The DC Today - Wednesday October 26, 2022
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 26 October 2022
⏱️ 14 minutes
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Summary
Today was a mixed bag, where we continue to see varying results from the Dow and the Nasdaq. Some market pundits have dubbed this as value vs. growth or categorized these baskets of equities as a difference in “duration.”
Regardless of how you describe it, we saw some downward pressure resulting from less-than-favorable earnings reports on a handful of large tech companies, and some continued positive momentum from the sectors leading the market on the year (Energy, Healthcare, Consumer Staples, etc.).
Market Action
Dow: +2.37 (0.01%) S&P: -0.74% Nasdaq: -2.04% 10-Year Treasury Yield: 4.01% (-9 basis points) Top-performing sector: Energy (+1.36%) Bottom-performing sector: Communication Services (-4.75%) WTI Crude Oil: $88.12/barrel (+3.26%) Key Economic Points of the Day:
The trade deficit widened in September by 5.7% (from $87.3 billion to $92.2 billion) There is a lot you could potentially dissect here, but the simplest explanation is that a strong dollar means buyers (exports) can buy less of our goods, and US purchasers (imports) can buy more goods, which expands the deficit – falling exports, rising imports. New home sales fell month over month (from 677,000 to 603,000), but we were still slightly above the average estimates of 593,000 For perspective here, new home sales peaked in August 2020 at 1.04 million Although the number of homes sold declined, the average sale price did rise from $436,800 to $470,600 (slightly below the record high of $479,800)
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:15.8 | Hello and welcome to D.C. today. I got invited back here filling in for David Bonson as he is speaking in Florida. |
| 0:23.8 | Last couple days, you guys had Brian Zitel yesterday. You have David Bonson back tomorrow. |
| 0:28.4 | Today was an interesting day in markets. We got more of kind of the theme we've seen all year, |
| 0:33.2 | where it's this high dispersion. Some people describe that dispersion of value versus growth. |
| 0:38.7 | Other people talk in terms of duration. But what you saw was a big difference between the Dow Jones and the NASDAQ. |
| 0:45.6 | Dow Jones was basically flat on the day. I think it was up two points, which was maybe 0.01%. |
| 0:51.3 | S&P was down 0.74%. And the NASDAQ was down 2.04%. That's the dispersion I'm |
| 0:59.2 | talking about. You have a Dow flat. You have a NASDAQ down 2%. The next good question to ask would be, |
| 1:04.8 | where does that attribution come from? It's actually a really easy answer. You had a couple very large |
| 1:10.5 | technology companies report after close yesterday, and the earnings were underwhelming. |
| 1:16.3 | So you saw a huge retreat in some very high capitalization tech companies. |
| 1:22.3 | What I mean by high capitalization is that if you were to look at an index of something like the S&P 500 or even the NASDAQ |
| 1:28.9 | as we're referencing today, and you look at the top 10 holdings, these high capitalization |
| 1:33.6 | companies make up a huge percentage of the index. So when you have movement there, it has a big |
| 1:40.5 | impact on what the bottom line or end result is. That's why when you look at kind of bisector performance, you saw energy had a huge up day, |
| 1:50.0 | where energy was up 1.36%. |
| 1:52.3 | And obviously, there's not really any energy exposure in the NASDAQ. |
| 1:56.8 | You have something like communication services. |
| 1:58.9 | Again, a newer sector that they created to grab some of the social media companies, search engine companies. |
| 2:05.1 | That was down 4.75% on the day. |
| 2:08.9 | That's a wild difference when you have a sector up nearly one and a half percent. |
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