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Stock Markets: Long-term prospects are uncertain

People walk outside the New York Stock Exchange (NYSE) in the Financial District of Manhattan on June 14, 2022 in New York City.

Spencer Pratt | Getty Images News | Getty Images

This report comes from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see?You can subscribe here.

What you need to know today

mild suspended sentence
U.S. stocks recovered some losses on Thursday. All major stock indexes were higher but still on track for a loss-making month. Asia-Pacific markets mostly followed Wall Street higher on Friday.Hong Kong’s Hang Seng Index Led by consumer cyclical stocks and real estate stocks, the stock market rose about 2.8%.However, Japan’s Nikkei 225 Index News that Tokyo’s inflation rate rose 2.8% in September, the lowest level in a year, caused the index to fall 0.34%.

Deliver Alpha
CNBC’s annual Investor Summit Delivering Alpha just concluded. Some highlights: Bill Ackman, head of Pershing Square Capital Management, thinks 10-year U.S. Treasury yields could be closer to 5%; BlackRock fixed income chief Rick · Rick Rieder said the Fed will raise interest rates – even though he disagrees; TCW Group CEO Katie Koch predicted the U.S. economy is about to fall into recession.

September downturn
China’s Beige Book survey released on Friday showed that China’s retail spending, real estate prices and loan growth were all weaker in September than the previous month. Analysts expect China’s economic outlook to become clearer in the final quarter of the year, especially as China’s ruling party convenes the Third Plenary Session of the Central Committee of the Communist Party of China in the coming weeks – a meeting that usually focuses on the economy.

Large population but small labor force
Although India has a population of 1.428 billion, it has surpassed China
Dear People of the United NationsThe country’s labor force accounts for only 51%, lagging behind China’s 75%. Oxford Economics says this disparity will persist until the late 2040s. This could prove to be an obstacle to India’s economic growth ambitions.

(PRO) Simple Bond Trading
Market watchers expect global interest rates to fall over the next 12 months – either because inflation has been contained or a recession is looming. When that happens, investment analysts say, this simple bond trade can give you a 40% return.

bottom line

Yesterday, some positive developments boosted investor sentiment. But the long-term outlook remains unclear.

U.S. Treasury yields edged lower. The 10-year Treasury yield is at 4.589%, still the highest level in decades but actually down about 5 basis points from Wednesday. This is the direction traders are paying close attention to.

Likewise, a pullback in oil prices has provided a slight respite to investors and the broader economy. U.S. West Texas Intermediate crude oil futures fell 2.1% to close at $91.71, and Brent crude oil futures fell 1.21% to close at $95.38.

Any relief from stress, no matter how small, gives stocks confidence to rise.this Dow Jones Industrial Average It rose 0.35%, the first increase in three years.this S&P 500 Index It rose 0.59% to hit 4.299.80, just one step away from the crucial 4,300 point.this Nasdaq Index Shares rose 0.83%, driven by a rebound in technology stocks AMDEspecially after Microsoft’s chief technology officer praised the chip manufacturer, the company’s stock price soared nearly 5%.

However, investors are less certain about the long-term outlook. The latest survey from the American Association of Individual Investors, which measures retail investor sentiment for stocks over the next six months, saw overall bearish sentiment climb to 40.9% from 34.6% last week. This is the highest level since mid-May and exceeds the historical average of 31%.

Prominent analysts and fund managers echoed the same pessimism at CNBC’s Delivering Alpha conference. The summit focused on warnings of an impending recession, the 10-year Treasury yield approaching 5% and another rate hike by the Federal Reserve.

Of course, these are just warnings, not hard-and-fast courses of action. For example, if the personal consumption expenditures price index due out later today convinces the Fed that inflation is sufficiently contained, rates could remain on hold for the rest of the year and give stocks more breathing room. But at least the current sentiment is that things will get worse before they get better.

—CNBC’s Scott Schnipper contributed to this report

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