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Tag: COMP

  • S&P 500 snaps three-day win streak as U.S. stocks close lower

    S&P 500 snaps three-day win streak as U.S. stocks close lower

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    U.S. stocks finished modestly lower Wednesday, with the S&P 500 snapping three straight trading days of gains, as investors weighed minutes from the Federal Reserve’s June meeting and signs of slowing growth in China. The S&P 500 SPX closed 0.2% lower, while the Dow Jones Industrial Average DJIA fell 0.4% and the Nasdaq Composite COMP slipped 0.2%, according to preliminary data from FactSet. Minutes from the Federal Reserve’s minutes June policy meeting, released on Wednesday, showed some support from Fed officials for an interest rate hike last month although the central bank decided to hold its benchmark rate steady….

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  • EV stocks get a broad boost after Tesla, Rivian, Nio report upbeat deliveries data

    EV stocks get a broad boost after Tesla, Rivian, Nio report upbeat deliveries data

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    Shares of electric vehicle makers got a broad boost Monday, after upbeat delivery and production data from a host of companies, including industry leader Tesla Inc. and those based in China.

    The Global X Autonomous and Electric Vehicles exchange-traded fund
    DRIV,
    +1.08%
    jumped as much as 1.7% intraday, before paring gains to close up 1.1%. It has climbed 5.7% amid a five-day win streak. The ETF outperformed the broader stock market by a wide margin, as the S&P 500 index
    SPX,
    +0.12%
    inched up 0.1% and the Nasdaq Composite
    COMP,
    +0.21%
    edged up 0.2%.

    The ETF’s most-active component was Tesla’s stock
    TSLA,
    +6.90%    ,
    which climbed 6.9% to $279.82, the highest close since Sept. 28, 2022. It has run up 16.1% amid a five-day win streak.

    The rally comes after Tesla revealed over the weekend a blowout deliveries report, in which the EV leader said it delivered a record 466,000 vehicles in the most recent quarter, well above expectations of 449,000.

    The ETF’s second-most active member was Rivian Automotive Inc.’s stock
    RIVN,
    +17.41%    ,
    which shot up 17.4% to its highest close since Feb. 17, and rocketed 45.4% amid a five-day win streak.

    The company reported second-quarter EV production that was more than triple that of a year ago, and deliveries that nearly tripled.

    Nio Inc.’s U.S.-listed stock
    NIO,
    +3.51%
    rallied 3.5% to $10.03, the first close above the $10 mark since March 31, after the Shanghai-based EV maker reported June deliveries that jumped 74% from May, but were down 17.4% from a year ago.

    Among its China-based peers, the U.S.-listed shares of Xpeng Inc.
    XPEV,
    +4.17%
    advanced 4.2% to the highest close since Sept. 26, 2022, of Li Auto Inc.
    LI,
    +3.42%
    hiked up 3.4% to the highest close since July 21, 2022 and of Boyd Co. Ltd.
    BYDDY,
    +3.07%
    rose 3.1%.

    Elsewhere, Lucid Group Inc. shares
    LCID,
    +7.26%
    charged 7.3% higher to a record sixth-straight gain and the highest close since May 31, as the EV sector’s rally helped offset an effective downgrade at Citi Research.

    Mullen Automotive Inc.’s stock
    MULN,
    -6.31%
    bucked the trend, as it sank 6.3% toward a record low close of 10.1 cents, even after the EV maker reported last week that it recorded revenue for the first time, and that it was in the “best financial position” in its history.

    In an interview on YouTube channel “Financial Journey,” as disclosed on Friday, Mullen Chief Executive Officer David Michery said he doesn’t believe the stock’s price reflects the true value of the company.

    He said he expects manufacturing of the Mullen One class 1 last-mile delivery cargo vans to begin in August with “sellable” vehicles available in September.

    For the Mullen Three class 3 trucks, with a gross vehicle Weight Rating (GVWR) of 11,000 pounds, Michery said manufacturing will start “right around the corner” in July, with sellable vehicles in August and September.

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  • Recession canceled? U.S. stock market ‘pretty frothy’ after S&P 500’s strongest first half since 2019.

    Recession canceled? U.S. stock market ‘pretty frothy’ after S&P 500’s strongest first half since 2019.

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    The S&P 500 index just wrapped up its strongest first half of a year since 2019, as a U.S. recession feared near by many investors seems perpetually further away than anticipated, leaving the stock market rally’s momentum for the rest of 2023 in question.

    It’s “difficult to gauge” when the “liquidity unleashed” by the U.S. government during the pandemic will run out, said José Torres, senior economist at Interactive Brokers, in a phone interview, referring to fiscal and monetary stimulus in 2020-2021. While the Federal Reserve has been raising interest rates since 2022 to battle high inflation, the Fed’s intervention after regional-bank failures in March provided more liquidity to the financial system, he said.

    That “created this environment for risk assets to run higher,” said Torres. And then, the artificial-intelligence craze has more recently driven “momentum” in U.S. stocks, he said. “I think the market goes lower from here.”

    The S&P 500
    SPX,
    +1.23%
    in mid-March was trading near its starting level in 2023, as regional-bank woes weighed on stocks before the Fed’s intervention that month. The central bank’s bank term funding program, announced March 12, helped shore up confidence in the banking system, taking off “a lot of pressure on financial conditions,” according to Torres. 

    The S&P 500 rose 15.9% in the first six months of 2023 for its strongest first-half of a year since 2019, according to Dow Jones Market Data. Each of the index’s 11 sectors climbed in June, marking the first time since November that all of them were up in the same month.

    The U.S. economy has been resilient despite the Fed’s rapid interest rate hikes in 2022 to cool demand and bring down still high inflation. Investors appear to be shrugging off recession worries after some surprisingly strong economic data in recent days.

    “Ladies and Gentleman, the recession has been cancelled!” wrote Bernard Baumohl, chief global economist at the Economic Outlook Group, in a note emailed June 29.  

    “Let’s not forget that despite the economy’s impressive performance the first three months, prices have continued to ease as well,” Baumohl said in the note. “Virtually every inflation metric has been falling,” he said, so “unless inflation shows signs of reversing course and accelerates, the Fed should maintain its current pause.”

    The Fed has slowed its interest-rate hikes this year, pausing them at its June policy meeting while signaling that further rate increases may still be coming. Federal-funds futures on Friday showed traders largely expecting the Fed to lift its benchmark rate by a quarter point in July to a targeted range of 5.25% to 5.5%, according to the CME FedWatch Tool, at last check. 

    Investors have cheered the Fed’s pause, with many expecting it’s near the end of its rate-hiking cycle, which had led to brutal losses for stocks and bonds last year. 

    Meanwhile, economic data released in the past week showed a revised estimate for U.S. growth in the first quarter was higher than anticipated; new orders for manufactured durable goods were stronger than expected in May; sales of newly built homes that same month beat economists’ forecasts; consumer confidence jumped in June to a 17-month high based on a Conference Board survey; and that initial jobless claims in the week ending June 24 fell.

    See also: U.S. economy on track to grow as fast as 2% in the second quarter

    Investors also welcomed more evidence of inflation easing. U.S. inflation measured by the personal-consumption-expenditures price index softened to 3.8% in May on a 12-month basis, the slowest increase since April 2021, based on a government report Friday. 

    But Torres said he worries the U.S. economy may be growing too fast for the Fed’s fight with inflation, potentially leading the central bank to become more hawkish by further tightening monetary policy. 

    ‘Shocked’

    “There’s a huge discrepancy” between two-year Treasury yields
    TMUBMUSD02Y,
    4.908%
    and where the Fed has indicated its benchmark rate may wind up at the end of its hiking cycle, he said. That’s after the recent rise in two-year yields from the wake of their fall during the regional-banking stress.

    The Fed’s summary of economic projections, released in June, showed its policy rate could wind up as high as 5.6% by the end of this year, compared to a current targeted range of 5% to 5.25%. 

    Meanwhile, the yield on the two-year Treasury note rose 81.7 basis points in the second quarter to 4.877% on Friday, the highest level since March 9 based on 3 p.m. Eastern Time levels, according to Dow Jones Market Data.

    “I’ve been shocked the market has already been able to digest this yield move to the upside,” said Torres. “There’s still more room to the upside on yields,” he said, adding that two-year Treasury rates often are viewed as a gauge of how hawkish the Fed may be with its policy rate.

    The U.S. stock market rose on Friday, closing out June with weekly, monthly and quarterly gains.

    The S&P 500 and Nasdaq Composite
    COMP,
    +1.45%
    each finished the month at its highest closing level since April 2022, with both indexes notching their longest monthly win streaks since 2021, according to Dow Jones Market Data. The technology-heavy Nasdaq soared 31.7% during the first six months of 2023, clinching its best first half since 1983.

    Sentiment in the stock market has gotten “pretty frothy,” making equities vulnerable to a decline, said Liz Ann Sonders, chief investment strategist at Charles Schwab, in a phone interview. “On the surface the market has been incredibly resilient, but of course the concentration has been extreme.” 

    She pointed to a “small handful” of megacap stocks, including names like Apple Inc.
    AAPL,
    +2.31%
    Microsoft Corp.
    MSFT,
    +1.64%
    and Nvidia Corp.
    NVDA,
    +3.63%    ,
    powering the performance of the S&P 500 and Nasdaq.

    Read: Apple clinches $3 trillion valuation, becoming first U.S. company to close at that mark

    Such stocks “really kicked into high gear” at the start of the banking trouble in March, as investors, in a defensive move, sought companies that are “highly liquid” and generate cash, she said.

    Stocks in that megacap group, sometimes referred to as Big Tech although they span sectors including communication services and consumer discretionary as well as information technology, have also benefited from AI exposure, said Sonders.

    Weakness, strength on the roll

    Sonders said she sees the U.S. as having experienced “rolling” recessions in different segments – such as housing or manufacturing – as opposed to the entire economy being swept up in a full-blown downturn. “The recession versus no recession debate” is missing the current nuances of this cycle, in her view.

    “We’ve seen weakness and strength rolling through the economy as opposed to everything either booming at the same time, or falling apart at the same time,” she said. So while cracks may turn up in the services sector, the U.S. could still benefit from other areas, such as the recent lift seen in the housing market, which already has gone through a recession, according to Sonders.

    Read: Homebuilder ETF outperforms S&P 500, industry’s stocks still ‘cheap’ in 2023 market rally

    In the stock market, megacap names have gotten a lot of attention for their surge this year, yet other pockets, such as homebuilders and the S&P 500’s industrials sector, have recently done well, she said. Industrial stocks
    SP500EW.20,
    +0.92%
    recently stood out to Sonders for their “decent breadth.”

    But to her thinking, “this is not the kind of environment to make a monolithic sector call or two,” rather Sonders favors screening stocks for characteristics such as “high quality” when looking for investment opportunities.

    Fluctuating financial conditions have made it harder to discern when the U.S. could fall into a recession, according to Torres. But rates rising further poses the risk of returning to the kind of environment that created stress for regional banks, he said. And with “commercial real estate lurking in the background” as a concern, he said it’s tough to see the stock market climbing from the S&P 500’s already “rich” levels.

    “The higher the Fed pushes rates, the more pressure that’s gonna put on bank balance sheets,” said Charlie Ripley, senior investment strategist for Allianz Investment Management, in a phone interview. “It just becomes a question of whether or not you’re going to see a run on a particular bank.”

    This coming week, the Fed will release minutes from its June policy meeting. Investors will see them on Wednesday, the day after the July 4 holiday in the U.S. 

    While the S&P 500 has rallied in 2023, shares of the SPDR S&P Regional Banking ETF
    KRE,
    -1.14%
    sank 30.5% in the first half of the year while the Invesco KBW Bank ETF
    KBWB,
    +0.24%
    is down 20.5% over the same period, according to FactSet data.

    “There is a lot of dispersion within the market,” said Ripley. “There are pockets that are doing better than others.”

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  • Li Auto, XPeng, and NIO Deliver Record Number of EVs in June

    Li Auto, XPeng, and NIO Deliver Record Number of EVs in June

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    Deliveries in June from Chinese electric-vehicle producers


    Li Auto



    XPeng


    and


    NIO


    were great but uneven. The results hold a couple of lessons for investors ahead of


    Tesla


    ‘s closely watched delivery report due Sunday.

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  • Stocks end higher Friday, as Nasdaq scores best first half of a year since 1983

    Stocks end higher Friday, as Nasdaq scores best first half of a year since 1983

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    U.S. stocks closed higher Friday, ending the month and the first half of 2023 with robust gains as a long-anticipated economic recession failed to materialize. The Dow Jones Industrial Average
    DJIA,
    +0.84%
    rose about 283 points on Friday, or 0.8%, ending near 34,405, according to preliminary FactSet data. It gained 4.6% in June and 3.8% over the year’s opening six months, its best first half since 2021, according to Dow Jones Market Data. Stocks have been in rally mode in 2023 as inflation continued to retreat under a regime of sharply higher interest rates. The bullish tone, especially for a select few technology stocks, has endured even as Fed Chairman Jerome Powell repeatedly said a few more interest-rate increases look likely this year, and that rates will likely stay high for awhile. Yet the U.S. economy hasn’t tipped into a recession, suggesting the Fed might have room to pull off a “soft landing” for the economy, or at least only a mild recession, as it fights to bring down the cost of living to its 2% annual target. On Friday, the personal-consumption expenditures price index, a key inflation gauge, eased to a 3.8% annual rate in May, the slowest level since April 2021. Against that backdrop, the S&P 500 index
    SPX,
    +1.23%
    rose 1.2% on the session, 2.3% in June and 15.9% in the first half, its best start to a year since 2019. But the Nasdaq Composite Index was the standout, gaining 1.5% on Friday and 31.7% in the first half of 2023, which was its best first half since 1983, according to Dow Jones Market Data.

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  • What’s at stake for stock and bond investors in second half of 2023

    What’s at stake for stock and bond investors in second half of 2023

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    There’s a lot riding for stock and bond investors in the second half of the year, with the biggest question centered around whether the idea of “immaculate disinflation” can come fully to fruition.

    The term refers to the notion that inflation might meaningfully dissipate from here, without a significant uptick in U.S. unemployment or a major recession. It’s considered to be the perfect scenario for investors and policy makers, who want inflation back down to their 2% target, and one in which the Federal Reserve’s main policy rate target wouldn’t need to go much higher from its current level between 5%-5.25%.

    What makes the path ahead so tricky is that core readings that represent the purest reads on inflation are proving to be stubborn and it isn’t clear whether they’ll turn meaningfully lower, fast. If they don’t, that would likely put pressure on central bankers to keep up their inflation fight and has the potential to drive up interest-rate expectations, as well as Treasury yields. Though the bond market has come around to the fact there won’t likely be any rate cuts by the Fed soon, it still isn’t completely on board with the idea of higher rates for longer — which, in turn, is helping to support equities for now.

    “The problem for the disinflation people or believers is that the core readings continue to come in too high,” said Jeffrey Cleveland, director and chief economist at Payden & Rygel, a Los Angeles-based investment management firm that oversees $148.9 billion in assets.

    Friday’s core reading from the Fed’s favorite inflation gauge — known as the PCE — was 0.3% for the month of May, and has been at or above that mark for six straight months.

    Via phone, Cleveland said his firm expects the monthly core PCE reading to end the year above 0.3%, but “you need monthly core PCE readings to be 0.1% or 0.2% to see meaningful disinflation.” If inflation surprises to the upside, “the whole Treasury curve moves up, with the 2-year rate most susceptible,” which would likely dent the performance of stocks.

    Cleveland said he expects the policy-sensitive 2-year Treasury yield BX:TMUBMUSD02Y to get back to 5% by December — a level that was last seen in March.

    The first six months of this year have turned out to be great for U.S. equities, with the Nasdaq-100
    NDX,
    +1.63%
    on track for its best first-half performance on record, as investors came around to the idea that the economy is resilient enough to absorb higher rates. The unemployment rate stood at 3.7% as of May as the U.S. added a shockingly large number of jobs, while annual core readings from the consumer-price index and PCE index came in at 5.3% and 4.6%, respectively, for May.

    Read: How stocks and every other major asset have performed in first half of 2023 — and over the last 18 months

    Meanwhile, the benchmark 10-year yield
    TMUBMUSD10Y,
    3.812%    ,
    which reflects investors’ long-term U.S. outlook, has remained relatively contained near 3.75% for months as robust U.S. data rolled in, accompanied by signs of overall inflation easing when waning gas and food prices are factored in.

    Data released this week reaffirmed that the U.S. economy and labor market are holding up, despite 5 percentage points of Fed rate hikes since March 2022. With policy makers signaling two more hikes may be on the way starting in July, the risk is that the economy continues to prove resistant to policy makers’ actions and requires even more tightening.

    “Not only is the U.S. economy continuing to prove resilient in the face of significantly tighter monetary policy, but it also appears the starting point of the economy for 2023 was even higher than previously anticipated with the consumer proving to be an even stronger force across the first three months,” said Stifel, Nicolaus & Co. economists Lindsey Piegza and Lauren Henderson, in a note this week. 

    Via phone, Henderson said her Chicago-based firm isn’t buying into the “immaculate disinflation” theory yet and thinks inflation “is proving stickier and more persistent than many expected.”

    Stifel, which updates its forecasts on a quarterly basis, is standing by its year-end expectations for the 2- and 10-year Treasury yields
    TMUBMUSD10Y,
    3.812%
    to be at 4.65% and 3.45%, respectively, she said. That’s below the current levels for those rates because Stifel economists foresee a short, shallow recession “sometime in the fourth quarter or beyond,” as policy makers push the fed-funds rate target up to 5.75% by year-end and stay there through 2024, according to Henderson.

    Inside the market for fixings, or derivatives-like instruments in which bets can be made on upcoming consumer-price index reports, traders have been coalescing around the view that the annual headline CPI rate is likely to start falling toward 2% this year. They even see the core CPI reading dropping to roughly 2.5% annually and to 0.2% monthly, in relatively quick fashion.

    However, one big name has a warning. Former New York Fed President Bill Dudley said inflation could easily go higher than his estimated 2.5% long-term average, and that the 10-year Treasury yield might even go above his “conservative” estimate of 4.5%.

    On Friday, financial markets were focused on the positive aspects of the PCE report, with all three major U.S. stock indexes
    DJIA,
    +0.97%

    SPX,
    +1.31%

    COMP,
    +1.49%
    higher in afternoon trading. Meanwhile, 3-month
    TMUBMUSD03M,
    5.320%
    through 30-year Treasury yields
    TMUBMUSD30Y,
    3.854%
    all moved lower.

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  • Nasdaq posts best first half since 1983 as inflation data power Friday stock surge

    Nasdaq posts best first half since 1983 as inflation data power Friday stock surge

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    U.S. stocks finished higher Friday, with the Nasdaq Composite closing out June with its strongest first half of a year since 1983, as investors hoped the Federal Reserve might be able to back off its inflation battle more quickly than Fed chief Jerome Powell has telegraphed.

    How stock indexes traded

    • The Dow Jones Industrial Average
      DJIA,
      +0.84%
      rose 285.18 points, or 0.8%, to close at 34,407.60

    • The S&P 500
      SPX,
      +1.23%
      gained 53.94 points, or 1.2%, to finish at 4,450.38, its highest closing value since April 20, 2022.

    • The Nasdaq Composite
      COMP,
      +1.45%
      climbed 196.59 points, or 1.4%, to end at 13,787.92, marking its highest closing value since April 7, 2022.

    For the week, the Dow gained 2%, the S&P 500 advanced 2.3% and the Nasdaq increased 2.2%, according to Dow Jones Market Data. All three indexes rose in June, with the S&P 500 climbing for a fourth straight month to book its longest monthly win streak since August 2021. The Nasdaq also climbed for a fourth consecutive month to score its longest such win streak since April 2021.

    What’s driven markets

    The final trading day of the week, month and quarter presented a positive picture for U.S. stocks as the main indexes advanced following the latest inflation report.

    “Clearly today the market likes and is responding to the inflation data,” said Chris Fasciano, portfolio manager at Commonwealth Financial Network, in a phone interview Friday. “It continues to show softening inflation and that’s clearly what the Fed’s looking for,” he said. “I think investors are comfortable right now with a soft-landing scenario” for the economy.

    On Friday, data showed U.S. inflation measured by the personal-consumption-expenditures price index eased to 3.8% in May on a 12-month basis, the slowest increase since April 2021.

    The PCE price index edged up 0.1% on a month-over-month basis in May, while core prices, which exclude volatile food and energy products, increased by 0.3%. The government’s PCE inflation report was in line with economists’ expectations.

    See: U.S. inflation slows, PCE shows, but price pressures still intense

    The data added to an increasingly upbeat portrait of a U.S. economy, which has continued to expand despite the Fed’s aggressive tightening of monetary policy. Gross domestic product in the U.S. expanded 2% during the first quarter, much stronger than the previous 1.3% reading, data released on Thursday showed.

    In other U.S. economic updates, the University of Michigan said Friday the final reading of its consumer-sentiment index for June improved to 64.4. That’s a four-month high.

    Still, the PCE report showed consumer spending rose just 0.1% in May, slower than economists had anticipated.

    The Federal Reserve has been raising interest rates since 2022 to cool the economy and tame inflation. Fed Chair Jerome Powell said earlier this week that he didn’t expect inflation in the U.S. to return to the central bank’s 2% target until 2025.

    “Right now, the Fed’s job is not clear-cut,” said George Mateyo, the chief investment officer of Key Private Bank, in emailed commentary Friday. “While they may not be done with rake hikes, perhaps they don’t have much more work to do.”

    The U.S. stock market has rallied this month, bringing the S&P 500 index’s gains this quarter to 8.3%. The S&P 500 jumped 15.9% in the first six months of this year, while the tech-heavy Nasdaq soared 31.7% for its best first half since 1983, according to Dow Jones Market Data.

    Companies in focus

    Jamie Chisholm and Greg Robb contributed.

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  • Dow ends 270 points higher, Nasdaq closes flat on upbeat economic data

    Dow ends 270 points higher, Nasdaq closes flat on upbeat economic data

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    U.S. stocks ended mostly higher Thursday, getting a boost from the financial sector, on positive tones from the banking sector and the economy. The Dow Jones Industrial Average
    DJIA,
    +0.80%
    rose about 269 points, or 0.8%, ending near 34,122, according to preliminary FactSet data. The S&P 500 index
    SPX,
    +0.45%
    ended 0.5% higher, while the Nasdaq Composite Index
    COMP,
    -0.00%
    closed virtually unchanged. The S&P 500’s financial sector was a standout, climbing 1.7%, a day after 23 of the nation’s biggest banks passed annual “stress tests,” designed to model their ability to withstand a severe global recession scenario. The U.S. economy also saw a revised gross domestic product reading of 2% in the first quarter. Federal Reserve Chairman Jerome Powell on Thursday also downplayed concerns that the Federal Reserve might be at risk of going too far with its rate hikes, at a meeting with other global central bankers in Spain, while also saying that coming rate decisions would be decided on a meeting-to-meeting basis.

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  • S&P 500 scores best day in almost two weeks as tech shares march higher

    S&P 500 scores best day in almost two weeks as tech shares march higher

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    U.S. stocks jumped on Tuesday, with the S&P 500 scoring its best daily gain in almost two weeks as technology shares climbed and housing data pointed to continued resilience in the U.S. economy, despite the Federal Reserve’s sharply higher interest rates. The Dow Jones Industrial Average
    DJIA,
    +0.63%
    rose about 211 points, or 0.6%, ending near 33,926, according to preliminary FactSet data. The S&P 500 index
    SPX,
    +1.15%
    gained 1.1%, posting its best daily percentage gain since June 15, according to FactSet data. The Nasdaq Composite Index
    COMP,
    +1.65%
    rose 1.7%. Stocks appeared poised to resume a tech-fueled rally that has the S&P 500 up 14% on the year so far and the Nasdaq about 29.5% higher. The S&P 500’s information technology sector jumped 2% Tuesday, while Communication Services rose 1.1%. Bolstering the tone, new home sales surged 12.2% in May, while the S&P CoreLogic Case-Shiller 20-city house-price index climbed in April.

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  • Dow gives back earlier gains, stocks end lower after Russia’s brief rebellion

    Dow gives back earlier gains, stocks end lower after Russia’s brief rebellion

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    U.S. stocks closed lower Monday, after Russia on the weekend was rocked by a brief revolt from the Wagner mercenary force. The Dow Jones Industrial Average
    DJIA,
    -0.04%
    fell about 11 points, or less than 0.1%, ending near 33,715, according to preliminary FactSet data, giving up earlier gains in the final moments of trade. The S&P 500 index
    SPX,
    -0.45%
    fell 0.4%, while the Nasdaq Composite Index
    COMP,
    -1.16%
    closed down 1.2%. Stocks have been struggling to extend a recent rally driven by a handful of technology stocks that earlier in June lifted major indexes to their highest levels in more than a year. Investors and oil markets were on edge Monday after a brief mutiny in Russia over the weekend raised concerns about potential disruptions to global oil supplies. U.S. crude prices edged higher Monday, with West Texas Intermediate oil for August
    CL00,
    +0.53%

    CLQ23,
    +0.53%
    ending slightly below $70 a barrel.

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  • HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

    HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

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    Goodbye pandemic refi cash-outs. Hello HELOCs?

    Home-equity lines of credit (HELOCs) and second-lien mortgages have been staging a notable comeback as U.S. homeowners look for liquidity and ways to monetize the pandemic surge in home prices, according to BofA Global.

    It used to be that borrowers sitting on an estimated $33 trillion pile of equity built up in their homes could simply refinance and pull out cash, until the Federal Reserve’s rapid rate hikes began squelching the option.

    Now, with mortgage rates above 6%, and the Fed penciling in two more rate hikes in 2023, cash-strapped homeowners have been seeking out alternatives to extract cash from their properties.

    While cash-out refinances tumbled 83% in the fourth quarter of 2022 from a year before, HELOCs rose 7% and home-equity loans grew 31%, according to the latest TransUnion data.

    “Borrower demand remains high, particularly given household budgets have been pressured by rising food and energy costs,” a BofA Global credit strategy team led by Pratik Gupta’s, wrote in a weekly client note.

    Risky loans to subprime borrowers and home equity products helped precipitate the 2007-2008 global financial crisis and the era’s wave of devastating home foreclosures.

    At the time, households had more than $1.2 trillion of home equity revolving and available credit (see chart), whereas the figure was closer to $900 billion in the first quarter of this year.

    Home equity products are making a big comeback as households seek liquidity


    BofA Global, New York Fed Consumer Credit Panel/Equifax

    The pandemic saw home prices surge, giving a big boost to home equity levels. The Urban Institute pegged home equity in the U.S. at $33 trillion as of May, up from a post-2008 peak of about $15 trillion.

    BofA analysts argued this time home equity products look different, with roughly $17 trillion of tappable equity across 117 million U.S. homeowners, and most borrowers having high credit scores and low rates.

    “The vast majority of that — $14 trillion — is from the cohort of homeowners who own their homes free & clear,” Gupta’s team wrote.

    Another $1.6 trillion of equity could be available from Freddie Mac and Fannie Mae borrowers, according to his team, which pegged an estimated 94% of all outstanding U.S. first-lien home mortgages now below 4% rates.

    Major banks own the bulk of home equity balances (see chart), led by Bank of America Corp.
    BAC,
    +1.23%    ,
    PNC Bank
    PNC,
    +0.57%    ,
    Wells Fargo,
    WFC,
    -0.05%    ,
    JPMorgan Chase
    JPM,
    +0.24%
    and Citizens
    CFG,
    +0.35%    ,
    according to the team, which notes several other major banks appear to have hit pause on their programs.

    A smaller portion of HELOCs and second-lien mortgages have been securitized, or packaged up and sold as bond deals, while nonbank lenders have been offering the products as well.

    Stocks closed lower Monday, taking a pause from a recent rally, as investors monitored weekend tumult in Russia. The Dow Jones Industrial Average
    DJIA,
    -0.04%
    was less than 0.1% lower, while the S&P 500 index
    SPX,
    -0.45%
    was off 0.5% and the Nasdaq Composite
    COMP,
    -1.16%
    fell 1.2%, according to FactSet.

    Related: The economy was supposed to cave in by now. It hasn’t — and GDP is set to rise again.

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  • Nvidia Stock Is Down. Blame Tesla.

    Nvidia Stock Is Down. Blame Tesla.

    [ad_1]

    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/nvidia-stock-price-ai-tesla-5af5041c

    • Order Reprints
    • Print Article

    Shares of newly minted $1 trillion company


    Nvidia


    were taking it on the chin Monday, and investors searching for a reason should look to


    Tesla

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  • What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

    What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

    [ad_1]

    Investors will start the week nervously sorting through the aftermath of a short-lived rebellion by the mercenary Wagner Group that’s seen leaving Russian President Vladimir Putin weakened.

    “As Monday’s global markets are set to begin trading, investors are laser-focused on whether the short-lived Russia insurrection was only the beginning of a much deeper thunderbolt set to rock geopolitical, economic and market stability in the days and weeks ahead,” Greg Bassuk, chief executive officer at AXS Investments in New York, told MarketWatch on Sunday in emailed comments.

    U.S. stock-index futures edged up after the start of electronic trading Sunday night, while oil rallied. Futures on the Dow Jones Industrial Average
    YM00,
    +0.14%
    rose 25 points, while S&P 500 futures
    ES00,
    +0.15%
    edged up 0.1% and Nasdaq-100 futures gained 0.2%.

    Global stocks fell last week as interest-rate hikes by European central banks stoked recession fears. In the U.S., the S&P 500
    SPX,
    -0.77%
    ended a streak of five straight weekly gains, while the Dow Jones Industrial Average
    DJIA,
    -0.65%
    and Nasdaq Composite
    COMP,
    -1.01%
    also pulled back.

    See: Russia’s short-lived revolt could have long-term consequences for Putin, as questions remain over Prigozhin’s whereabouts

    ‘Real cracks’

    While a weakened Russia raises the prospects of a favorable outcome for Ukraine 16 months after Putin’s decision to invade, the potential for further internal strife in the nation with the world’s largest nuclear arsenal is less comforting, observers noted.

    “This raises profound questions. It shows real cracks,” U.S. Secretary of State Antony Blinken told CBS News’ “Face the Nation” on Sunday morning.

    Putin’s hold on power “certainly seems shakier than it was a few days ago,” but there remains “no clear contender to replace him, by election or coup,” said Benjamin Friedman, policy director at Defense Priorities, a foreign-policy think tank in Washington, D.C.

    Nonetheless, the war in Ukraine “is weakening Russia in various ways, including by creating internal strife and dangerously discontented elites who have some power,” Friedman told MarketWatch. “The perception of Putin’s fallibility and weakness is growing and creates its own reality. That is dangerous to him. It’s hard to predict what additional power grabs and instability that could create,” he said.

     See: Russia’s short-lived revolt could have long-term consequences for Putin, as questions remain over Prigozhin’s whereabouts

    ‘Bloodbath’ of volatility?

    AXS Investment’s Bassuk said the further turmoil “could drive a bloodbath of market volatility amid its impact on the war with Ukraine, a shifting balance among the G-8 superpowers, and the already heightened potential for a U.S. and global recession.”

    Analysts have warned that an uptick in volatility may be overdue. The Cboe Volatility Index
    VIX,
    +4.11%    ,
    a measure of expected volatility in the S&P 500 over the next 30 days, last week fell to its lowest since January 2020 and ended Friday below 14. Its long-term average stands near 20. The subdued performance, which has accompanied a year-to-date rally of more than 13% for the S&P 500 index, is taken by some market watchers as a sign of complacency.

    Read: Why the ‘easy money’ has been made in the stock-market rally — and what comes next

    Potential ‘nonevent’

    But the quick termination of the rebellion could make it more of a “nonevent” for capital markets as trading resumes, said Marc Chandler, managing director at Bannockburn Global Forex.

    While conventional wisdom sees signs of Putin’s weakness, the Russian leader has often been underestimated, he said.

    “The war in Ukraine is likely unaffected, and Kyiv’s counteroffense thus far seems rather muted. The risk is that the war escalates if Kyiv resorts to medium- and long-range missiles to hit Russian assets in Crimea, and possibly in Russia proper,” Chandler said.

    The rebellion, led by Wagner Group chief Yevgeny Prigozhin, saw the mercenary paramilitary force take over Russia’s southern military headquarters in Rostov-on-Don amid little resistance before marching largely unchallenged toward Moscow. Putin, without mentioning him by name, accused Prigozhin of treason.

    The advance halted a little more than 120 miles from the capital before Prigozhin abruptly stood down in a deal that would see him sent to Belarus and charges against him of leading an armed rebellion dropped.

    As events unspooled Saturday, analysts warned that extended strife could spark a flight to quality when markets reopened into assets like U.S. Treasury bonds
    TMUBMUSD10Y,
    3.720%    ,
    the U.S. dollar
    DXY,
    -0.14%
    and other havens like the Japanese yen
    USDJPY,
    -0.21%    ,
    Swiss franc
    USDCHF,
    -0.06%
    and gold
    GC00,
    +0.32%    .

    The dollar was little changed versus major rivals in the early going Sunday evening, while gold for August delivery
    GCQ23,
    +0.32%
    edged up 0.2%.

    All eyes on oil

    Meanwhile, commodity and financial markets have seen big swings since Russia invaded Ukraine on Feb. 24, 2022.

    First and foremost, the invasion produced a global energy shock. Russia was the world’s third-largest crude producer behind the U.S. and Saudi Arabia, and a key supplier of natural gas to Western Europe.

    Crude-oil futures soared in the immediate aftermath of the invasion, with the global benchmark Brent crude
    BRN00,
    +0.91%
    topping out just shy of $140 a barrel in early March 2022 after closing at $94.05 on the eve of the invasion.

    Natural-gas prices had also soared, and fears of shortages led to a scramble by European governments to fill storage amid apocalyptic predictions about a harsh 2022-’23 winter.

    Energy prices subsequently fell back. Crude oil is trading well below levels seen ahead of the invasion. And despite waves of sanctions by European and U.S. governments and price caps aimed at limiting Moscow’s ability to fill its coffers, Russian crude supplies remain robust.

    Oil prices were on the rise Sunday night, with WTI up 87 cents, or 1.3%, to trade at $70.03 a barrel, while Brent gained 91 cents, or 1.2%, to $74.76 a barrel.

    August Brent crude
    BRNQ23,
    +0.95%
    settled Friday at $73.85 a barrel, falling 3.6% last week. West Texas Intermediate crude for August delivery
    CL00,
    +0.91%    ,
    the U.S. benchmark, dropped 3.9% last week to end Friday at $69.16 a barrel.

    Jorge Leon, senior vice president at Rystad Energy, noted that in the past 35 years, geopolitical shocks involving big oil producers have seen crude futures jump by an average of 8% in the five days after the start of the triggering event (see chart below).


    Rystad Energy

    A rise of that magnitude looks unlikely given how quickly the rebellion was quelled, he said.

    “Given that the short-lived event this weekend in Russia appears to have ended, we do not expect to see such a significant increase in oil prices next week. We do, however, believe that the geopolitical risk amid internal instability in Russia has increased,” Leon said in emailed comments.

    —Barbara Kollmeyer contributed.

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  • U.S. stock futures little changed after short-lived Wagner mutiny in Russia; oil futures rise

    U.S. stock futures little changed after short-lived Wagner mutiny in Russia; oil futures rise

    [ad_1]

    U.S. stock-index futures opened near unchanged and attempted to edge higher Sunday night, as investors reacted to chaotic weekend events that saw a short-lived rebellion that pitted the mercenary Wagner Group against the Russian military leadership. After advancing to within around two hours of Moscow, the mutiny was abruptly halted, with Wagner Group leader Yevgeny Prigozhin reportedly agreeing to depart for Belarus. Analysts said the events, while a potential plus for Ukraine 16 months after Russia’s invasion, appeared to weaken Russian President Vladimir Putin’s hold on the country, That raises concerns about the potential for further internal strife, a recipe for uncertainty that could feed volatility in financial markets. Futures on the Dow Jones Industrial Average
    YM00,
    +0.09%
    rose 20 points, while S&P 500
    ES00,
    +0.10%
    futures ticked up 2.75 points and Nasdaq-100 futures
    NQ00,
    +0.16%
    edged up 11.25 points shortly after the start of electronic trading. Moves for all three contracts amounted to less than 0.1%. Stocks fell last week, with the S&P 500
    SPX,
    -0.77%
    snappng a streak of five straight weekly gains. Oil futures rose, with West Texas Intermediate crude for August delivery
    CL.1,
    +1.26%

    CL00,
    +1.26%    ,
    the U.S. benchmark, up 48 cents, or 0.7%, at $69.64 a barrel on the New York Mercantile Exchange.

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  • What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

    What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

    [ad_1]

    Investors will start the week nervously sorting through the aftermath of a short-lived rebellion by the mercenary Wagner Group that’s seen leaving Russian President Vladimir Putin weakened.

    “As Monday’s global markets are set to begin trading, investors are laser-focused on whether the short-lived Russia insurrection was only the beginning of a much deeper thunderbolt set to rock geopolitical, economic and market stability in the days and weeks ahead,” Greg Bassuk, chief executive officer at AXS Investments in New York, told MarketWatch on Sunday in emailed comments.

    U.S. stock-index futures edged up after the start of electronic trading Sunday night, while oil rallied. Futures on the Dow Jones Industrial Average
    YM00,
    +0.14%
    rose 75 points, while S&P 500 futures
    ES00,
    +0.12%
    edged up 0.2% and Nasdaq-100 futures gained 0.3%.

    Global stocks fell last week as interest-rate hikes by European central banks stoked recession fears. In the U.S., the S&P 500
    SPX,
    -0.77%
    ended a streak of five straight weekly gains, while the Dow Jones Industrial Average
    DJIA,
    -0.65%
    and Nasdaq Composite
    COMP,
    -1.01%
    also pulled back.

    See: Russia’s short-lived revolt could have long-term consequences for Putin, as questions remain over Prigozhin’s whereabouts

    ‘Real cracks’

    While a weakened Russia raises the prospects of a favorable outcome for Ukraine 16 months after Putin’s decision to invade, the potential for further internal strife in the nation with the world’s largest nuclear arsenal is less comforting, observers noted.

    “This raises profound questions. It shows real cracks,” U.S. Secretary of State Antony Blinken told CBS News’ “Face the Nation” on Sunday morning.

    Putin’s hold on power “certainly seems shakier than it was a few days ago,” but there remains “no clear contender to replace him, by election or coup,” said Benjamin Friedman, policy director at Defense Priorities, a foreign-policy think tank in Washington, D.C.

    Nonetheless, the war in Ukraine “is weakening Russia in various ways, including by creating internal strife and dangerously discontented elites who have some power,” Friedman told MarketWatch. “The perception of Putin’s fallibility and weakness is growing and creates its own reality. That is dangerous to him. It’s hard to predict what additional power grabs and instability that could create,” he said.

     See: Russia’s short-lived revolt could have long-term consequences for Putin, as questions remain over Prigozhin’s whereabouts

    ‘Bloodbath’ of volatility?

    AXS Investments’ Bassuk said the further turmoil “could drive a bloodbath of market volatility amid its impact on the war with Ukraine, a shifting balance among the G-8 superpowers, and the already heightened potential for a U.S. and global recession.”

    Analysts have warned that an uptick in volatility may be overdue. The Cboe Volatility Index
    VIX,
    +4.11%    ,
    a measure of expected volatility in the S&P 500 over the next 30 days, last week fell to its lowest since January 2020 and ended Friday below 14. Its long-term average stands near 20. The subdued performance, which has accompanied a year-to-date rally of more than 13% for the S&P 500 index, is taken by some market watchers as a sign of complacency.

    Read: Why the ‘easy money’ has been made in the stock-market rally — and what comes next

    Potential ‘nonevent’

    But the quick termination of the rebellion could make it more of a “nonevent” for capital markets as trading resumes, said Marc Chandler, managing director at Bannockburn Global Forex.

    While conventional wisdom sees signs of Putin’s weakness, the Russian leader has often been underestimated, he said.

    “The war in Ukraine is likely unaffected, and Kyiv’s counteroffense thus far seems rather muted. The risk is that the war escalates if Kyiv resorts to medium- and long-range missiles to hit Russian assets in Crimea, and possibly in Russia proper,” Chandler said.

    The rebellion, led by Wagner Group chief Yevgeny Prigozhin, saw the mercenary paramilitary force take over Russia’s southern military headquarters in Rostov-on-Don amid little resistance before marching largely unchallenged toward Moscow. Putin, without mentioning him by name, accused Prigozhin of treason.

    The advance halted a little more than 120 miles from the capital before Prigozhin abruptly stood down in a deal that would see him sent to Belarus and charges against him of leading an armed rebellion dropped.

    As events unspooled Saturday, analysts warned that extended strife could spark a flight to quality when markets reopened into assets like U.S. Treasury bonds
    TMUBMUSD10Y,
    3.727%    ,
    the U.S. dollar
    DXY,
    -0.11%
    and other havens like the Japanese yen
    USDJPY,
    -0.19%    ,
    Swiss franc
    USDCHF,
    -0.03%
    and gold
    GC00,
    +0.18%    .

    The dollar was little changed versus major rivals in the early going Sunday evening, while gold for August delivery
    GCQ23,
    +0.18%
    edged up 0.2%.

    All eyes on oil

    Meanwhile, commodity and financial markets have seen big swings since Russia invaded Ukraine on Feb. 24, 2022.

    First and foremost, the invasion produced a global energy shock. Russia was the world’s third-largest crude producer behind the U.S. and Saudi Arabia, and a key supplier of natural gas to Western Europe.

    Crude-oil futures soared in the immediate aftermath of the invasion, with the global benchmark Brent crude
    BRN00,
    +0.73%
    topping out just shy of $140 a barrel in early March 2022 after closing at $94.05 on the eve of the invasion.

    Natural-gas prices had also soared, and fears of shortages led to a scramble by European governments to fill storage amid apocalyptic predictions about a harsh 2022-’23 winter.

    Energy prices subsequently fell back. Crude oil is trading well below levels seen ahead of the invasion. And despite waves of sanctions by European and U.S. governments and price caps aimed at limiting Moscow’s ability to fill its coffers, Russian crude supplies remain robust.

    Oil prices were on the rise Sunday night, with WTI up 87 cents, or 1.3%, to trade at $70.03 a barrel, while Brent gained 91 cents, or 1.2%, to $74.76 a barrel.

    August Brent crude
    BRNQ23,
    +0.80%
    settled Friday at $73.85 a barrel, falling 3.6% last week. West Texas Intermediate crude for August delivery
    CL00,
    +0.69%    ,
    the U.S. benchmark, dropped 3.9% last week to end Friday at $69.16 a barrel.

    Jorge Leon, senior vice president at Rystad Energy, noted that in the past 35 years, geopolitical shocks involving big oil producers have seen crude futures jump by an average of 8% in the five days after the start of the triggering event (see chart below).


    Rystad Energy

    A rise of that magnitude looks unlikely given how quickly the rebellion was quelled, he said.

    “Given that the short-lived event this weekend in Russia appears to have ended, we do not expect to see such a significant increase in oil prices next week. We do, however, believe that the geopolitical risk amid internal instability in Russia has increased,” Leon said in emailed comments.

    —Barbara Kollmeyer contributed.

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  • U.S. stocks finish lower to cap off worst week since Silicon Valley Bank collapse

    U.S. stocks finish lower to cap off worst week since Silicon Valley Bank collapse

    [ad_1]

    U.S. stocks finished lower on Friday, capping off the worst week for the S&P 500 and Nasdaq Composite since the collapse of Silicon Valley Bank back in March. The S&P 500
    SPX,
    -0.77%
    shed 33.54 points, or 0.8%, to 4,348.35, bringing its weekly drop to 1.4%, based on preliminary closing data from FactSet. This represents the large-cap index’s worst week since the week ended March 10, which coincided with the collapse of Silicon Valley Bank following a doomed attempt to raise capital days earlier. The Nasdaq Composite
    COMP,
    -1.01%
    fell 138.09 points, or 1%, to 13,492.52, shedding 1.4% for the week, also the worst since March 10. The Dow Jones Industrial Average
    DJIA,
    -0.65%
    fell 218.02 points, or 0.6%, to 33,728.69, falling 1.7% for the week, its worst in just over a month. U.S. stocks have suffered this week as a torrid bull run appeared to run out of steam as worries about the outlook for global growth resurfaced.

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    Source link

  • Option demand explodes in June as investors use bullish bets to chase stock-market rally

    Option demand explodes in June as investors use bullish bets to chase stock-market rally

    [ad_1]

    Trading in U.S. stock option contracts has surged in 2023 as retail and institutional traders have harnessed bullish call options to chase a runaway rally in U.S. stocks, market analysts told MarketWatch.

    As of Friday, 46 million option contracts linked to U.S. equity indexes, individual stocks and exchange-traded funds have traded hands every trading session on average this month, according to an analysis by Callie Cox, a U.S. equity strategist at eToro.

    This means that, barring a sudden drop-off in trading activity, June is on track to be the busiest month for option traders ever, Cox said. That is particularly notable given that the summer months are typically more placid on Wall Street.

    “It’s pretty incredible for a summer month. It shows how engaged investors are after such a strong rally,” said Callie Cox, a U.S. equity strategist at eToro, during an interview with MarketWatch.


    ETORO

    Much of the demand has centered on call options: trading volume in these contracts has averaged 26 million a day so far, leaving June on track for the heaviest month of call buying since November 2021, Cox said.

    Several overlapping trends have contributed to the surge in option demand, market analysts said.

    Investors wary about a rally that recently carried the S&P 500 index to its highest level in 14 months have opted to buy short-dated calls. Often these are contracts tied to the S&P 500 or the index-tracking SPDR S&P 500 exchange-traded fund with less than 24 hours left until expiration, a class of options referred to as “0DTEs” for “zero days to expiration.”

    Some traders see these cheap short-term bets as a particularly affordable, if risky, strategy for reaping gains as the market marches higher, according to market analysts and portfolio managers who spoke with MarketWatch.

    And when stocks pull back, investors often change their strategy and instead of buying calls, opt to take advantage by buying or selling put options.

    While a call represents a bet that a given index, stock or currency will rise, a put represents the opposite.

    In addition to betting on calls tied to popular equity indexes and exchange-traded funds like the S&P 500 or the Invesco QQQ Trust Series 1 ETF
    QQQ,
    -0.99%    ,
    investors are also scooping up bullish options tied to Nvidia Corp. and other market leaders, hoping to maximize any returns from the artificial intelligence boom.

    The Wall Street Journal reported earlier this week that trading in call options tied to shares of Nvidia Corp.
    NVDA,
    -1.90%
    and two other chip stocks, Advanced Micro Devices
    AMD,
    -0.62%
    and Intel Corp.,
    INTC,
    +0.89%
    has surged fivefold since the beginning of the year, citing data from Cboe Global Markets, owner of the world’s largest options exchange.

    But demand for calls has expanded beyond megacap technology names into areas of the market that have trailed since the start of the year, including small-cap stocks and others, which have rallied in June.

    The Russell 2000
    RUT,
    -1.44%    ,
    an index that tracks small-cap stocks traded in the U.S., is up nearly 5% year-to-date. As of the end of May, it was marginally negative for the year, options experts said.

    “With mega cap technology leading the indexes higher, investors started to play catch-up by trying to buy the second-tier and heavily shorted companies,” said Alon Rosin, head of equity derivatives at Oppenheimer, in emailed commentary shared with MarketWatch.

    This means that investors’ rush to try to keep up with the market hasn’t only benefited hot AI-stocks.

    Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, made a similar observation in a recent note to clients where she pointed out that call buying has surged for both companies expected to benefit from the AI boom, as well as stocks in an RBC basket of companies that are threatened by it — stocks like Robert Half International
    RHI,
    -0.54%    ,
    Chegg Inc.
    CHGG,
    -4.00%
    and Yext Inc.
    YEXT,
    -2.74%    ,
    she said.

    Silverman said heavy call buying in this group is indicative of the market’s “extreme call exuberance.”

    Call buying has helped send popular indicators of positioning like the put-call ratio and skew, which measures the cost of downside protection via puts vs. demand for upside exposure via calls, to their lowest levels of the year earlier this month.

    “People are reaching for upside via calls, and you’re seeing skew falling due to the fact that everybody has been buying calls,” said Mark Callahan, head of trading and a portfolio manager at Aptus Capital Advisors, during a phone interview with MarketWatch.

    Callahan manages several active exchange-traded funds that require heavy option trading.

    U.S. stocks have marched higher this year, with the S&P 500 rising for five straight weeks through June 16, its longest streak of weekly gains since November 2021. The Nasdaq Composite
    COMP,
    -1.01%
    has seen even stronger performance, and its eight-week win streak has been heralded as the tech-heavy index’s longest rally since 2019, according to FactSet data.

    The S&P 500 has risen more than 13% so far this year, while the Nasdaq has gained more than 30%. Both have erased much of their losses from 2022, which was the worst year for stocks since 2008. Last week, both the S&P 500 and Nasdaq hit their highest levels since April 2022.

    However, there are some signs that the torrid rally might be in the midst of a pullback as the S&P 500, Nasdaq and Dow Jones Industrial Average
    DJIA,
    -0.65%
    are all on track to finish the week lower on Friday.

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  • U.S. stocks fall to cap off worst week since collapse of Silicon Valley Bank

    U.S. stocks fall to cap off worst week since collapse of Silicon Valley Bank

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    U.S. stocks fell Friday with the S&P 500 index on track for its worst week since the collapse of Silicon Valley Bank in March suggesting the three month rally may be coming to an end.

    Investors sought safety in bonds and the U.S. dollar as a wave of interest-rate hikes and hawkish commentary from international central bankers revived worries about global economic growth.

    How are stocks trading?

    • The S&P 500
      SPX,
      -0.51%
      fell 32 points, or 0.8%, to 4,349.

    • The Dow Jones Industrial Average
      DJIA,
      -0.43%
      fell 204 points, or 0.6%, to 33,741.

    • The Nasdaq Composite
      COMP,
      -0.75%
      slid 145 points, or 1.1%, to 13,484.

    On Thursday, the Dow industrials fell 4.81 points, or less than 0.1%, to close at 33,946.71. The four-day slide is the blue-chip gauge’s longest losing streak since a five-day drop that ended on May 25, according to Dow Jones Market Data. Both the S&P 500 and Nasdaq finished higher, snapping a three-day losing streak.

    What’s driving markets

    U.S. stocks on Friday looked set to snap the longest streak of weekly gains since 2019 for the Nasdaq.

    Concerns that interest rate rises by central banks might harm global economic growth were weighing on global equities on Friday, analysts said, following interest rate rises in the U.K., Switzerland, Norway and Turkey on Thursday. The latest batch of rate hikes followed moves by the central banks of Canada and Australia earlier this month.

    Data released on Friday also showed business activity in the eurozone losing momentum in June, according to a purchasing managers survey. U.S. economic growth may also be slowing. The S&P Global U.S. services index fell to a 54.1 in June from 54.9 in the prior month, a two-month low, while the manufacturing index, meanwhile, slid to a five-month low of 46.9 from 51 in May.

    “US stocks are sliding as the global growth outlook continues to deteriorate following soft global PMI readings,” Edward Moya, Senior Market Analyst at Oanda wrote in a note Friday. “The risk of a sharper economic downturn is greater for Europe than it is for the US, so that could keep the dollar supported over the short-term.”

    With central banks around the world promising to raise borrowing costs even higher to tame inflation, analysts focused on the potential ramifications of higher interest rates for both the health of the economy and equity valuations. In the U.S., analysts across Wall Street have warned that the S&P 500 and Nasdaq Composite valuations are again looking unreasonably rich.

    The price-to-earnings ratio for the S&P 500 based on Wall Street’s forecasts for corporate earnings over the next 12 months is just shy of 19, according to FactSet. That’s higher than the five-year average.

    While the Federal Reserve opted to leave interest rates on hold in June, Chair Jerome Powell reiterated in Congressional testimony this week that senior Fed officials strongly support hiking rates “a couple of times” later this year.

    Ryan Belanger, founder and managing principal at Claro Advisors, is among the analysts who believe the market’s rally is getting ahead of itself.

    “The market is too confident that the Federal Reserve can engineer a soft landing and it would be wise for investors to reduce exposure to stocks,” Belanger said in emailed commentary.

    With the S&P 500 down nearly 1.5% for the week, stocks are on track for their biggest such pullback since March 10, FactSet data showed.

    Of course, the market is coming off a rally which is leading some to conclude that this might be a healthy pullback. The S&P 500 had climbed for five straight weeks through June 16, its longest such winning streak since November 2021, Dow Jones Market Data show.  Meanwhile, the technology-heavy Nasdaq had logged eighth straight weekly advance to mark its longest stretch of gains since March 2019.

    “Some of this is a bit of a giveback and when you look at the market action from the last month and a half, we’ve kind of gone parabolic,” said Paul Nolte, senior wealth manager and market strategist at Murphy & Sylvest Wealth Management, during a phone interview with MarketWatch.

    Defensive assets like the dollar and high-quality sovereign bonds were outperforming on Friday, with the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.742%
    falling five basis points to 3.744%. Yields on 10-year U.K. gilt
    TMBMKGB-10Y,
    4.317%
    and 10-year German bunds were down by 10 basis points or more. Crude prices
    CL.1,
    -1.12%    ,
    which are sensitive to expectations for the global economy, fell 1.6% to $68.49 a barrel.

    However, U.S. Treasury Secretary Janet Yellen struck an upbeat tone Friday when she said during an interview with Bloomberg that recession risks in the U.S. have faded “because look at the resilience of the labor market, and inflation is coming down.”

    Investors will hear from Cleveland Fed President Loretta Mester later. She’s expected to speak at 1:40 p.m. Eastern Time.

    Companies in focus

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  • S&P 500, Nasdaq snap 3-day losing streak as stocks shrug off early losses to finish mostly higher

    S&P 500, Nasdaq snap 3-day losing streak as stocks shrug off early losses to finish mostly higher

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    U.S. stocks finished mostly higher on Thursday, with both the Nasdaq Composite and S&P 500 bringing a three-day losing streak to an end. The S&P 500
    SPX,
    +0.37%
    gained 16.16 points, or 0.4%, to finish at 4,381.85, according to preliminary closing data from FactSet. The Nasdaq Composite
    COMP,
    +0.95%
    rose by 128.41 points, or 1.3%, to 13,630.61, per early closing data. The Dow Jones Industrial Average
    DJIA,
    -0.01%
    was the only one of the main indexes to finish lower, falling 4.75 points, or less than 0.1%, to 33,947.04, its fourth straight day in the red. It’s the longest losing streak for the Dow since May 25, FactSet data show.

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  • Intel Stock Drops Despite Plan for Cost Savings. This Is Why.

    Intel Stock Drops Despite Plan for Cost Savings. This Is Why.

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    Chip maker


    Intel


    offered positive news on its foundry business Wednesday as it continues to build out new facilities to expand the custom chip-making service. Investors sold the stock anyway.

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