Market Wraps
Watch For:
Existing Home sales for July; Earnings from Lowe’s, Dicks Sporting Goods, Baidu, Medtronics, Macy’s, Toll Brothers
Today’s Top Headlines/Must Reads:
– Is Nvidia the New Tesla? Options Traders Place Their Bets
– How Hard Should the Fed Squeeze to Reach 2% Inflation?
– New U.S. Buyback Tax Hits Companies With $3.5 Billion Burden
Opening Call:
Stock futures climbed on Tuesday as Treasury yields dipped from near 16-year highs.
With 10-year Treasury yields seeming to have topped out – for now – stocks rebounded from Monday’s lows, and futures indicate they are looking to continue that rally as yields eased.
Meanwhile, investors looked to Nvidia’s results due Wednesday.
“Nvidia had better meet its $11bn sales forecast for last quarter, otherwise, there is a chance that we will see a sizeable downside correction,” Swissquote Bank said.
Traders also have one eye on a likely catalyst later in the week when Jerome Powell is expected to give a speech at the Jackson Hole symposium.
Powell’s words will “likely to be the next acid test for markets, with particular scrutiny likely to land on any outlook comments. The battle against inflation, as evidenced by the recent consumer prices index, is not yet over, with the level still above the Fed’s 2% target,” Interactive investor said.
Overseas stocks gained, as tech led Europe’s Stoxx 600 higher. In Asia, the Nikkei 225 and the Hang Seng Index both gained slightly less than 1%.
Pre-Market Movers
Coinbase said late Monday that it took a stake in stablecoin company Circle. The companies co-founded the USD Coin in 2018. Shares of Coinbase traded up 1.7%.
Microsoft submitted a new proposal for acquiring videogame maker Activision Blizzard to the U.K.’s competition authority.
Shares of Microsoft and Activision rose 0.5% and 1.5%, respectively. Ubisoft stock gained more than 6% in Paris.
Tesla looked set to build on Monday’s 7.3% surge, adding another 3.6% in premarket trading.
Zoom Video Communications rose 3.9% after the company’s adjusted second-quarter earnings and revenue beat analysts’ expectations.
Monday’s Post-Close Movers
Dragonfly Energy posted lower sales in the second quarter. Shares dropped 18%.
Emergent Biosolutions said it would be removed from the S&P SmallCap 600 index. Shares fell 5%.
Fabrinet issued a fiscal first-quarter forecast that was better than expectations. The stock rose 18%.
Tingo Group postponed its second-quarter earnings filing. Shares fell 24%.
ZW Data Action Technologies posted a sharp increase in revenue in the latest quarter, driven by its main stream service revenues and ad consumption shifts from clients shifting to its search engine marketing service from its ad portal placement service. Shares rose 8.4%.
Forex:
The summit of BRICS countries this week could cause the dollar to fall, DZ Bank Research said.
“The question here will inevitably be whether and how countries can bid farewell to their heavy dependence on the overpowering dollar,” it said.
“The discussion alone could weigh on the dollar in the coming days-at least until all eyes are on Jackson Hole.”
Bonds:
The 10-year Treasury yield may extend its strong uptrend after breaking above last year’s high of 4.338% on Monday to reach 4.354%, its highest level since November 2007, UOB said.
Upward momentum is very strong, as indicated by the daily average directional index, which is surging higher, and 10-year yield could rise further to 4.45% and possibly 4.50% later, UOB added.
To sustain a strong uptrend, 10-year yield should ideally remain above the 21-day exponential moving average, which is now at 4.134%, it said.
Energy:
Oil prices edged lower as supply concerns were eased by hopes for a resumption of Iraqi oil exports from a Turkish export terminal.
Around 450,000 barrels a day of Iraqi oil could return to energy markets if the flows resume. A legal dispute between Baghdad, Ankara and the autonomous Kurdish region of Iraq halted the flows in March.
“Crude oil struggled to keep its head above water on signs of supply tightness easing,” ANZ said.
Metals:
Metal prices rose, with a slightly less bearish macroeconomic outlook briefly taking the pressure off industrial goods.
“The macro mood is less bearish ahead of a quiet period for data and central bank decisions,” Peak Trading Research said.
Inflation expectations have recovered while the dollar has lost some momentum, Peak added.
“Interest rates are still creeping higher, but the macro mood has improved and investors seem content to wait for more significant macro catalysts in September.”
Today’s Top Headlines
SoftBank Chip Unit Arm Files for an IPO Likely to Be 2023’s Biggest
Arm Ltd., the British company whose circuit designs lie inside billions of electronic devices, said profit fell by more than 50% in the most recent quarter in filings that kicked off what is expected to be the biggest initial public offering of the year.
Arm raised lofty expectations for its business overall but faces near-term market challenges. Sales of smartphones-a core market for Arm’s circuit designs-have slowed in recent quarters, including a 7.8% decline in the second quarter, according to International Data Corporation. The company reported $675 million of revenue in its latest quarter, ended in June, down from $692 million the year prior. It reported that net income more than halved to $105 million in the quarter.
Woodside Energy CEO Upbeat About Resolving Labor Dispute
SYDNEY-Woodside Energy is making good progress toward resolving a labor dispute in Australia that has jolted natural gas markets worldwide, Chief Executive Meg O’Neill said in an interview.
More negotiations between Woodside and workers at three offshore platforms that feed the North West Shelf liquefied natural gas facility in Western Australia are due to take place on Wednesday in an effort to reach agreement on issues around pay and conditions, O’Neill said on Tuesday.
Deal to Double China Flights Signals U.S. Airlines’ Stronger Hand
SINGAPORE-The U.S.’s decision to double the number of direct flights it allows from China casts a rare glimmer of light on an otherwise gloomy relationship. It also underscores how far the two sides must go before their bilateral links return to prepandemic levels.
There are far fewer direct flights between the two countries than four years ago, before Beijing imposed strict border controls to reduce the spread of Covid-19. Other countries-including America’s closest allies-have been quick to restore flights to and from China after Beijing ended the restrictions in January, but U.S. carriers appear to be in no great rush to see Washington do the same.
Startups Hunker Down in Europe as Funding Shrivels
Daan Weddepohl raised just a third of the amount of venture capital that he hoped for to fund the U.S. expansion of his Dutch startup.
“It took a lot more work, a lot more time, was a lot more painful, and I had to go to a lot more conferences to meet people,” Weddepohl said of his fundraising efforts for Peerby, which lets people in the Netherlands and Belgium borrow and rent things from others in their neighborhood.
U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn
U.S. stocks might find some relief this week, analysts say, but that doesn’t mean this late-summer selloff is over.
Rather, any bounce will likely be a reprieve before the S&P 500 SPX continues its slide toward 4,200, the next major support level for the index, technical analysts said.
As Ukraine’s Counteroffensive Grinds On, Russia Seeks to Advance in the North
KYIV-Russia is on the attack in northeastern Ukraine as it seeks to take back territory that Kyiv recaptured last fall and to divert Ukrainian forces from their counteroffensive in the south and east.
The main fighting is taking place around the village of Synkivka, just 16 miles from the Russian border, where Russia is trying to traverse Ukrainian minefields and advance on the city of Kupyansk to the south.
Afghans Who Allied With U.S. Face Killings, Arrests Under Taliban Rule, U.N. Finds
Hundreds of soldiers, police and other officials from the former U.S.-backed government in Afghanistan have been subjected to extrajudicial executions, torture, disappearances or arbitrary arrests since the Taliban took over the country, according to the United Nations.
In the two years of Taliban rule, a U.N. investigation found evidence of 800 such serious human-rights violations against ex-army and police personnel, as well as other former officials of the administration they ousted.
Tucker Carlson’s Trump Interview Showcases Potential of Tie-Up With Elon Musk’s X
Tucker Carlson’s interview with Donald Trump is shaping up as a well-timed branding exercise for the new company the former Fox News host is launching.
Carlson taped an interview with Trump several days ago and plans to stream it on X, formerly known as Twitter, without ads, people familiar with the situation said. Its release is expected to coincide with Wednesday’s first Republican presidential debate on Fox News.
Source: Dow Jones Newswires