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Today in the Market (10/10/2022)

Good Evening. As Wall Street navigated into third-quarter earnings season and braced for a slew of inflation reports, U.S. equities extended a downtrend on Monday and began the week lower.

The Nasdaq Composite led falls, falling 1.04% to a two-year bottom, as a set of new limits imposed by the Biden administration on China’s access to American technology sent chip stocks tumbling and weighed on the broader technology sector. The S&P 500 decreased by 0.75%, while the Dow Jones declined by 0.32%.

RECALL

Rivian (RIVN) shares were down today after the electric adventure truck manufacturer announced it will recall all of its vehicles due to a safety problem.

The recall concerns around 13,000 automobiles delivered to consumers by Rivian. A nut that connects the front suspension arms to the steering knuckle assembly may not have been torqued securely enough, which could result in its failure.

Rivian states that it is recalling nearly all customer-delivered cars “out of an abundance of caution,” despite the fact that the problem was detected in only seven trucks. Rivian stated that it is unaware of any injuries associated with the issue.

How long would it take to get your vehicle back? In an email to clients, CEO RJ Scaringe stated that the majority of them would be able to fix their trucks in a matter of minutes by tightening the nut, but a few would require replacement parts.

THE DOLLAR STRENGTH IS HURTING COMPANIES

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One veteran currency strategist (Joseph Lewis, head of corporate hedging and FX solutions at Jefferies) warns that the full impact of the strong U.S. dollar on the top and bottom lines of significant corporations such as Nike (NKE) and FedEx (FDX) in the third quarter will likely not be seen for some time.

Why is that? The dollar’s strength has a negative impact on the sales and earnings of multinational firms that conduct business in numerous nations. The reverse occurs when the dollar is weak.

This strength is becoming a big pain issue for firms (and markets) when it comes to communicating with investors and delivering genuine financial results.

Last week, food manufacturers Conagra Brands (CAG) and McCormick (MKC) warned of a possible financial impact from the dollar’s surge. And analysts anticipate hearing the pessimistic currency sentiment everywhere as earnings season begins.

THE WEEK AHEAD

Inflation data is incoming: Thursday’s release of the consumer price index will reveal the extent of September’s inflationary damage. Inflation was higher than anticipated last month, leading to a market collapse. This time, economists predict a decrease in the “core CPI,” which excludes food and fuel prices.

Earnings season has returned: The release of third-quarter earnings reports by corporations, beginning with PepsiCo on Wednesday, could inject additional volatility into an already volatile stock market. These reports will illustrate how businesses adjust to the Fed’s interest rate increases.

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