US Open: Indices trim early gains as risk aversion returns on Wall Street 📉

• Wall Street indexes try to gain after opening but risk aversion drives sentiments lower again and sellers return
• More than 3% rise in silver contracts spurs silver mining stocks - Hecla Mining (HL.US) gains 13,5%
• Strong results from JP Morgan (JPM.US), Wells Fargo (WFC.US) and Citigroup (C.US) lift bank stock prices
• US30 0.4% vs. close to 0.9% after the session opened and falls below 34,000 points again.
• VIX futures trade near 6% gains, suggesting risk aversion ahead of the weekend

We can see a risk aversion sentiments on Wall Street and sellers stopped US30 rally above 34,000 points. However we can see much better sentiment on bank stocks (where reports from the three largest lenders in the U.S) and the sector of mining companies, especially from the oil and silver markets - major companies shares are under pressure again. Philadelphia Fed chief Patrick Harker indicated today that the disinflationary trend will continue, the unemployment rate is likely to rise above 4% and the Fed may end the cycle at current levels although rates will remain higher for longer and it is unclear when they will be cut.

Markets saw the commentary as an addendum to the previous several statements by Fed officials but not enough to improve sentiment on Friday. Echoes of the conflict in the Middle East, where a ground military operation by Israel is not ruled out - the market fears an escalation and other Arab states joining the war. Wall Street tried to reverse yesterday's downward momentum, which was temporarily helped by falling yields, but supply is 'back in play' - the US30 is trading up 0.4%, the US100 is losing 0.3% and US500 contracts have erased most of the gains and are trading just 0.14% higher. Potentially increases of oil prices due to 'war shocks' is still risk factor for stocks and oil rises more than 3% today. 

Major S&P 500 companies trading with the highest volatility. Source: xStation5

Looking at the chart of the US30, we can see that the RSI indicator has risen very rapidly to levels signaling overbought, but it is important to note that the declines have again been stopped slightly below the SMA200 average (red line) - demand has defended the momentum and now contracts are licking up to the highest levels since the end of September. Source: xStation5Currently, the market gives only a 10% chance of a 25bp rate hike in November. Source: CME

News from companies

• BlackRock (BLK) is recovering from declines caused by lower-than-forecast AUM and outflows from its equity market funds. At the same time, however, the fund reported much higher-than-forecast earnings per share and higher revenues, and now the bulls are trying to reverse the downward reaction
• Boeing (BA.US) and Spirit AeroSystems (SPR.US) - shares are falling as an Air Current report indicated that the companies expanded their inspections of the rear pressure bulkhead structure of the 737 Max 8 aircraft this week, citing two unidentified people familiar with the matter
• Dollar General (DG.US) shares are gaining as the retail company announced that its former CEO Todd Vasos, whom the company (and the stock market) remembered fondly, is returning to the post. Analysts also hailed the fact of his return as a big plus but the reaction may be short-lived looking at the challenges the company faces
• Shares of Smart Global (SGH.US) are losing 40% as the semiconductor maker reported significantly lower earnings forecasts for the third quarter. According to analysts, the lower forecasts indicate that the company will likely suspend its operations in Brazil
• Western Digital (WDC.US) shares are reducing initial gains due to news from Kyodo news agency, which indicated that the company and Kioxia have reached a merger agreement, an anonymous source was quoted as saying.
• United Health's (UNH.US) results beat analysts' forecasts. Medical costs came in lower than expected. Jefferies indicated that cost declines should accelerate in the current quarter. Earnings per share came in at $6.56, up 13.3% year-on-year, while revenue rose 14.2% to $92.36 billion versus FactSet's $91.4 billion estimate.  The company raised its full-year 2023 EPS guidance to a range of $24.85-25 from $24.70-25. Analysts' consensus EPS was $24.83, according to FactSet.
• Hecla Mining (HL.US) gains 13% after Roth MKM raised its recommendation from neutral to 'buy' and silver futures prices rose more than 3% 

Chart of Hecla Mining (HL.US). Shares are bouncing dynamically from the $3.7, which previously also turned out to be the 2022 oversold low (two times) - the stock is currently gaining 13.5% and the price is approaching the SMA50 (orange line), the overcoming of which may open the way for the bulls even to levels above $5 per share (SMA200, red line). Source: xStation5