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Markets: U.S. dollar, bitcoin picked up in Q3 as oil slipped

Yahoo Finance Live anchors discuss third-quarter market performance.

Video transcript


JULIE HYMAN: Welcome back. We are awaiting the first opening bell of the fourth quarter. As we do that, let's take a quick look at how the markets did during the third. Not fantastic. All three major averages saw losses in Q3.

The Dow led those losses with a drop of 6.7%. And of course, it took through its new lows, so did the S&P 500. The NASDAQ fell just over 4%. It wasn't the worst quarter of the year, by the way, but nonetheless, it felt kind of rocky because there was an attempt at a rally that then, of course, failed.

And looking at some of the other assets, I was looking at the dollar index, which we've talked so much about. It was up 7% over the course of the quarter, as we've continued to see dollar strength. Bitcoin was actually up on the quarter, 3.7%. Crude oil was down by nearly 25%. And we also saw energy, well, energy shares were still up on the quarter, interestingly enough, even with that drop in oil.

BRIAN SOZZI: It's quite interesting. A lot of folks in the market, I would argue, haven't seen the Fed go on this type of rate hiking cycle campaign and as long as they've been in the market. So I think you've seen a lot of next generation traders, next generation investors be surprised by how fast the Fed is moving, and then what type of volatility that causes in the markets. And they're, I would say, playing the reactionary card.

- If we can leave that chart up there on the screen for hot second. One of the particular areas of the market that I've been keeping close tabs on is technology, particularly. And in that move higher that we had been watching from about the end of June, early July, to begin the third quarter into mid-august, 19% move higher for tech. So clearly, there was some biting there.

But it's the concerted action that took place afterwards, a downward move by about 21% in XLK, particularly tracking the technology sector there. And it really goes to show, especially as you were talking about crypto a moment ago, it kind of brought back to mind the fact that we had seen so much of this correlation in the crypto price movement and the tech movement. But in tech, there's kind of this reassertion of, or at least re-invigoration of conversation around, what actually is high growth internet right now? Because that's really the basis for so much of the investment, so much of the fanfare that had taken place in previous bull markets as well and really initiated by tech. So if there's any kind of move higher that we track from this point, it's going to be really interesting to track to see where the tech sector more broadly and investors start to try and get ahead of the trade there.

BRIAN SOZZI: Yeah, I joked a little bit in the morning newsletter, The Morning Brief this morning that you're probably hear talk of a Santa Claus rally. It's coming. These things happen. It happens every year in the fourth quarter, but I have to push back.

What would justify the Santa Claus rally? What, stocks are oversold, like Matt Miskin just said? So what? So what?

JULIE HYMAN: The only thing that would justify a rally to me that you could see coming at this point is more focus on a Fed pivot at some point. Whether the Fed is actually pivoting, maybe. Because as we've been talking about, if you look at what's coming for earnings, people are bracing themselves.

BRIAN SOZZI: I don't want to look.

JULIE HYMAN: I mean, unless you could argue that the expectations are so bad already that it won't be as bad. But there are other strategists who say, the expectations are bad enough. So I think there's a lot of bracing going on right now for this fourth quarter.

- Exactly. And so with the Fed pivot narrative being wrong earlier in the third quarter, we've already seen some of that pivoting in the language that banks are using right now to say, you know what? We have a little bit more confidence that there will be a soft landing and perhaps that's the change in the verbiage that we hear used at least to show some type of [INAUDIBLE].

BRIAN SOZZI: Brad, I'm jealous of your white cup. I got the purple one every day, but I really like that cup. It's nice.

- Randall gave me this cup.

BRIAN SOZZI: I got to shout you out. That's really cool.

JULIE HYMAN: It's because he's got the sports.