I think that it's important to remember that market sentiment can be very cyclical. Just because things are looking down right now doesn't mean that they will stay that way forever. There's always the chance that the market will bottom out and start to rebound, so it's important to keep an eye on the long-term trend.

It appears that the market is still struggling to find its footing, as futures are trading in the red in premarket trading. After an initial sell-off in the overnight session, there was a brief rally early this morning; however, those gains have been lost as the market has continued to fluctuate. Volatility has also been on the rise, with the VIX moving back up over 27 after falling as low as 19 just a month ago. It remains to be seen whether the market can stage a sustained rally or if this pattern of fluctuation will continue.

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