Tag: Dow Jones Industrial Average

CNBC Daily Open: Nvidia’s record close juiced the Nasdaq

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Jensen Huang, chief executive officer of Nvidia Corp.

David Paul Morris | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Markets popped
U.S. stocks had a great Tuesday, with the S&P 500 and Nasdaq Composite advancing more than 1% each. Meanwhile, Treasury yields dipped, relieving the pressure on stocks. Asia-markets climbed Wednesday. Australia’s S&P/ASX 200 rose around 1.4%, leading gains in the region, after the country’s consumer price index for July softened to 4.9% from June’s 5.4%.

Stricter regulations for regional banks
All U.S. banks with at least $100 billion in assets — which includes regional banks — will have to issue long-term debt, according to plans by U.S. banking regulators. The debt will protect depositors in the event of a bank failure. But raising debt at potentially higher prices will squeeze margins for mid-sized banks.

Nvidia’s record close
Nvidia shares popped 4.16% Tuesday to close at a record of $487.84. Investors cheered the chipmaker’s partnership with Google, which gives users of Google Cloud greater access to technology powered by Nvidia’s H100 GPUs. Nvidia’s risen 234% this year, making it the best performer in the S&P 500.

China’s big on Costco too
Some parts of China’s economy are booming despite a general slowdown. The average daily foot traffic at Costco was around 7,000 people — two times that of the U.S. — according to David and Susan Schwartz, co-authors of the forthcoming book “The Joy of Costco: A Treasure Hunt from A to Z.” Apart from the wholesale retailer, the premium market is enjoying success as well.

Bitcoin ETF on the way?
Crypto asset manager Grayscale prevailed in its lawsuit against the Securities and Exchange Commission, which previously denied the company’s application to convert the Grayscale Bitcoin Trust to an ETF. The ruling paves the way for other companies that want to create bitcoin ETFs, like BlackRock and Fidelity. Bitcoin jumped 6% and shares of Coinbase surged 15% on the news.

[PRO] Year-end high for S&P?
The S&P 500 will be close to touching 5,000 by the end of the year, Morgan Stanley Investment Management’s Andrew Slimmon believes. Here’s why Slimmon thinks stocks will rise despite struggling in August — and the three stocks to buy to ride on the wave.

The bottom line

A sudden flurry of positive business news — and not-so-good economic data — is giving stocks a last hurrah as they try to overcome the doldrums of August.

Nvidia’s announcement of its partnership with Google gave the stock the jolt that even its out-of-this-world earnings report couldn’t. It seemed investors were waiting for signs that Nvidia’s sales could be sustained in the long-term before piling back in — and pile back in they did.

Meanwhile, cryptocurrency got a boost from the U.S. Court of Appeals for the D.C. Circuit, which ruled against the SEC’s denial of Grayscale’s bitcoin ETF. “The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” the court said, referring to exchange-traded products.

On the other side of the coin, economic data released Tuesday doesn’t look so hot. The Conference Board’s Consumer Confidence Index came in at 106.1 for August, markedly lower than the forecast of 116. “Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at The Conference Board.

Consumers could also be concerned about the cooling labor market. Job openings in July fell from 9.5 million a month prior to 8.8 million, the lowest level since March 2021. But that’s still around 1.5 openings per unemployed person, so the figure isn’t really cool, but a nice Goldilocks temperature.

Markets found strength on the news. The S&P 500 advanced 1.45%, its best day since June 2 and its first three-day gain for August. The Dow Jones Industrial Average climbed 0.85%. The Nasdaq Composite jumped 1.74%, thanks to a bounce in tech stocks. All three indexes closed above their 50-day moving average — the first time since Aug. 14 for the S&P.

If the personal consumptions expenditure index and the jobs report for August come in softer than expected, there’s a chance stocks can sustain this positive momentum into September.

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August 29, 2023
CNBC Daily Open: Markets’ last hurrah for a horrid August

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Jensen Huang, CEO of Nvidia, shows the Nvidia Volta GPU computing platform at his keynote address at CES in Las Vegas, Jan. 7, 2018.

Rick Wilking | Reuters

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Markets popped
U.S. stocks had a great Tuesday, with the S&P 500 and Nasdaq Composite advancing more than 1% each. Meanwhile, Treasury yields dipped, relieving the pressure on stocks. The pan-European Stoxx 600 rose 1%, with all sectors and major bourses in positive territory. Shares of Dutch insurance company NN Group jumped 10.15% after posting strong earnings.

Stricter regulations for regional banks
All U.S. banks with at least $100 billion in assets — which includes regional banks — will have to issue long-term debt, according to plans by U.S. banking regulators. The debt will protect depositors in the event of a bank failure. But raising debt at potentially higher prices will squeeze margins for mid-sized banks.

Nvidia’s record close
Nvidia shares popped 4.16% Tuesday to close at a record of $487.84. Investors cheered the chipmaker’s partnership with Google, which gives users of Google Cloud greater access to technology powered by Nvidia’s H100 GPUs. Nvidia’s risen 234% this year, making it the best performer in the S&P 500.

Bitcoin ETF on the way?
Crypto asset manager Grayscale prevailed in its lawsuit against the Securities and Exchange Commission, which previously denied the company’s application to convert the Grayscale Bitcoin Trust to an ETF. The ruling paves the way for other companies that want to create bitcoin ETFs, like BlackRock and Fidelity. Bitcoin jumped 6% and shares of Coinbase surged 15% on the news.

[PRO] Buy the dip
August hasn’t been kind to stocks. It’s been the worst month of the year so far, weighed down by rising bond yields and weak economic data from China and the euro zone. But HSBC thinks now’s precisely the time for investors to buy stocks and other risk assets.

The bottom line

A sudden flurry of positive business news — and not-so-good economic data — is giving stocks a last hurrah as they try to overcome the doldrums of August.

Nvidia’s announcement of its partnership with Google gave the stock the jolt that even its out-of-this-world earnings report couldn’t. It seemed investors were waiting for signs that Nvidia’s sales could be sustained in the long-term before piling back in — and pile back in they did.

Meanwhile, cryptocurrency got a boost from the U.S. Court of Appeals for the D.C. Circuit, which ruled against the SEC’s denial of Grayscale’s bitcoin ETF. “The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” the court said, referring to exchange-traded products.

On the other side of the coin, economic data released Tuesday doesn’t look so hot. The Conference Board’s Consumer Confidence Index came in at 106.1 for August, markedly lower than the forecast of 116. “Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at The Conference Board.

Consumers could also be concerned about the cooling labor market. Job openings in July fell from 9.5 million a month prior to 8.8 million, the lowest level since March 2021. But that’s still around 1.5 openings per unemployed person, so the figure isn’t really cool, but a nice Goldilocks temperature.

Markets found strength on the news. The S&P 500 advanced 1.45%, its best day since June 2 and its first three-day gain for August. The Dow Jones Industrial Average climbed 0.85%. The Nasdaq Composite jumped 1.74%, thanks to a bounce in tech stocks. All three indexes closed above their 50-day moving average — the first time since Aug. 14 for the S&P.

If the personal consumptions expenditure index and the jobs report for August come in softer than expected, there’s a chance stocks can sustain this positive momentum into September.

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August 29, 2023
CNBC Daily Open: Despite Monday’s bounce, stocks are still wobbly

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A trader works on the floor of the New York Stock Exchange during opening bell in New York City on August 21, 2023.

Angela Weiss | AFP | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Markets’ last burst for August
U.S. stocks started the final week of August on an upbeat note, with all three major indexes closing in the green. All but one sector in the S&P 500 were positive. Asia-Pacific markets followed Wall Street higher Tuesday. Hong Kong’s Hang Seng Index extended gains from yesterday and added around 1.87%. Japan’s Nikkei 225 inched up 0.34% even as the country’s unemployment rate for July was a higher-than-expected 2.7%, compared with the 2.5% consensus.

Goldman offloads another acquisition
Goldman Sachs is selling its personal financial management unit to Creative Planning, a wealth management firm. In May 2019, Goldman acquired United Capital Financial Partners for $750 million. CEO David Solomon heralded the deal as a way to reach high net worth clientele (Goldman focuses on ultra high net worth clientele) — but the bank only captured around 1% of that market by February.

Artificial intelligence, human control
Artificial intelligence must be “subject to human control,” Microsoft’s president and vice-chairman Brad Smith told CNBC in an exclusive interview. “We need to ensure that we have humans in control,” Smith said. It follows, then, that AI won’t replace jobs, but will serve as a tool to help the humans doing the work, Smith added.

Monetizing Google Maps data
Google is planning to license solar and environment data to companies, CNBC has learned. Google has energy data on over 350 million buildings, according to documents CNBC viewed, and sees opportunity to sell the data to companies like Tesla Energy, Aurora Solar and Zillow. The tech giant hopes revenue can hit $100 million in the first year.

[PRO] ‘Absolutely formidable’ semiconductor firm
With a market capitalization of $1.15 trillion, Nvidia is the world’s most valuable chipmaker and has been the focus of this year’s AI-fueled frenzy. But there’s a semiconductor company that’s “absolutely formidable” in terms of its dominance in the foundry business, according to an analyst from asset management firm Sanlam Investments UK.

The bottom line

“There’s an old adage amongst people who cover consumer markets,” said Michael Zdinak, an economist who leads the U.S. consumer markets service at S&P Global Market Intelligence. “Never bet against the U.S. consumer because we’re always willing to spend money we don’t have.”

Analysts at Deutsche Bank and Morgan Stanley, however, aren’t so optimistic about the consumer.

“The consumer is less healthy than it appears,” wrote Morgan Stanley analyst Simeon Gutman. Consumers are spending more on services than goods, according to Gutman, which isn’t good news for consumer retailers. Indeed, the retail sector’s been roiled by volatility the last two weeks amid choppy earnings, said Deutsche Bank analyst Krisztina Katai. And investors should expect more turmoil ahead.

Maybe that warning comes from an overabundance of caution. After all, retail rallied Monday, along with nine other sectors in the S&P 500 (only utilities dipped by 0.04%). Markets broadly rose: The S&P added 0.63%, the Dow Jones Industrial Average gained 0.62% and the Nasdaq Composite climbed 0.84%.

Markets are trying to make up for a dismal August — so far, the S&P has shed around 3.4%, the Dow 2.8% and the Nasdaq 4.5% — but that might prove a difficult feat. Monday’s rally was just one data point. Moreover, there are more obstacles ahead.

“The ‘Wall of Worry’ that had all but disappeared by July is being rebuilt – U.S. 10 year yields above 4%, anxiety rising in China, Europe’s economy slumps, and a more sober tone from some U.S. retailers,” Evercore ISI senior managing director Julian Emanuel wrote in a Sunday note.

That’s not news investors want to hear heading into September, a historically bad month for stocks. Hence, even if markets manage to claw back some losses by the end of this week, it’d be prudent to brace for another trying month.

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August 28, 2023
CNBC Daily Open: Despite Monday’s bounce, stocks are still shaky

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Traders work on the floor of the New York Stock Exchange during morning trading on August 25, 2023 in New York City.

Michael M. Santiago | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Markets’ last burst for August
U.S. stocks started the final week of August on an upbeat note, with all three major indexes closing in the green. All but one sector in the S&P 500 were positive. The pan-European Stoxx 600 rose 0.89%, helped by technology and construction stocks, which were the best-performing sectors. U.K. markets were closed for a bank holiday.

Goldman offloads another acquisition
Goldman Sachs is selling its personal financial management unit to Creative Planning, a wealth management firm. In May 2019, Goldman acquired United Capital Financial Partners for $750 million. CEO David Solomon heralded the deal as a way to reach high net worth clientele (Goldman focuses on ultra high net worth clientele) — but the bank only captured around 1% of that market by February.

Monetizing Google Maps data
Google is planning to license solar and environment data to companies, CNBC has learned. Google has energy data on over 350 million buildings, according to documents CNBC viewed, and sees opportunity to sell the data to companies like Tesla Energy, Aurora Solar and Zillow. The tech giant hopes revenue can hit $100 million in the first year.

Doomed hope on meme stock?
Bed Bath & Beyond filed for Chapter 11 bankruptcy protection in April; its share price has hovered around 20 cents since then. Yet investors are still trading the stock at enormous volumes: More than 15 million transactions took place on Aug. 16, according to Nasdaq data. It seems investors are still seized by meme stock frenzy — and might be left as empty handed as the company.

[PRO] Stocks’ September vulnerability
We’re in the last trading week for August. Investors may be heaving a sigh of relief because stocks have had more down weeks than up so far this month. But September’s historically the worst month for stocks, according to CFRA data. And stocks still look vulnerable going into the new month, CNBC Pro’s Bob Pisani writes. Here’s why.

The bottom line

“There’s an old adage amongst people who cover consumer markets,” said Michael Zdinak, an economist who leads the U.S. consumer markets service at S&P Global Market Intelligence. “Never bet against the U.S. consumer because we’re always willing to spend money we don’t have.”

Analysts at Deutsche Bank and Morgan Stanley, however, aren’t so optimistic about the consumer.

“The consumer is less healthy than it appears,” wrote Morgan Stanley analyst Simeon Gutman. Consumers are spending more on services than goods, according to Gutman, which isn’t good news for consumer retailers. Indeed, the retail sector’s been roiled by volatility the last two weeks amid choppy earnings, said Deutsche Bank analyst Krisztina Katai. And investors should expect more turmoil ahead.

Maybe that warning comes from an overabundance of caution. After all, retail rallied Monday, along with nine other sectors in the S&P 500 (only utilities dipped by 0.04%). Markets broadly rose: The S&P added 0.63%, the Dow Jones Industrial Average gained 0.62% and the Nasdaq Composite climbed 0.84%.

Markets are trying to make up for a dismal August — so far, the S&P has shed around 3.4%, the Dow 2.8% and the Nasdaq 4.5% — but that might prove a difficult feat. Monday’s rally was just one data point. Moreover, there are more obstacles ahead.

“The ‘Wall of Worry’ that had all but disappeared by July is being rebuilt – U.S. 10 year yields above 4%, anxiety rising in China, Europe’s economy slumps, and a more sober tone from some U.S. retailers,” Evercore ISI senior managing director Julian Emanuel wrote in a Sunday note.

That’s not news investors want to hear heading into September, a historically bad month for stocks. Hence, even if markets manage to claw back some losses by the end of this week, it’d be prudent to brace for another trying month.

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August 28, 2023
Dow ends up 200 points, stocks score back-to-back gains

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U.S. stocks scored back-to-back gains on Monday in an attempt to claw back ground in a rough August for equities. The Dow Jones Industrial Average
DJIA,
+0.62%
rose about 213 points, or 0.6%, ending near 34,560, according to preliminary data from FactSet. The S&P 500 index
SPX,
+0.63%
closed 0.6% higher and the Nasdaq Composite Index
COMP,
+0.84%
gained 0.8%. Investors kicked of the final week of August on an upbeat note, while largely focusing on Thursday’s inflation data and Friday’s monthly jobs report to help inform the Federal Reserve’s path on interest rates and its inflation fight. The 10-year Treasury yield
TMUBMUSD10Y,
4.203%
eased back to about 4.20% late Monday after its sharp rise a week ago to its highest level since 2007. The Dow still was off about 2.8% so far in August, while the S&P 500 index was 3.4% lower and the Nasdaq was down 4.5%, according to FactSet.

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August 28, 2023
Investors parked heavy in cash may be making a ‘mistake’, Nuveen says

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Investors sitting on the sidelines in cash and in money-market funds might consider moving into longer-dated bonds sooner rather than later, according to Saira Malik, chief investment officer at Nuveen.

As look at historical returns shows the broader $55 trillion U.S. bond market typically outperforms short-term Treasurys at the end of past Federal Reserve rate hiking cycles since the 1990s.

The bond market produced an average 5.5% three-month rolling return following the last rate hike (see chart) in the past four Fed hiking cycles, while short-term Treasurys returned 2.1%.

This data includes the three-month rolling average performance of bonds in all Federal Reserve rate-hiking cycles since 1990 (1995, 2000, 2006 and 2018) based on the Bloomberg U.S. Aggregate Bond Index and the Bloomberg U.S. Treasury 1-3 Year Index

Bloomberg, Nuveen

Of note, the magnitude of the bond market’s outperformance faded by 12 months versus short-term positions, when looking at the Bloomberg U.S. Aggregate Bond Index’s performance relative to the Bloomberg U.S. Treasury 1-3 Year Index.

“The broad market typically experienced a strong relief rally immediately after the Fed pause and mostly outperformed the following year,” Malik said, in a Monday client note. “This lends further credence to our view that overallocating to cash or short-term government debt could be a mistake — and that investors may want to start closing their duration underweights.”

Individuals can gain exposure to Wall Street bond indexes through related exchange-traded funds, including the iShares Core U.S. Aggregate Bond ETF
AGG
and the SPDR Bloomberg 1-3 Year U.S. Treasury Bond UCITS ETF
UK:TSY3
for short-term Treasury exposure.

Fed Chairman Jerome Powell signaled on Friday that additional rate hikes might be needed to keep the U.S. cost of living in retreat, even though rates already sit at a 22-year high and inflation has fallen sharply in the past year, while speaking at the annual Jackson Hole gathering in Wyoming. He also reiterated a vow to keep rates at a restrictive level for a while to keep inflation in check.

Malik pointed to cooling housing inflation as a positive sign on the inflation front. Home buyers have pulling back as the benchmark 30-year mortgage rate hit an average of 7.31%, the highest levels since 2000.

She also expects U.S. economic growth to slow and a “partial retracing” of the 10-year Treasury yield
BX:TMUBMUSD10Y,
following its surge in recent weeks.

“Historically, the 10-year yield has peaked within the last few months of the final rate hike in a tightening cycle. We expect this hike will occur at either the September or November Fed meeting, and that the 10-year yield will decline through year-end.” Yields and debt prices move opposite each other.

Related: Pimco emerges as a buyer in Treasury market selloff, says Bond Vigilante theme ‘a bit extreme’

Stocks were higher Monday, with the Dow Jones Industrial Average
DJIA
up 0.5%, the S&P 500 index
SPX
0.3% higher and the Nasdaq Composite Index
COMP
up 0.4%, according to FactSet.

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August 28, 2023
Fed’s Powell leaves investors with a cloud of uncertainty. Why the U.S. stock market faces a difficult week ahead.

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The U.S. stock market recovered from a three-week losing streak this week, though release of Nvidia’s earnings and a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium provided some volatility, but the artificial intelligence boom offset rising bond yields.

Next week, the July personal consumption expenditure index, the Fed’s preferred measure of inflation, and the latest monthly employment report will offer another trial for the markets as investors assess whether stocks can defend their recent gains under the “cloudy skies” of uncertainty over the economic outlook.

On Friday, Fed Chair Powell said the central bank is prepared to raise interest rates further until policymakers are confident that inflation is on a convincing path toward the Fed’s 2% target, but he admitted they remain unsure of whether more rate hikes are needed as the economy may not have felt the full effect yet of the monetary tightening over the past year and a half.

“Powell is in this position where he’s trying to summit one of the Grand Tetons and he doesn’t do that without pausing and catching his breath,” said Johan Grahn, head ETF market strategist at Allianz Investment Management. Grahn thinks the Federal Open Market Committee is debating whether they have reached the “summit,” or one of the “peaks,” or are at a “false summit” in their endeavors to curb inflation through interest-rate hikes and demand moderation.

“Powell needs these ‘data clouds’ to give him a sign so that they know if the work is done, and I don’t believe that he will know that between now and September,” Grahn said.

Powell’s heavily anticipated address at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming came days after Nvidia
NVDA,
-2.43%,
the chip maker at the forefront of an industry-wide AI frenzy, delivered blowout earnings that surpassed Wall Street’s estimates, thanks largely to a boom in revenue from generative AI. However, both events were largely in line with expectations eliciting yawns from a sleepy August Wall Street, said market analysts.

U.S. stocks finished the week mostly higher with the Dow Jones Industrial Average
DJIA
down 0.5%, while the S&P 500
SPX
gained 0.8% and the Nasdaq Composite
COMP
climbed 2.3% for the week, according to Dow Jones Market Data.

See: Hot U.S. economy pushes real yields to around 15-year highs after Powell’s Jackson Hole speech

However, the biggest event for markets is always the next one.

With the second-quarter earnings reporting season coming to an end, major economic data in coming days will provide some guidance on the resilience of the U.S. economy and whether the Fed will raise interest rates further at its September 19-20 policy meeting.

“There’s a dearth of corporate news that’s really going to move the markets, which means traders and investors are going to focus their attention on the macro components,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.

Next week, the markets will get the latest reports on the jobs market, including the July Job Openings and Labor Turnover Survey (JOLTS) due out on Tuesday, followed by August ADP’s National Employment Report on Wednesday. The Labor Department’s August nonfarm payrolls report will center stage on Friday.

The U.S. economy is expected to add 175,000 new jobs in August, down from 187,000 in the prior month, economists polled by the Dow Jones estimate. The percentage of jobless Americans seeking work is forecast to remain unchanged at 3.5% from the previous month. The central bank in June predicted unemployment would climb to 4.1% by the end of 2023, compared with 4.5% in March’s prediction, according to the quarterly Summary of Economic Projections.

Meanwhile, the Bureau of Economic Analysis on Thursday will release its Personal Consumption Expenditures (PCE) Index — the Fed’s preferred inflation gauge — for July.

Annual U.S. inflation in July is forecast to creep back up to 3.3% year-over-year from 3% in the prior month, while consumer prices are expected to rise another mild 0.2% for the month. The so-called “core” PCE is also expected to tick up slightly to 4.2% from 4.1% in June, according to Wall Street analysts polled by Dow Jones. The core rate omits volatile food and energy costs and is viewed by the Fed as a better predictor of future inflation trends.

Powell, during his speech at Jackson Hole, pointed to the core PCE as his focus. “The lower monthly readings for core inflation in June and July were welcome, but two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said.

Investors need the “Goldilocks scenario” where economic growth is slowing, but not falling off a cliff, which would suggest that the Fed is closer to being done raising interest rates, Saglimbene told MarketWatch in a phone interview on Friday. “Any stronger than expected economic data, such as hotter-than-expected PCE inflation and employment report, may be greeted by the market as negative.”

While the July PCE report will be the “linchpin” for the September policy meeting, the data would have to skew significantly away from expectations in order for policymakers to take “one more step up this proverbial mountain,” said Grahn.

However, the assessment of the precise level of monetary policy restraint is complicated by uncertainty about the duration of the lags with which monetary tightening affects economic activity and inflation, Powell said on Friday, noting “the wide range of estimates” of these lags suggests that there may be “significant further drag” in the pipeline.

“The lag effect, in my opinion, overshadows the concern that two months of good inflation readings is not a trend,” Grahn told MarketWatch via phone on Friday. “The lag effect is starting to work its way into the economy, but it’s not reasonable to believe it will show the full impact in the next four weeks, so I would expect a meeting in September with a decision to nothing.”

Overall the U.S. stock market has slumped this month as August once again lives up to its dismal reputation for stocks. The S&P 500 has lost nearly 4% so far this month, on course for its biggest monthly loss of 2023, while the Dow Jones Industrial Average was down 3.4% and the Nasdaq Composite has dropped 5.3% month-to-date, according to Dow Jones Market Data.

These pullbacks are seen as a sharp contrast to the AI-driven rally earlier this year when the Nasdaq Composite had its best first-half performance since 1983, as investors hoped the Fed might be able to back off its inflation battle more quickly than markets have expected.

However, recent strong economic data has raised concern that the Fed will keep its benchmark lending rates higher for longer than anticipated, which triggered a jump in longer-dated Treasury yields.

The 10-year Treasury note yield
BX:TMUBMUSD10Y
rose to its highest level since November 2007 on Monday, according to Dow Jones Market Data. Elsewhere, a slowdown in China’s economy after emerging from COVID-19 lockdowns, the lingering debt troubles in its real-estate sector and the uncertainty of Beijing’s policy support are also feeding into broader unease in the U.S. financial markets.

See: Global investors expect China to deliver a massive fiscal stimulus. Here’s why it may never arrive.

August is historically not the best month for the U.S. stock market. Investors came into August of 2023 with five straight months of gains for the S&P 500 index and the Nasdaq Composite, so there was an “excuse” for investors to take profits on megacap technology companies which are trading at “rich valuations,” Saglimbene said.

The weekly AAII Investor Sentiment Survey shows bullish sentiment decreased and is below average for the second consecutive week in the seven days to Wednesday. In the most recent survey, only 32.3% of respondents had a bullish outlook for the stock market, which is below the historical average of 37.5%.

However, historical data shows that September may not look much better than August as September is traditionally the weakest month for U.S. stocks. The S&P 500 and the Dow industrials each has lost an average of 1.1% in September dating back to 1928 and 1896, respectively, according to Dow Jones Market Data.

See: Here are the odds that the stock market will crash

Moreover, there’s still a concern that the Fed is going to raise interest rates again and may slow the economy more than expected, which may end up causing a recession in 2024, said Saglimbene.

“I don’t think traders are ready to step into the market and buy based on these declines, but I do think if we see more pressure in September while macro conditions are holding up, you’re going to have more investors step in and start buying, and that could be more supportive [for stocks] in the back half of this year when seasonality trends get better.”

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August 27, 2023
U.S. stocks finish higher as S&P 500, Nasdaq snap 3-week losing streak

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U.S. stocks finished higher on Friday, helping the Nasdaq Composite and S&P 500 clinch their first weekly gain after three weeks of losses. The S&P 500
SPX,
+0.67%
gained 29.40 points, or 0.7%, to 4,405, according to preliminary closing data from FactSet. It finished 0.8% higher on the week, snapping a three-week losing streak. The Nasdaq Composite
COMP,
+0.94%
gained 126.67 points, or 0.9%, to 13,590.65. The Dow Jones Industrial Average
DJIA,
+0.73%
rose by 247.48, or 0.7%, to 34,346.90, but notched a 0.5% loss on the week, for its third weekly loss in four. Federal Reserve Chairman Jerome Powell delivered a speech at the Kansas City Fed’s annual symposium in Jackson Hole that moved markets on Friday, although stocks managed to shrug off initial losses to climb higher during the session.

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August 25, 2023
How the stock market’s performance under Biden is worse than under Obama or Trump — in one chart

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U.S. stocks so far haven’t fared as well under President Joe Biden as they did in Donald Trump’s single term or in either of Barack Obama’s two terms.

The research team at Wilshire Indexes is pointing that out this month with the chart below, which features the FT Wilshire 5000
XX:W5000FLT,
an index that aims to reflect the performance of the total U.S. stock market.

U.S. stocks haven’t performed as well in Biden’s current term as they did under Obama or Trump.

Wilshire Indexes

Biden and his allies could be worried about how stocks
SPX
are doing, and it’s possible his administration will try to help the market somehow in 2024, according to Philip Lawlor, managing director of market research at Wilshire Indexes.

“With the 2024 election in sight, the disparity in cumulative equity return generated so far under the Biden administration compared to the superior return trajectory delivered by the Trump and Obama presidencies could cause some concern,” Lawlor wrote. “Electoral cycle logic points to the Biden administration doing its utmost to ensure that the gap closes next year.”

Biden officially launched his re-election campaign in April, and the Democratic incumbent and his cabinet officials have traveled around the U.S. in recent months to talk up their economic policies, including measures such as the Inflation Reduction Act.

When asked about the stock market’s struggles earlier this year, one White House official told MarketWatch that the administration wants to see “strong performance,” but he also noted that roughly half of Americans don’t hold stocks and highlighted other economic indicators.

“The markets are going to go up and down. The main measure that the president has about the state of the economy is, how are middle-class families doing?” said Bharat Ramamurti, deputy director of the White House’s National Economic Council.

“Do they have good-paying jobs that allow them to support themselves and their families? Are they seeing their wages go up? Do they feel like they have good opportunities to advance in their career, good opportunities to switch jobs and make more money? Or live in a better neighborhood, or whatever the case may be? By those metrics, we think that the economy is doing very, very well.”

Republican presidential hopefuls made their economic pitches at a debate on Wednesday night in Milwaukee, with Florida Gov. Ron DeSantis, who is currently running second in GOP primary polls, saying the country “must reverse ‘Bidenomics’ so that middle-class families have a chance to succeed again.” Trump, the current frontrunner in the 2024 primary, skipped the debate and instead released an interview just before the event kicked off.

Betting markets tracked by RealClearPolitics give Biden a 35% chance of winning the 2024 presidential election, while Trump is at 27% and DeSantis is at 6%.

Stocks
DJIA

COMP
were higher in choppy trading Friday after Federal Reserve Chair Jerome Powell warned that the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that the Fed would proceed cautiously.

From MarketWatch’s archives (Dec. 31, 2022): U.S. stocks log their worst year since 2008, crushed by Fed’s rate hikes

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August 25, 2023
U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

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U.S. stocks ended higher Friday after Federal Reserve Chairman Jerome Powell warned the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that monetary policy would proceed cautiously.

How stock indexes traded

For the week, the Dow fell 0.4%, the S&P 500 gained 0.8% and the Nasdaq climbed 2.3%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses, while the S&P 500 and technology-heavy Nasdaq Composite each…

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August 25, 2023
CNBC Daily Open: Jackson Hole fears overshadow Nvidia

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Jerome Powell, chairman of the U.S. Federal Reserve, right, walks the grounds at the Jackson Hole economic symposium in Moran, Wyoming, US, on Thursday, Aug. 24, 2023.

David Paul Morris | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Rally fizzles out
U.S. stocks closed lower Thursday as an earlier Nvidia-sparked rally fizzled out, while Treasury yields climbed higher. The pan-European Stoxx 600 tumbled 0.4%, ending three consecutive days of gains. Separately, Turkey hiked interest rates from 17.5% to 25%, more than the expected 20%. The lira jumped on the news.

Muted response to Nvidia
Nvidia shares inched up just 0.1% Thursday, paring earlier gains of as much as 8% when it touched a record high of $502. That’s despite the company reporting an astounding earnings beat after the bell Wednesday. Nvidia’s results scared investors away from competitors as well: Shares of AMD slumped 7%, while that of Intel sank 4.1%.

Dog days of August
August is living up to its reputation as a horrid month for stocks. The S&P 500 is down more than 3% so far, on pace to snap a five-month winning streak, while the Nasdaq Composite is headed for its biggest one-month loss since December. Low trading volumes, economic weakness in China and high Treasury yields are all contributing to the August sell-off, writes CNBC’s Fred Imbert.

Building BRICS
The BRICS coalition — which comprises Brazil, Russia, India, China and South Africa — extended invitations to six nations. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates will join BRICS on Jan. 1, 2024. A total of 23 countries, including the six set to join the coalition, have formally applied for membership.

[PRO] A single-stock ETF play
Exchange-traded funds typically track a basket of stocks belonging to a specific sector, like banks or semiconductors. This ETF, however, consists of just one stock — and aims to deliver a 1.5-times return on a daily basis. What’s more, it’s had a return of more than 400% year to date.

The bottom line

Even Nvidia’s blockbuster earnings couldn’t quell investor anxiety over Jackson Hole.

Nvidia shares rose just 0.1% despite reporting a 422% year-over-year surge in net income. Perhaps investors, bursting with enthusiasm over the chipmaker, had already priced in the record revenue. Perhaps investors wanted to cash out early after Nvidia’s shares hit a record high earlier in the day — investors have been bracing for a bad August, and an even worse September, which is historically the worst month for stocks. Or perhaps investors were worried about Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.

(To be clear, analysts still think Nvidia’s shares will pop in the long run. Rosenblatt increased its price target from $800 to $1,100, a new high among Wall Street analysts and an implied 133% upside from Thursday’s close. Big Wall Street banks like Goldman Sachs, Citi and Bank of America were more conservative than that, but still hiked their targets for Nvidia.)

Last year, the S&P 500 lost 2% in the five trading days before Powell’s Jackson Hole speech, and stumbled 5.5% in the five after, according to DataTrek Research. This time, investors are “worried about what [Powell] might say around r-star and embracing, high new normal rates,” said Krishna Guha, head of global policy and central bank strategy for Evercore ISI. R-star is the value at which interest rates neither stimulate nor restrict the economy. In other words, investors are concerned the Fed might not cut interest rates that much even after inflation subsides.

History, then, repeated itself. One day before Powell’s speech, stocks fell sharply. The S&P retreated 1.5% and the Nasdaq shed 1.87%, the biggest one-day loss since Aug. 2 for both indexes. The Dow Jones Industrial Average slipped 1.08%, its worst day since March. Technology stocks, because of their sensitivity to interest rates, were the biggest losers of the day: Amazon lost 2.7% and Apple dropped 2.6%. With just one week left before August draws to a close, it seems market sentiment isn’t likely to change soon, even with earth-shattering reports like Nvidia’s.

— CNBC’s Jeff Cox contributed to this report

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August 24, 2023
Why this abstract concept could rattle stocks when Powell speaks at Jackson Hole

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There’s one big, but theoretical, concept that has the potential to shake up the stock market the most on Friday, when Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech at an annual symposium held in Jackson Hole, Wyo.

It has to do with the neutral rate of interest. That’s the level of real short-term interest rates that’s expected to prevail when the U.S. economy is at full strength and inflation is stable. The real neutral rate — known alternatively as r* or r-star— is estimated to be around 0.5%, after subtracting the Fed’s 2% inflation target from policy makers’ latest forecasts for where the fed funds rates is likely to be in the long run. And that neutral rate may be moving higher, given how the economy is performing right now.

Read: Jackson Hole meeting: When is Jerome Powell’s speech? What investors need to know.

Settling on the right theoretical level for the neutral rate matters because the U.S. economy appears to be accelerating, even after the Fed has hiked rates by more than five full percentage points to a 22-year high of 5.25%-5.5%. The world’s largest economy grew at a solid 2% pace in the first quarter, followed by a 2.4% pace for the second quarter. Now, the Atlanta Fed’s GDPNow model is forecasting a third-quarter growth rate of 5.8% for real gross domestic product — a number that’s drawn plenty of skeptics, but underscores just how well the economy seems to be doing.

See: R-Star Is the New Buzzword. Listen for It at Jackson Hole.

“The notion of a higher r-star or neutral rate has crept its way into the marketplace and has been a hot topic lately,” said Thomas Urano, co-chief investment officer at fixed-income money manager Sage Advisory in Austin, Texas, which oversaw $23 billion as of July. “The market is trying to digest where the Fed views this neutral rate and is looking to get a little more clarity as Powell speaks in Jackson Hole.”

If the neutral rate is higher than previously thought, that means policy makers might need to hike the fed-funds rate target even further, in addition to holding borrowing costs higher for longer and delaying the timing of their first rate cut.

Traders and investors are well aware that the Fed is likely to keep interest rates higher for longer, and they’ve pushed out their expectations about the timing of the first rate cut next year, according to Dan Eye, chief investment officer for Pennsylvania-based Fort Pitt Capital Group, which manages $4.9 billion in assets.

However, the market is not yet fully positioned for the Fed to put rate hikes back on the table, Eye said via phone on Wednesday.

Dow industrials
DJIA,
the S&P 500
SPX,
and Nasdaq Composite
COMP
are respectively up so far this year by 4.1%, 15.6%, and 31.3% as investors and traders hold out hope for a soft- or no-landing scenario in which the U.S. economy can emerge relatively unscathed as inflation keeps falling.

As of Wednesday afternoon, all three major stock indexes were higher, led by a 1.8% advance in the Nasdaq Composite as investors await a fiscal second-quarter earnings announcement from chip maker Nvidia Corp.
NVDA,
+2.84%
that’s due after the close.

Any remarks by Powell on Friday that can be interpreted as suggesting that more rate hikes are likely to come will produce volatility and “a downdraft in stocks,” Eye said. The best possible outcome for stock investors would be if Powell “stresses data dependency and says that policy makers will continue to consider the cumulative impact of rate hikes that have been done already.”

The theme of the Kansas City Fed’s Jackson Hole symposium, being held Thursday-Saturday, is “Structural Shifts in the Global Economy,” a topic that’s led to the growing expectation that Powell will address where he and the Fed currently see the neutral rate.

In the run-up to Friday’s Jackson Hole speech, the Treasury market has already priced in a scenario of better-than-expected U.S. economic growth, with 10- and 30-year yields reaching multiyear highs on Monday and last week. Though both yields pulled back on Tuesday and Wednesday, they could bounce back again if investors sell off long-dated government debt in response to Powell’s remarks, investors said.

The recent rise in yields has been blamed, in part, for August’s decline in U.S. stocks, with the S&P 500 down more than 3% so far this month.

“Powell has to sound hawkish, he cannot afford not to do so” because “any signal that the hiking cycle is done will probably lead to such a bullish response in risk assets that it will loosen broader financial conditions,” said strategist Rikkert Scholten at Rotterdam-based Robeco, which oversees $194 billion.

Still, Robeco’s investment team also expects the Fed chairman to stress data dependence as a way of “credibly” keeping his options open.

Brad Conger, deputy chief investment officer at Hirtle Callaghan & Co. in West Conshohocken, Penn., which manages $18.5 billion in assets, said he believes the Fed is near the end of its rate-hiking cycle, which began in March 2022.

Nevertheless, “any discussion about a higher natural rate of interest due to the shifting structure of the economy would set off a bout of uncertainty,” he said. Natural rate is the phrase used to describe where the neutral rate may settle over the longer run.

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August 23, 2023
CNBC Daily Open: Rising yields couldn’t stifle excitement over Nvidia

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A sign is posted at the Nvidia headquarters in Santa Clara, California, May 25, 2022.

Justin Sullivan | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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

Tech rallied amid rising yields
The Nasdaq Composite rallied Monday, breaking a four-day losing streak, even as the 10-year U.S. Treasury yield hit 4.342%, a decades-long high. Asia-Pacific markets mostly rose. Japan’s Nikkei 225 climbed around 0.9%. The index was lifted by SoftBank shares rising 1.57% on the news that its chip unit Arm has filed for a Nasdaq listing.

Nasdaq listing for Arm
Arm filed for a Nasdaq listing Monday. The U.K.-based company didn’t provide a projected share price, so its valuation is still unknown. (Japan’s Softbank bought Arm in 2016 for $32 billion.) Arm’s chip designs are found in nearly all smartphones, making it one of the most important companies in the chip industry — and a big deal for the initial public offerings market.

S&P cuts credit ratings of banks
S&P Global downgraded the credit ratings of several U.S. banks Monday. The ratings of Associated Banc-Corp and Valley National Bancorp were cut because of funding risks and a higher reliance on brokered deposits, while that of UMB Financial Corp, Comerica Bank and Keycorp were downgraded because of large deposit outflows and interest rates remaining high.

Ingredients for food inflation in Asia
Rice prices surged to their highest in almost 12 years after India banned the export of non-basmati white rice in July. Now, India, the world’s largest exporter of onions, is adding a 40% export tax to the allium. “What seems to be clear is that food price volatility will continue in coming months,” an analyst said.

[PRO] 10% fall in the Stoxx 600?
Europe’s regional Stoxx 600 index currently at 448.66 — but UBS thinks the index will drop 10% to 410 by the end of this year. These are the stocks that will drag the index down because of their high volatility and negative earnings revisions, according to the Swiss bank.

The bottom line

Yields on U.S. Treasurys continued marching higher, with the benchmark 10-year yield closing at 4.342%, a level not seen since November 2007. The 2-year yield added over 6 basis points to breach the 5% barrier, trading at 5.007%.

“Typically spikes in Treasury yields expose other areas of weakness,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “This is a risk to tech stocks and growth stocks with high PE multiples.”

It’s true technology stocks are sensitive to a high interest rate environment because their value rests on future earnings. Despite that, tech rallied, making their gains even more striking. The tech-heavy Nasdaq Composite snapped a four-day losing streak to advance 1.6%, its biggest one-day increase since July 28 when it added 1.9%. The S&P 500 tech sector gained 2.26%, helping to push the broader index up 0.69%. However, the Dow Jones Industrial Average slipped 0.11%.

“We’re seeing a positive return in the stock market, [which] we didn’t see last week. We think rates are going to be higher for longer and maybe the stock market’s okay with it,” Katy Kaminski, chief market strategist at AlphaSimplex, told CNBC.

Some individual stock movements of note: Tesla popped 7.33%, Meta rose 2.35% and Nvidia jumped 8.3%. Investors are anticipating Nvidia’s earnings report, which comes out Wednesday after the bell. It’s a crucial moment when we’ll find out whether Nvidia’s revenue forecast — which was 50% higher than Wall Street estimates — comes to fruition.

If it does, expect another surge in its stock and other AI-related firms. More importantly, Nvidia’s report might sway market sentiment again, as it did in May when the chipmaker changed the narrative from woes around inflation and recession to optimism and enthusiasm over AI. Some excitement is exactly what the market needs in a sluggish August.

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August 21, 2023
Stocks end mostly lower, Nasdaq books biggest 3-week drop since December

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Stocks closed mostly lower Friday, capping off a bruising week of losses as Treasury yields jumped and China’s mounting property woes gripped investors. The Dow Jones Industrial Average
DJIA,
+0.07%
rose about 27 points, or 0.1%, ending near 34,501, according to preliminary FactSet data. The S&P 500 index
SPX,
-0.01%
was nearly flat at 4,370 and the Nasdaq Composite Index
COMP,
-0.20%
shed 0.2%, despite briefly turning positive late in the session. It still was a tough week for equities, with the Dow booking a 2.2% loss, the S&P 500 index a 2.1% decline and the Nasdaq a 2.6%. The Nasdaq also posted its biggest 3-week decline since December 2022, according to Dow Jones Market Data. Yields on the 10-year Treasury rose for a 5th week in the row, with the benchmark
TMUBMUSD10Y,
4.252%
rate briefly touching its highest level since November 2007, before settling back at 4.251% on Friday. China Evergrande’s
EGRNF,

Chapter 15 bankruptcy filing in New York late Thursday kept focus on the wobbling property market in the world’s second-largest economy. Earlier in the week, Country Garden Group missed a dollar-denominated debt payment. Next week investors will be focused on Federal Reserve Chairman Jerome Powell’s speech on Friday at the Jackson Hole economic summit for hints to whether the central bank is likely done hiking rates in this cycle. The Fed’s policy rate sits at its highest level in 22 years.

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August 18, 2023
Union Throws a Curveball in Battle for U.S. Steel
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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/u-s-steel-usw-right-bid-cliffs-89cbf208
Updated Aug. 18, 2023 2:15 pm ET / Original Aug. 18, 2023 11:58 am ET

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The battle for

United States Steel

has already taken a number of unexpected twists and turns. Investors just got another one.
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August 18, 2023
The selloff in Treasurys isn’t over yet, Barclays warns

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There is room for a continued selloff in U.S. Treasurys which has already pushed 10- and 30-year yields to their highest levels since 2007 and 2011, according to researchers at Barclays.Though the recent selloff took a breather on Friday, the steady drive higher in long-dated yields which unfolded this week left observers warning that the era of low rates may be firmly behind the U.S. as a new normal appears to take shape in the bond market. Long-term rates yields are just beginning to enter ranges that have been historically consistent with where they traded during the early 2000s.Read: Why Treasury yields keep rising,…

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August 18, 2023
This one stock holds the key to the market and whether this August sell-off is something bigger

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August 18, 2023
U.S. stocks open lower with Dow industrials heading for worst week since March

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U.S. stock indexes opened lower on Friday as the Dow Jones Industrial Average is on pace to book its worst week since March, while the S&P 500 and the Nasdaq Composite are headed for their third straight week of losses. The Dow industrials
DJIA,
-0.26%
was down 156 points, or 0.4%, to 34,328, with the blue-chip gauge dropping 2.7% for the week. The S&P 500
SPX,
-0.54%
lost 0.6% on Friday, on pace to post a weekly decline of 2.7%. The Nasdaq
COMP,
-0.94%
was off 0.9%, losing 3.3% so far this week, according to FactSet data. Treasury yields were slightly lower on Friday morning, with the 10-year yield
TMUBMUSD10Y,
4.234%
down 2 basis points, at 4.27% after rising to its highest level since 2007 in the previous session.

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August 18, 2023
Traders brace for explosion of volatility Friday as $2.2 trillion in stock options expire

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It’s that time again: monthly stock-market options for August are set to expire on Friday, potentially spurring more volatility in stocks after a bruising three-week run.

U.S. stock option contracts with a notional value of $2.2 trillion are set to expire, according to Rocky Fishman, founder of newly formed strategy firm Asym 500 and a former head of index derivatives strategy at Goldman Sachs Group. Notional value measures the market value of the stocks, indexes and exchange-traded funds controlled by the options, although the premiums paid by holders of the options are worth much less.

ASYM 500

Fishman noted that the size of option-market open interest expiring on Friday is about average for an off-month expiration.

Monthly options expire every month, but once a quarter — in March, June, September and December — an event known as “Triple Witching” takes place, causing notional value of expiring options to swell as quarterly and sometimes calendar-year options expire along with monthlies and weeklies.

Sessions where monthly options expire often see higher-than-normal volatility, and options-market analysts warned that the same could happen on Friday.

Charlie McElligott, a longtime derivatives strategist who publishes research on Nomura’s trading desk, warned clients that option dealers are “short gamma” heading into Friday’s expiration, increasing the potential for option dealers to exacerbate market volatility. McElligott illustrated this tendency in the chart below.

NOMURA

Why are dealers short gamma, and what does this mean? As stocks have stumbled, option traders have been buying put options and selling call options. As a result, dealers could be forced to hedge their positions by buying futures if stocks rise and their customers close out their short-call positions, or selling futures to hedge the risk of puts moving into the money.

This would serve to exaggerate the market’s move in either direction, driving a rising market higher and a falling market lower, McElligott said.

Dealers could hit “peak short gamma” if the S&P 500 falls to 4,320, sending a wave of puts into the money. If that happens, it’s possible dealers could slam stocks lower as they rush to avoid being on the hook for puts sold to customers. The S&P 500
SPX
finished Thursday at 4,370.36.

NOMURA

Gamma is used by options analysts to describe how quickly an option’s delta changes. Delta represents how sensitive the price of an option is to moves in the underlying asset. When options are about to expire, delta typically increases dramatically, since small moves that put it closer to being in or out of the money can have a dramatic impact on the option’s price.

Brent Kochuba, founder of SpotGamma, also cited risks tied to dealers’ short-gamma position in research shared with clients. SpotGamma shares data and analytics about the option market.

“We have been watching market gamma fall into negative gamma territory all month. Once it entered that range, price action became visibly choppier, as expected during these conditions,” he said in written commentary shared with MarketWatch and SpotGamma clients.

Option contracts give traders the right, but not the obligation, to buy or sell the underlying asset or currency. Often, options tied to stock-market indexes like the S&P 500 are settled in futures or cash. Options tied to exchange-traded funds like the SPDR S&P 500 ETF Trust
SPY,
which tracks the S&P 500 index, are settled in shares of the ETF.

A put option allows the buyer the right, but not the obligation, to sell shares at an agreed-upon price known as the “strike price.” A call option, conversely, gives the holder the right to buy shares. Put options tend to appreciate when the underlying stock or index falls, while the opposite is true for calls.

U.S. stocks finished lower on Thursday, with the S&P 500 and Nasdaq Composite poised to record a third straight weekly decline, what would be the longest such streak for the S&P 500 since February.

The S&P 500 was off by 0.8% on Thursday, while the Nasdaq Composite
COMP
fell by 1.2% to 13,316.93. The Dow Jones Industrial Average
DJIA
shed 290.91 points, or 0.8%, to 34,474.83.

In addition to monthly options expiring Friday, weekly options known as “zero days until expiration” or “0DTE” options could further complicate the market’s reaction. A veteran Goldman Sachs Group strategist warned earlier this week that 0DTE traders have been limiting upswings in stocks while piling on the pressure when markets sink.

See: ‘This is no longer a buy-the-dip market.’ Why this Goldman Sachs veteran is worried about the stock market.

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August 18, 2023
Deere Raises Guidance as Earnings Smash Estimates

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Deere

crushed Wall Street’s earnings estimates and increased fiscal-year financial guidance. The stock, however, was down. Current results were great, but investors are worried about whether the current phase of rising demand for agricultural equipment is over.

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August 18, 2023