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Today in the Market (9/29/2022)

Good Evening. U.S. equities plummeted on Thursday, with Apple leading the decline, as renewed recession fears pervaded Wall Street and erased gains from the previous session’s brief relief rally.

The S&P 500 fell 2.11% to a new low for 2022, while the Dow Jones lost 1.54%. The Nasdaq Composite declined by 2.84%.


CarMax (KMX) shares fell 24.60% to $65.16, a more than two-year low after the business released second-quarter earnings that fell short of analyst expectations. In addition, the uncertain economic climate was beginning to weigh on vehicle demand, sending ripples across the auto industry, which has mostly avoided a substantial inflationary impact this year.

Strong demand for personal transportation in the face of inventory constraints has enabled automakers and retailers to pass on increased costs to customers, protecting their profitability for the year in large part.

Analysts have cautioned, however, that the industry will soon feel the effects of rising interest rates and a decline in consumer confidence, as inventory shortages push auto prices to all-time highs.

Cox Automotive, which monitors U.S. vehicle market trends, lowered its projection for new and used car sales on Wednesday, blaming deteriorating consumer sentiment. Earlier in the day, Moody’s altered its assessment of the global Automotive industry to “negative” from “stable”.

Zoom out… The auto sector, which has been reeling from a larger market selloff, was dealt another blow by CarMax’s gloomy comments and poor earnings.


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Pension funds and other institutional investors examine their market exposures at the end of each quarter and month to ensure that they adhere to stringent allocation limitations between equities and bonds, as well as between domestic and overseas companies. Even during a worldwide sell-off, US stocks outperformed many other asset classes, requiring portfolio managers to reduce their holdings.

According to a model from Credit Suisse Group AG, pension funds could be done selling approximately $26 billion in equities by the end of September due to this relative outperformance. Also, The bank warns that the timing of trades may be significantly affected by market mood and regularly planned cash flows, among other factors.

Those who had thought that purchasing from this former source of assistance would provide a boost this time around would be disappointed. JPMorgan Chase & Co. estimates that the rebalancing of the world’s largest money managers has revitalized equities over the past two quarters by injecting $250 billion into stocks in June and $230 billion in March.

Looking forward… Expect the historically stabilizing effect of target-date funds (TDFs) to not result in the typical “miraculous quarter-end stock market rallies,” according to StoneX Financial Inc. macro strategist Vincent Deluard

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