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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

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    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

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    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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  • Is Japan’s world-beating stock-market rally merely a function of a weak yen?

    Is Japan’s world-beating stock-market rally merely a function of a weak yen?

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    Japanese stocks are primed to outpace global peers this year, with the Nikkei 225 Stock Average reaching its highest level in nearly 33 years last week and up 17.6% year-to-date.

    However, most of the Japan’s stock outperformance is a direct result of renewed weakness in Japanese yen, and it could tell us little about domestic policy or economic performance in Japan, argued Adam Cole, chief currency strategist at RBC Capital Markets. 

    Unsurprisingly, Japan’s outperformance is attracting attention. Investors have cited a number of drivers besides a weak yen, including corporate governance reforms, a push to return cash to shareholders, and cheaper valuations and lower volatility relative to much of the U.S. market.

    Billionaire investor Warren Buffett is also feeding the excitement. Berkshire Hathaway Inc.
    BRK.A,
    +0.69%

    BRK.B,
    +0.59%
    has boosted its stake in five Japanese trading conglomerates and now has more equity exposure in Japan than any other country outside the U.S.

    The Nikkei
    NIK,
    +0.37%    ,
    the best performing major market index of 2023, has solidly outperformed the S&P 500
    SPX,
    +1.17%    ,
    which is up around 7% so far this year. The iShares MSCI Japan ETF
    EWJ,
    +0.32%    ,
    which tracks the MSCI Japan Index, is up 9.7% in the year to date, versus a gain of 7.5% for the S&P 500-tracking SPDR S&P 500 ETF Trust
    SPY,
    +1.17%    .

    See: Japan’s stock market is smoking the S&P 500. Is it too late to jump in?

    Cole, in a note, pointed to the chart below highlighting the relative performance of Japanese equities, which has recently followed the dollar/yen currency pair
    USDJPY,
    +0.33%
    closely. It “should not be surprising given the prominence of exporters in listed Japanese companies,” he said in a Wednesday note. 

    SOURCE: RBC CAPITAL MARKETS, BLOOMBERG

    The U.S. dollar fetched 139.45 yen Wednesday, its strongest level versus the Japanese currency since last November, amid broad strength for the greenback. The ICE U.S. Dollar index
    DXY,
    +0.03%    ,
    which measures the currency’s strength against a basket of six major rivals, advanced 0.4% to 103.90 on Wednesday, according to FactSet data.

    Cole thinks there is strong evidence that economic activity in advanced economies has become less sensitive to exchange-rate movements over the last 30 years as moves in foreign exchange tend to be “fully passed through to trade prices and hence export margins.” 

    As a result, internationally-exposed equity markets have become more sensitive to exchange-rate movements.

    When comparing the Nikkei 225’s performance relative to the MSCI World Index
    990100,
    +0.29%    ,
    which represents large and midcap equity performance across all 23 developed markets, Cole said Japanese equities are almost “exactly in the middle of the last 30 years’ range, rather than being at a 30 year high.”

    If RBC’s expectation of further yen weakness is correct, Japanese stocks may still have the potential to continue their outperformance, said Cole.

    He warned, however, that investors should be aware that the causality should run from the currency to the equity market, instead of the other way. That means the rally in the equity market tells us “little about domestic policy or economic performance in Japan,” Cole said.

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  • Could bitcoin and gold be haven buys as debt-ceiling fears mount? Here’s what recent trading patterns suggest.

    Could bitcoin and gold be haven buys as debt-ceiling fears mount? Here’s what recent trading patterns suggest.

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    Welcome back to Distributed Ledger. This is Frances Yue, reporter at MarketWatch.

    Fears are brewing in financial markets that the U.S. lawmakers won’t be able to reach an agreement to raise the country’s debt limit by X date, or the date that the U.S. government is unable to meet its debt obligations.  

    Analysts at JPMorgan Chase & Co.
    JPM,
    +0.94%
    on Wednesday said they see the odds of debt ceiling negotiators failing to reach a deal by early June at “around 25% and rising.” 

    Concerns around a technical default of U.S. government debt have contributed to volatility across financial markets, sending Treasury bills maturing in the first eight days of June above 6%. Yields on such bills briefly topped 7% on Thursday. 

    As investors search for havens from such tumult, gold and bitcoin are often cited as potential refuges. 

    Still, gold futures have been retreating since the most-active contract reached its second-highest settlement on record on May 4. 

    Bitcoin, which rallied almost 60% so far this year, have also posted lackluster performance for the past few weeks, down 5.8% over the past month. 

    Are gold and bitcoin effective hedges against a technical default of U.S. government debt? Why are we not seeing a rally as the X date approaches? I caught up with several analysts to ask their views.

    Find me on Twitter at @FrancesYue_ to share any thoughts on crypto, gold, or this newsletter.  

    Is gold the haven?


    FactSet

    “Generally speaking, gold thrives when there are periods of uncertainty,” said Rhona O’Connell, analyst at StoneX Group. “But if you take that uncertainty too far, then we get to stages where people are sitting on their hands and not really doing very much and that’s what’s happened here.”

    Gold futures for June delivery 
    GC00,
    +0.09%
    GCM23,
    +0.09%
     on Thursday declined by $20.90, or 1.1%, to $1,943.70 per ounce on Comex, with prices for the most-active contract posting their lowest finish since March 21, according to FactSet data.

    As gold futures price retreat to below $2,000, “I suppose it’s arguable that the bulls might be a bit disappointed,” said O’Connell.  But there’s “bound to be a retreat” with gold’s price premium building over the past few weeks, according to O’Connell. 

    “The fact that gold hasn’t managed to climb any higher given the potential seriousness of the economic consequences should no agreement be reached before the June deadline reflects a prevailing view that ultimately the markets believe some middle ground can be found in time,” Rupert Rowling, analyst at Kinesis Money, wrote in a recent note.

    Still, gold’s price stays elevated at levels that were not seen many times in history.

    What about bitcoin?

    Considering the rally bitcoin had so far this year, it’s “not crazy to see a little bit of pullback, according to Steven Lubka, a managing director at Swan Bitcoin. 

    Bitcoin gained almost 60% so far this year while still down over 60% from its all-time high in 2021.

    Still, if the U.S. ends up defaulting on its debt, and “everyone freaks out, bitcoin could do very well in that scenario,” Lubka said, citing bitcoin’s limited supply, decentralized and non-sovereign properties.

    However, not everyone agrees. There is not enough evidence to support the claim that bitcoin could serve as a hedge against the debt ceiling tumult, according to Lapo Guadagnuolo, director at S&P Global Ratings. 

    “We can’t make that argument because we don’t see that in the data,” Guadagnuolo said. 

    A rising dollar

    The recent strength of the U.S. dollar have also weighed on bitcoin and gold.

    On Thursday, the ICE U.S. Dollar Index
    DXY,
    -0.02%    ,
     which measures the currency’s strength against a basket of six major rivals, climbed above 104 to its highest level since March 17, according to Dow Jones market data.

    Although a technical default of U.S. government debt could hurt the dollar’s reputation in the long term, it might have little bearing on the immediate reaction, which would resemble a knee-jerk move higher, as my colleague Joseph Adinolfi elaborated here. 

    As gold is mostly denominated in U.S. dollar and bitcoin’s main trading pairs are dollar-denominated stablecoins, a strong dollar could weigh on both assets. 

    Still, the debt ceiling debacle in the long term could strengthen the narrative around bitcoin and gold, as “the governance of the worlds fiat system comes into question,” according to Greg Magadini, director of derivatives at Amberdata.

    Crypto in a snap

    Bitcoin lost 2.8% in the past week and was trading at around $26,360 on Thursday, according to CoinDesk data. Ether declined 0.9% in the same period to around $1,805

    Biggest Gainers

    		 Price

    		 %7-day return
    marumaruNFT

    		 $0.26

    		 201%
    Render

    		 $2.70

    		 19.5%
    Kava

    		 $1.10

    		 14.3%
    TRON

    		 $0.08

    		 10.6%
    Huobi

    		 $3.12

    		 8.4%
    Source: CoinGecko
    Biggest Decliners

    		 Price

    		 %7-day return
    GMX

    		 $52.68

    		 -14.6%
    Sui

    		 $0.99

    		 -13.3%
    Fantom

    		 $0.33

    		 -10.1%
    Stacks

    		 $0.59

    		 -9.7%
    Optimism

    		 $1.62

    		 -9.7%
    Source: CoinGecko

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  • ‘Don’t kiss your dollars goodbye just yet’: IMF chief sees U.S. dollar remaining global reserve currency

    ‘Don’t kiss your dollars goodbye just yet’: IMF chief sees U.S. dollar remaining global reserve currency

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    “‘Don’t kiss your dollars goodbye just yet.’”


    — Kristalina Georgieva, managing director, International Monetary Fund

    Don’t count International Monetary Fund Managing Director Kristalina Georgieva among the naysayers expecting the U.S. currency to lose its luster due to “de-dollarization.”

    In remarks at an economic forum in Doha Wednesday, she argued that the U.S. dollar was likely to retain its status, Reuters reported.

    “We don’t expect a rapid shift in [dollar] reserves because the reason the dollar is a reserve currency is because of the strength of the U.S. economy and the depth of its capital markets,” she said.

    A debate over de-dollarization — countries moving away from the dollar as a reserve and medium of exchange — has raged this year. The question is whether a meaningful shift away from the dollar is under way that would have implications for the U.S. or global economy.

    See: Why Washington and Wall Street are worried about the ‘de-dollarization’ threat

    Skeptics of de-dollarization contend that moves to price some commodity transactions in units other than the dollar pose little threat to the currency’s dominant role in the financial system, while the greenback’s share of global forex reserves has always tended to ebb and flow.

    The ICE U.S. Dollar Index
    DXY,
    +0.38%    ,
    a measure of the currency against a basket of six major rivals, was little changed after hitting a roughly 2-month high on Tuesday. The index, which rose sharply in 2022, is little changed on the year.

    On a more immediately pressing matter, Georgieva played down the risk of a default by the U.S. government as the White House and congressional Republicans continue to negotiate over lifting the debt ceiling. Such showdowns are a somewhat regular occurrence in the U.S., she noted.

    “History tells us that the U.S. would wrestle with this notion of default … but come the 11th hour it gets resolved and I have confidence we will see that play again,” Georgieva said.

    The Treasury Department has warned the U.S. could find itself unable to pay its bills as early as June 1 — the so-called X-date — unless the debt ceiling is raised or otherwise addressed. The White House and congressional negotiators continue to talk.

    Worries over the potential for default have roiled the market for short-term Treasury bills, with traders and investors shunning paper that would come due around the X-date.

    Stocks fell Tuesday, as an agreement remained elusive. Major indexes were down again Wednesday morning, with the Dow Jones Industrial Average
    DJIA,
    -0.77%
    down around 192 points, or 0.6%, and the S&P 500
    SPX,
    -0.73%
    off 0.7%, though stock indexes remain near multimonth highs.

    Don’t miss: A debt-ceiling deal will spark a new worry: Who will buy the deluge of Treasury bills?

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  • 4 signs stocks are headed for a punishing selloff, as even strong performers look vulnerable

    4 signs stocks are headed for a punishing selloff, as even strong performers look vulnerable

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    U.S. stocks just touched their highest levels in two months. Yet, signs of a looming selloff are piling up, according to Jonathan Krinsky, chief technical strategist at BTIG.

    The S&P 500
    SPX,
    +0.33%
    and Russell 3000
    RUA,
    +0.40%
    are both trading just shy of their highs from mid-February, but market breadth hasn’t recovered, as index gains over the past month have largely relied on megacap names like Microsoft Corp.
    MSFT,
    +0.93%
    and Apple Inc.
    AAPL,
    +0.01%
    helping to offset weakness in other areas of the market.

    As of Friday, only 45% of Russell 3000 stocks were trading above their 200-day moving averages, according to data cited by Krinsky. By comparison, when the broad-market gauge was trading at its highest level of 2023 back in February, 70% of the individual stocks included in the index were trading above their 200-day moving average. Technical analysts use moving averages as a gauge of a stock or index’s momentum.


    BTIG

    Lackluster breath is looking like more of an issue analysts say, especially now that the Nasdaq’s outperformance appears to be fading after leading markets higher since the start of the year.

    Over the last two weeks, the Dow Jones Industrial Average
    DJIA,
    +0.30%
    has outperformed the Nasdaq Composite
    COMP,
    +0.28%
    by the widest margin since the two-week period ending Dec 30, according to FactSet data.

    Krinsky cited exchange-traded funds that feature megacap technology names, including the iShares Expanded Tech-Software ETF
    IGV,
    +0.45%    ,
    the Communications Services Select Sector SPDR Fund ETF
    XLC,
    -0.57%
    and Consumer Discretionary Select Sector SPDR Fund ETF
    XLY,
    +0.71%    ,
    as examples of emerging weakness in this critical sector of the market. Meanwhile, regional bank stocks, small-cap stocks and shares of retailers, all of which have lagged behind the market this year, look weak.

    See: Are tech stocks becoming a haven again? ‘It is a mistake,’ say market analysts.

    Krinsky summed up this dynamic thus: “The weak parts of the market remain weak, while the strong parts now appear vulnerable,” the BTIG analyst said in a Sunday note to clients.

    Furthermore, “[i]n absolute and relative terms, the tech sector looks like a poor risk/reward to us here,” Krinsky added.

    Low implied volatility is another issue for markets, Krinsky said. That can mean investors have gotten too complacent and markets may be heading for a selloff, analysts say.

    The Cboe Volatility Index
    VIX,
    -0.41%    ,
    otherwise known as Wall Street’s “fear gauge,” finished Friday at its lowest end-of-day level since Jan. 4, according to Dow Jones Market Data. The Cboe S&P 500 9-Day Volatility Index, which tracks implied volatility over a shorter time horizon, has also fallen to January lows, FactSet data show.

    Such low levels mean volatility could be poised to “mean revert,” Krinsky said, which may portend a selloff in the months ahead for the S&P 500, the most liquid and most closely watched gauge of U.S. stock-market performance.

    Implied volatility gauges measure activity in option contracts linked to the S&P 500 to gauge how volatile traders expect markets to be over the coming days and weeks. Typically, implied volatility advances when U.S. stocks are falling.

    The greenback has shown some signs of life in recent sessions, although the U.S. dollar remains well below the multi decade highs it reached back in September. That the buck bounced off its February lows late last week suggests that momentum could be skewed toward the upside for the dollar, Krinsky said, which could create more problems for stocks given the dollar’s tendency to weigh on markets during 2022.

    The ICE U.S. Dollar Index
    DXY,
    -0.43%    ,
    a gauge of the dollar’s strength measured against a basket of rivals, was up 0.7% in recent trade at 102.22.

    All of these factors support the notion that stocks could be headed for what Krinsky called the “reverse October playbook.”


    BTIG

    Just as the S&P 500 bottomed following the hotter-than-expected September report on consumer-price inflation, the market’s monthslong rebound rally may have peaked following last week’s CPI report for March, which showed consumer prices rose a scant 0.1% last month, less than the 0.2% increase that had been forecast by economists polled by MarketWatch.

    Not everybody agrees with this assessment. Marko Papic, chief strategist at Clocktower Group, cited market data going back to 1934 to show that U.S. stocks tend to rally after inflation peaks. Consumer-price inflation reached its highest level in more than four decades when the CPI headline number showed prices up 9.1% year-over-year in June.


    CLOCKTOWER GROUP

    U.S. stocks look set to decline for a second day in a row on Monday, with the S&P 500 off 0.3% at 4,126, while the Nasdaq Composite was down by 0.4% at 12,070, and the Dow Jones Industrial Average traded marginally lower at 33,881.

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  • Moody’s sees risk that U.S. banking ‘turmoil’ can’t be contained

    Moody’s sees risk that U.S. banking ‘turmoil’ can’t be contained

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    Despite quick action by regulators and policy makers, there’s a rising risk that banking-system stress will spill over into other sectors and the U.S. economy, “unleashing greater financial and economic damage than we anticipated,” said Moody’s Investors Service, one of the Big Three credit-ratings firms.

    Simply put, the risk is that officials “will be unable to curtail the current turmoil without longer-lasting and potentially severe repercussions within and beyond the banking sector,” Atsi Sheth, Moody’s managing director of credit strategy, and others wrote in a note distributed on Thursday. Still, the agency’s baseline view is that U.S. officials will “broadly succeed.”

    Moody’s warning came as Treasury Secretary Janet Yellen indicated that the U.S. could take additional actions if needed to stabilize the banking system, and after Federal Reserve Chairman Jerome Powell assured Americans on Wednesday that the central bank would use its tools to protect depositors.

    Read: Regional banks get the attention, but worries are more widespread, says ex-FDIC chief Bair and Debate over expanding deposit insurance weighs on bank stocks. Here’s what to know.

    Beneath the surface, though, is lingering worry. Hedge-fund manager Bill Ackman, for example, is warning of an acceleration of deposit outflows from banks and the latest global fund manager survey from Bank of America
    BAC,
    -2.42%
    found that 31% of 212 managers polled regard a systemic credit crunch as the biggest threat to markets.

    Of the three ways in which banking-system troubles could spill over more broadly, one of them is potentially the “most potent,” according to Moody’s: That is a general aversion to risk by financial-market players and a decision by banks to retrench from providing credit. Such a scenario could lead to the “crystallization of risk in multiple pockets simultaneously,” the ratings agency said.


    Source: Moody’s Investors Service

    “Over the course of 2023, as financial conditions remain tight and growth slows, a range of sectors and entities with existing credit challenges will face risks to their credit profiles,” the Moody’s team wrote. Banks are not the only type of players with exposure to interest-rate shocks, and “market scrutiny will focus on those entities that are exposed to similar risks as the troubled banks.”

    A second potential channel for spillover is through the direct and indirect exposure to troubled banks that private and public entities have — via deposits, loans, transactional facilities, essential services, or holdings in those banks’ bonds and stocks. And a third way in which banking problems could spread more broadly is through a misstep by policy makers, who have been focused on inflation and may not be able to respond effectively enough to evolving developments, Moody’s said.

    On Thursday, U.S. stocks
    DJIA,
    +0.23%

    SPX,
    +0.30%

    COMP,
    +1.01%
    finished higher as investors continued to weigh the risks to the banking sector. The policy-sensitive 2-year Treasury yield
    TMUBMUSD02Y,
    3.833%
    fell to its lowest level this year, while gold futures settled at a more than one-year high.

    Last week, Fitch Ratings said that nonbank financial institutions, insurers, and funds were experiencing a variety of “knock-on effects” as the result of the sudden deterioration of a few U.S. banks.

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  • Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

    Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

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    U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.07%
      dropped 345.22 points, or 1.1%, to close at 31,909.64, its fourth straight day of declines for its longest losing streak since December.

    • The S&P 500
      SPX,
      -1.45%
      fell 56.73 points, or 1.4%, to finish at 3,861.59.

    • Nasdaq Composite
      COMP,
      -1.76%
      sank 199.47 points, or 1.8%, to end at 11,138.89.

    For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.

    What drove markets

    U.S. stocks slumped amid investor concerns about the banking sector after the closure of Silicon Valley Bank by the Federal Deposit Insurance Corp and in the wake of the monthly employment report released Friday.

    In a sign of investor anxiety, the CBOE Volatility Index
    VIX,
    +9.69%
    was up Friday afternoon at almost 25, after jumping Thursday, according to FactSet data, last check.

    “Bears came out of hibernation this week after waking up to a warning shot from the banking space,” said Adam Turnquist, chief technical strategist for LPL Financial, in emailed comments Friday, pointing to the collapse of Silicon Valley Bank.

    Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corp. was appointed receiver, with the bank becoming the first FDIC-backed institution to fail this year.

    Read: Bank ETFs fall amid concerns over SVB and ‘crack’ in financial system after rate hikes

    The SPDR S&P Regional Banking ETF
    KRE,
    -4.39%
    was down more than 4% Friday afternoon, FactSet data show, while shares of Bank of America Corp.
    BAC,
    -0.88%
    closed 0.9% lower, Citigroup Inc.
    C,
    -0.53%
    slid 0.5% and JPMorgan Chase & Co.
    JPM,
    +2.54%
    rose 2.5%.

    Worries over the banking sector are “probably overshadowing” the positive aspects of the employment report, said Karim El Nokali, investment strategist at Schroders, in a phone interview Friday.

    The U.S. employment report for February showed the labor market continued to grow at a robust pace last month, with the U.S. economy adding 311,000 jobs, more than the 225,000 that economists polled by the Wall Street Journal had expected.

    But “if you dig a little deeper” into the report, average hourly earnings came in “a little lighter than expected” while labor-force participation ticked up, which are positive developments from an inflation standpoint, said El Nokali.

    Average hourly wages grew by 0.2%, a slower rate than the 0.3% rate economists had expected. It was also less than the 0.3% increase in January. The unemployment rate ticked higher to 3.6%, helped by an increase in the labor-force participation rate.

    “On the margin,” said El Nokali, the employment report was “positive for the equity market.” He said it would “probably argue more” for the Federal Reserve to raise its benchmark rate by 25 basis points at its policy meeting later this month, as opposed to a 50-basis-point hike that investors had been fearing leading up to the employment data.

    See: Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

    Fed Chair Jerome Powell said earlier this week that the “totality” of jobs and inflation data would determine whether the central bank would go back to raising its policy interest rate by another 50 basis points at its meeting later in March.

    After climbing earlier in the week, odds of a 50-basis-point rate hike by the Fed have moderated over the past 24 hours. Traders now see a 62% chance of the central bank raising its benchmark rate by 25 basis points, according to the CME FedWatch Tool.

    Meanwhile, Treasury yields sank Friday.

    The yield on the 2-year Treasury note
    TMUBMUSD02Y,
    4.594%
    dropped 31.4 basis points to 4.586%, while the 10-year Treasury yields fell 22.8 basis points to 3.694%, according to Dow Jones Market Data. The Treasury yield curve remains massively inverted, which has contributed to banks’ woes.

    Companies in focus

    —Steve Goldstein contributed to this report.

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  • Turkey ETF tumbles and lira slumps to record low after major earthquake adds to economic woes

    Turkey ETF tumbles and lira slumps to record low after major earthquake adds to economic woes

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    Turkey’s lira hit a record low and its stock market tumbled on Monday after a major earthquake killed nearly 1,500 people and wounded thousands of others in the country, piling on further economic hardship in a region already grappling with economic instability and geopolitical turmoil. Another 700 deaths have been reported in Syria, according to Reuters.

    The Turkish lira
    USDTRY,
    +0.05%
    fell to a record low of 18.83 against a strong dollar on Monday, while the country’s major stock index, the Turkey ISE National 100
    XU100,
    -1.35%
    — which tracks the performance of 100 companies selected from the National Market, real estate investment trusts and venture capital investment trusts listed on the Istanbul Stock Exchange — tumbled 1.4%. 

    The iShares MSCI Turkey ETF
    TUR,
    -1.88%    ,
    which tracks several dozen Turkish equities, slumped 1.9%. 

    Also see: 7.8-magnitude quake kills more than 1,900, knocks down buildings in southeast Turkey and Syria

    At least 1,498 people were killed and 8,533 people were injured in Turkey when a magnitude 7.8 earthquake struck central Turkey and northwest Syria early Monday morning, followed by another large quake in the afternoon, according to Yunus Sezer, the head of Turkey’s Disaster and Emergency Management Agency.

    The U.S. Geological Survey estimated on Monday that there was a high probability that the economic losses from the initial earthquake could top $1 billion.

    The ICE U.S. Dollar Index
    DXY,
    +0.72%    ,
     a measure of the currency against a basket of six major rivals, jumped 0.7% on Monday.

    See: Oil prices look to extend last week’s slide

    Oil futures traded lower as of Monday morning despite news reports that Turkey has halted crude-oil flows to its export terminal in Ceyhan. Turkish pipeline operator BOTAS said there was no damage on main pipelines which carry crude oil from Iraq and Azerbaijan to Turkey, according to Reuters.

    Iraq’s semi-autonomous Kurdistan Regional Government has stopped shipments through the pipeline which runs from Iraq’s northern Kirkuk fields to Ceyhan, the region’s ministry of natural resources said on Monday.

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  • U.S. stock futures rise ahead of last trading week of 2022

    U.S. stock futures rise ahead of last trading week of 2022

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    U.S. stock futures rose Monday night, ahead of the final trading week of 2022.

    Dow Jones Industrial Average futures
    YM00,
    +0.46%
    gained more than 150 points, or 0.5%, as of 11 p.m. Eastern. S&P 500 futures
    ES00,
    +0.59%
    and Nasdaq-100 futures
    NQ00,
    +0.69%
    were also logging solid gains, indicating positive market moves when regular trading resumes Tuesday from the three-day Christmas holiday.

    Oil prices rose
    CL.1,
    +0.64%    ,
    as the U.S. Dollar Index
    DXY,
    -0.37%
    slipped.

    Last week, the Dow gained nearly 1%, while the S&P 500 and Nasdaq fell for a third straight week.

    See more: What to expect for the stock market in 2023 after the biggest decline since the financial crisis

    On Friday, the Dow Jones Industrial Average 
    DJIA,
    +0.53%
    rose 176.44 points, or 0.5%, to close at 33,203.93. The S&P 500 
    SPX,
    +0.59%
     gained 22.43 points, or 0.6%, finishing at 3,844.82, for a weekly decline of 0.2%. The Nasdaq Composite 
    COMP,
    +0.21%
     closed at 10,497.86, up 6.85 points, or 0.4%. For the week, the Nasdaq fell 1.9%.

    Friday marked the start of the so-called Santa Claus rally period — the final five trading days of the calendar year and the first two trading days of the new year. That stretch has, on average, produced gains for stocks, but failure to do so is often read as a negative indicator.

    Read more: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter

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  • U.S. stock futures rise ahead of last trading week of 2022

    U.S. stock futures rise ahead of last trading week of 2022

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    U.S. stock futures rose Monday night, ahead of the final trading week of 2022.

    Dow Jones Industrial Average futures
    YM00,
    +0.49%
    gained more than 150 points, or 0.5%, as of 11 p.m. Eastern. S&P 500 futures
    ES00,
    +0.64%
    and Nasdaq-100 futures
    NQ00,
    +0.79%
    were also logging solid gains, indicating positive market moves when regular trading resumes Tuesday from the three-day Christmas holiday.

    Oil prices rose
    CL.1,
    +0.64%    ,
    as the U.S. Dollar Index
    DXY,
    -0.23%
    slipped.

    Last week, the Dow gained nearly 1%, while the S&P 500 and Nasdaq fell for a third straight week.

    See more: What to expect for the stock market in 2023 after the biggest decline since the financial crisis

    On Friday, the Dow Jones Industrial Average 
    DJIA,
    +0.53%
    rose 176.44 points, or 0.5%, to close at 33,203.93. The S&P 500 
    SPX,
    +0.59%
     gained 22.43 points, or 0.6%, finishing at 3,844.82, for a weekly decline of 0.2%. The Nasdaq Composite 
    COMP,
    +0.21%
     closed at 10,497.86, up 6.85 points, or 0.4%. For the week, the Nasdaq fell 1.9%.

    Friday marked the start of the so-called Santa Claus rally period — the final five trading days of the calendar year and the first two trading days of the new year. That stretch has, on average, produced gains for stocks, but failure to do so is often read as a negative indicator.

    Read more: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter

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  • $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

    $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

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    Monday served as another smackdown for investors who are banking on a Goldilocks economy and a less aggressive Fed.

    Some are now not ruling out a Grinch-like turn from the central bank — a 0.75% hike next week instead of the 0.50% markets have been pinning hopes on — following strong data on services, jobs and wages.

    It all goes along with the theme of 2022 — expect the unexpected. The relief of moving out of a crippling pandemic was quickly replaced by the biggest war on Europe’s shores in decades, that sparked worldwide inflation surges.

    What comes next is anyone’s guess and that brings us to our call of the day via Saxo Bank’s annual “Outrageous Predictions” for 2023.

    While some of these will sound crazy, note that the Saxo team, led by Chief Investment Officer Steen Jakobsen, have nailed a few wild prophecies in the past decade. Those include: a Brexit prediction in 2015, a 25% drop for the S&P 500 from its 2007 high in 2008, a tripling of Bitcoin’s value forecast in 2017.

    The focus for 2023’s prediction is that “a return to the disinflationary prepandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” says Jakobsen.

    As for those predictions, here we go:

    • Gold crosses $2,075 then rockets to $3,000 on unstoppable inflation. “Fed policy tightening and quantitative tightening drives a new snag in U.S. treasury markets that forces new sneaky ‘measures’ to contain Treasury market volatility that really amounts to new de facto quantitative easing,” says Saxo. And China’s end of zero-COVID drives up demand, commodity prices and inflation.

    • Widespread price controls to cap official inflation due to war economy mentality. “In 2023, expect broadening price and even wage controls, maybe even something like a new National Board for Prices and Incomes being established in the U.K. and the U.S.,” said Saxo. Market fallout? Fuel for gold’s
      GC00,
      +0.19%
      climb.

    • There’s a new reserve asset in town. Non U.S.-allied countries move away from the U.S. and IMF to create an “international clearing union (ICU) and a new reserve asset, called the Bancor (currency code KEY)” that borrows from economist John Maynard Keynes idea of resisting U.S. power over the international monetary system. Nonaligned central banks slash U.S. dollar reserves, Treasury yields soar and the dollar
      DXY,
      +0.09%
      drops 25% against a basket of currencies that trade with Bancor.

    • Japan pegs USDJPY to 200. Pressure intensifies on the already weak yen
      USDJPY,
      +0.04%
      into 2023 as currency intervention fails and inflation soars. The government resets the financial system, erasing all debt, recapitalizing banks, as trillions of yen return to Japan shores. But the yen still weakens by year-end.

    • A $10 trillion-dollar Manhattan project. A team of major tech leaders form a mega research-and-development effort for energy infrastructure and ground-breaking technologies — the Third Stone. Companies tied to the project soar in an overall weak environment for investing.

    • Tax haven ban kills private equity. The OECD launches a full ban on the biggest tax havens in the world in 2023 and in the U.S., carried interest tax as capital gains is shifted to ordinary income. It’s a body blow for private equity and venture capital — the valuation of publicly listed private-equity firms fall 50%.

    The rest of their predictions are here, such as the formation of an EU Armed Forces in 2023 and an “UnBrexit” referendum.

    Read: Why Monday’s stock-market rout should be a wake up call for investors

    The markets

    MarketWatch

    Stocks
    DJIA,
    -0.96%
     
    SPX,
    -1.40%
     
    COMP,
    -1.77%
    are drifting into the red, with Treasury yields
    TMUBMUSD10Y,
    3.571%
     
    TMUBMUSD02Y,
    4.395%
    steady, the dollar
    DXY,
    +0.09%
    lower and oil
    CL.1,
    -3.43%
     
    BRN00,
    -3.73%
    also down.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    BioVie stock
    BIVI,
    -18.43%
    is climbing after positive results from the clinical-stage biopharmaceutical company on a drug for Parkinson’s and Alzheimer’s.

    NRG Energy
    NRG,
    -15.79%
    agreed to buy Vivint Smart Home
    VVNT,
    +32.31%
    in a $5.2 billion deal. Vivint shares are soaring.

    MEI Pharma
    MEIP,
    -33.52%
    shares are tumbing after drugmaker said it would stop developing cancer treatment zandelisib outside of Japan and announces job cuts. Herbalife shares
    HLF,
    -18.85%
    are down 10% after an offering of convertible notes 

    Powell Industries
    POWL,
    +19.11%
    stock is up 9% after the electrical equipment maker’s well-received results and new orders. Within software Sumo Logic
    SUMO,
    +11.65%
    and GitLab shares
    GTLB,
    +5.71%
    are surging on upbeat results and forecasts.

    Layoffs extending beyond tech? PepsiCo 
    PEP,
    -0.86%
    is reportedly cutting hundreds of workers at its North American headquarters.

    Home builder Toll Brothers
    TOL,
    -1.56%
    will report results after the close.

    The October trade deficit jumped 5.4% to $78,2 billion.

    The U.S. and EU are reportedly considering fresh steel and aluminum tariffs on China to fight carbon emissions.

    Best of the web

    “Nothing to be glad about.” An empty, lonely and cold formerly occupied Ukraine city.

    Morocco’s World Cup team leans on its secret weapon of parents in the stands.

    Why human composting could be the next big thing.

    The chart

    Headed into the holidays, consumers are using savings and credit, says a team of Jefferies analysts led by Corey Tarlowe. “The savings rate continues to trend lower and credit card balances are growing +15% Y/Y. We believe these trends indicate that the consumer is stretched.”

    Against this backdrop, they like Costco
    COST,
    -1.34%    ,
    Dollar General
    DG,
    -1.52%    ,
    Target
    TGT,
    +0.13%
    and Walmart
    WMT,
    -0.98%    .


    FactSet/Jefferies

    The tickers

    These were the top-searched tickers on MarketWatch at 6 a.m.:

    Ticker

    		 Security name
    TSLA,
    -2.00%         		Tesla
    GME,
    -5.32%         		GameStop
    AMC,
    -9.00%         		AMC Entertainment
    NIO,
    +2.37%         		NIO
    BBBY,
    -8.86%         		Bed Bath & Beyond
    AAPL,
    -1.83%         		Apple
    APE,
    -5.40%         		AMC Entertainment Holdings preferred shares
    COSM,
    -17.49%         		Cosmos
    AMZN,
    -2.26%         		Amazon.com
    MULN,
    -3.08%         		Mullen Automotive
    Random reads

    Tributes pour after “Cheers” star Kirstie Alley dies at 71.

    Happy 190th birthday to the world’s oldest tortoise.

    A green Grinchy dog for Christmas? Not everyone’s heart grew three sizes.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton

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  • A Geopolitical Picture Of The Bitcoin Price Breakout

    A Geopolitical Picture Of The Bitcoin Price Breakout

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    “Fed Watch” is a macro podcast, true to bitcoin’s rebel nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.

    Watch This Episode On YouTube Or Rumble

    Listen To The Episode Here:

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    Ansel Lindner

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  • U.S. stock futures give up early gains after Wall Street’s best week since June

    U.S. stock futures give up early gains after Wall Street’s best week since June

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    U.S. stock futures gave up strong early-session gains overnight after Wall Street notched its best week since June.

    After initially surging about 300 points, or 1% on Sunday evening, Dow Jones Industrial Average futures
    YM00,
    -0.02%
    were last about flat at midnight Eastern, while S&P 500 futures
    ES00,
    +0.05%
    and Nasdaq-100 futures
    NQ00,
    +0.16%
    similarly gave up sharp early gains.

    The U.S. Dollar Index
    DXY,
    +0.19%
    nudged higher, while the British pound
    GBPUSD,
    +0.12%
    surrendered much of an afternoon rally fueled by the possibility that Rishi Sunak will be Britain’s next prime minister, after Boris Johnson bowed out of the running. Crude prices
    CL.1,
    -0.55%
    ticked slightly higher Sunday.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    +2.47%
     gained 748.97 points, or 2.5%, to close at 31,082.56. The S&P 500
    SPX,
    +2.37%
     climbed 86.97 points, or 2.4%, to finish at 3,752.75, and the Nasdaq Composite
    COMP,
    -0.81%
     rose 244.87 points, or 2.3%, to end at 10,859.72.

    The three major indexes scored their biggest weekly percentage gains since June last week. For the week, the Dow rose 4.9%, the S&P 500 gained 4.7% and the Nasdaq advanced 5.2%.  Yields on 10-year Treasury notes
    TMUBMUSD10Y,
    4.156%
    ended Friday at 4.228%.

    Investors were heartened by reports that the Fed may back off slightly from its aggressive rate-hiking policy later this year.

    The upcoming week is the busiest of the third-quarter earnings season, with 165 S&P 500 companies, including 12 Dow components reporting. That includes earnings from Big Tech companies Alphabet
    GOOGL,
    +1.16%    ,
    Amazon
    AMZN,
    +3.53%    ,
    Apple
    AAPL,
    +2.71%    ,
    Meta
    META,
    -1.16%
    and Microsoft
    MSFT,
    +2.53%    .

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  • DXY | U.S. Dollar Index (DXY) Overview | MarketWatch

    DXY | U.S. Dollar Index (DXY) Overview | MarketWatch

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    This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

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  • Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

    Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

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    U.S. stocks finished sharply lower Friday, but still booked their best weekly gains in a month, after September jobs data showed an unexpected fall in the unemployment rate that’s anticipated to reinforce the Federal Reserve’s resolve to keep tightening monetary policy.

    Investors also weighed a profit warning at a leading microchip maker ahead of next week’s increase in quarterly earnings results.

    What happened
    • The Dow Jones Industrial Average
      DJIA,
      -2.11%
      fell 630.15 points, or 2.1%, ending at 29,296.79, but off the session low of 29,142.66.

    • The S&P 500
      SPX,
      -2.80%
      dropped 104.86 points, or 2.8%, closing at 3,639.66.

    • The Nasdaq Composite
      COMP,
      -3.80%
      shed 420.91 points, or 3.8%, to finish at 10,652.40.

    Stocks posted back-to-back losses, trimming weekly gains, but recorded their best weekly gains since Sept. 9, according to Dow Jones Market Data.

    Read: Will the stock market be open on Columbus Day?

    What drove markets

    Stocks recorded sharp losses Friday after the Labor Department said the U.S. economy added 263,000 jobs in September, while the unemployment rate declined to 3.5% from an August reading of 3.7%. Average hourly earnings rose 0.3%.

    Still, a powerful rally earlier in the week boosted all three major stock indexes to weekly gains, a departure from three straight weekly losses, according to Dow Jones Market Data.

    “It’s manic. We are all on edge,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of the sharp market swings.

    “Any piece of good news is a cause for an explosive rally,” Engelke said by phone. On the flip side, he pegged technology-based trading “in an illiquid and emotional market” as exacerbating Friday’s selloff.

    “It’s a reflection that people have re-entered the mind-set that the Fed is going to be raising rates at a rapid clip, probably for longer than what they might have suspected at the start of the week,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, by phone.

    Pavlik expects the Fed to keep tightening financial conditions to try to head off inflation. “But once we turn the corner, and the economy slows down, the Fed probably will be more aggressive in cutting rates on the way down.”

    In addition, the Fed has been “draining liquidity from the system at a remarkable pace,” wrote Rick Rieder, BlackRock’s chief investment officer of global fixed income, in a Friday client note, while pointing to an astounding $1.3 trillion decline in the central bank’s balance sheet since the December 2021 peak.

    Pavlik at Dakota Wealth said he anticipates the Fed will start slowing interest rate hikes by mid-next year, which likely means continued pressure for the stock market, particularly with a backdrop of big oil-price
    CL00,
    +5.37%
    gains this week after global crude producers voted to cut monthly production and with the U.S. dollar’s
    DXY,
    +0.44%
    surge this year against a basket of rival currencies.

    U.S. crude oil prices climbed for a fifth day in a row on Friday to settle at $92.64 a barrel, while booking at 16.5% weekly gain.

    New York Fed President John Williams said Friday that benchmark interest rates likely need to hit 4.5% over time. The Fed’s policy rate now sits in a 3%-3.25% range, up from a zero-0.25% range a year ago.

    The benchmark 10-year Treasury rate
    TMUBMUSD10Y,
    3.889%
    climbed to 3.883% Friday, as the key metric used to gauge the affordability of credit for businesses, household and the economy posted 10 straight weeks of gains, according to Dow Jones Market Data.

    Read: Bond markets facing historic losses grow anxious of Fed that ‘isn’t blinking yet’

    Investors continued to hope for relief on the inflation front and will be monitoring next week’s release of the September consumer-price index, as well as corporate earnings season as it picks up.

    Companies in focus
    • Twitter Inc.
      TWTR,
      -0.43%
      shares fell 0.4% Friday after a judge delayed a looming trial between the company and Elon Musk to allow the Tesla Inc.
      TSLA,
      -6.32%
      CEO more time to close his $44 billion acquisition of the social media platform.

    • Besides the jobs report, investors weighed a profit warning from microchip maker Advanced Micro Devices Inc. AMD, which said the PC market weakened significantly during the quarter. AMD shares fell 13.9%, and rivals including Nvidia Corp. NVDA and Intel Corp. INTC also closed lower.

    • U.S. cannabis stocks were choppy Friday, with the AdvisorShares Pure US Cannabis ETF
      MSOS,
      -2.80%
      ending lower, following steep gains earlier in the week after President Joe Biden said the U.S. would consider de-scheduling cannabis from its current position as a Schedule 1 narcotic under federal law.

    —Steven Goldstein contributed reporting to this article

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  • New home sales decline in March

    New home sales decline in March

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    U.S. new-home sales decreased 8.6% to an annual rate of 763,000 in March, the government said Tuesday. That figure represents the quantity of homes that would be sold over a yearlong period of time if the same number of properties were bought each month based on the rate of sales in March. Compared to a year ago, sales were down 12.6%. Economists polled by MarketWatch expected new-home sales in March to drop to an annual rate of 770,000.

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  • Home prices rose at breakneck pace in February, Case-Shiller report shows

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