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  • German exports to Russia’s neighbors have surged

    German exports to Russia’s neighbors have surged

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    European Union countries are meant to have placed an array of sanctions on Russia, preventing exports of a host of goods and services, ranging from high-end machinery to luxury cars, to the country in the wake of its unprovoked 2022 invasion of neighboring Ukraine.

    And official data do show that EU exports to Russia have slumped, by 31% during the first five months of the year.

    But, curiously, exports from EU countries to Russia’s neighbors have surged.

    Take Germany, for instance, whose exports to Kazakhstan are up 105% on a year-over-year basis. German exports to Central Asia and Belarus are up 75%.


    IIF

    “Not all of this stuff is going to Russia. But a lot of it probably is,” tweeted Robin Brooks, chief economist at the Institute of International Finance, who produced the chart.

    And it’s not just Germany. Sweden also has seen a surge of exports to Kazakhstan.

    Meanwhile, Germany, Poland, the Czech Republic and Hungary have boosted exports to Kyrgyzstan.

    Read on:

    Why the exodus of Western companies out of Russia market after Ukraine invasion hasn’t fully materialized

    Yale’s Sonnenfeld locked in heated clash over integrity of Swiss research into companies’ Russia retreat

    How enforcement loopholes are creating an unfair playing field for U.S. companies that exited Russia over Ukraine war

    Far from Putin’s claims of resilience, Russian economy is being hammered by sanctions and exodus of international companies, Yale report finds

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  • U.S. stocks would be much lower if it wasn’t for ‘excessive’ government spending, Morgan Stanley’s Mike Wilson says

    U.S. stocks would be much lower if it wasn’t for ‘excessive’ government spending, Morgan Stanley’s Mike Wilson says

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    U.S. stocks would be in much worse shape in 2023 if it wasn’t for “excessive” fiscal policy from the government and explosive money-supply growth in recent years.

    That’s the latest take from Morgan Stanley’s Mike Wilson, the bank’s chief investment strategist who, as MarketWatch’s Steve Goldstein pointed out earlier, seems to never miss an opportunity to recall how wrong his market calls have been this year.

    In his latest note, Wilson told clients and the financial press that excessive government spending has helped prop up the U.S. economy and markets to a degree that Wilson and his team failed to anticipate.

    “Part of the reason we’ve found ourselves offside this year is that the fiscal impulse returned with a vengeance and remained quite strong in 2023 — something we didn’t factor into our forecasts,” Wilson said in the note.

    In an accompanying chart, Wilson noted that fiscal spending looks particularly excessive when compared with the U.S. unemployment rate, which fell to 3.5% in July, according to data from the Department of Labor released on Friday.


    MORGAN STANLEY

    To be sure, Wilson was one of a select few on Wall Street to correctly anticipating last year’s inflation-driven selloff.

    But heading into the New Year, he expected stocks would tumble to new lows during the first half of 2023.

    And after hanging on to his bearish view for months in spite of a powerful rally in equities driven by the artificial intelligence craze and a surprisingly resilient U.S. economy, he’s recently taken the opportunity to reflect on why he got it wrong, while acknowledging the possibility that the rally could continue.

    See: Morgan Stanley’s Mike Wilson admits ‘we were wrong’ about 2023 stock-market rally, but refuses to throw in the towel

    See: Morgan Stanley’s Mike Wilson is warming to the U.S. stock-market rally. Here’s what would make him turn bullish.

    It’s possible, even likely, that the government’s excessive spending could continue, at least until it comes time to raise the debt ceiling again in 2025.

    Fitch Ratings last week cited projections for ballooning budget deficits for helping to inspire its decision to strip the U.S. of its AAA credit rating.

    “The main takeaway for the equity market this year is that fiscal policy has allowed
    the economy to grow faster than forecast, giving rise to the consensus view that the
    risk of a recession has faded considerably. Furthermore, with the recent lifting of the debt ceiling until 2025, this aggressive fiscal spending could continue,” Wilson said.

    The biggest problem with spending so much during good economic times, however, is that it limits Congress’s ability to act when another recession inevitably arrives.

    That could create problems for corporate earnings and, by extension, stocks, down the road, Wilson said.

    “If fiscal policy is showing such little constraint in good times, what happens to the deficit when the next recession arrives?”

    U.S. stocks were trading higher early Monday after the S&P 500
    SPX
    logged its fourth straight day in the red on Friday, capping off the worst week for stocks since March. The index was up 0.5% in recent trade near 4,500, while the Nasdaq Composite
    COMP
    was 0.2% lower at 13,881.

    The Dow Jones Industrial Average
    DJIA,
    which has surged higher over the past month as traders have favored some of this year’s market laggards, was up 300 points, or 0.9%, at 35,362.

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  • The S&P 500 hasn’t seen a 2% daily drop in nearly 6 months. Does this mean a selloff is overdue?

    The S&P 500 hasn’t seen a 2% daily drop in nearly 6 months. Does this mean a selloff is overdue?

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    The U.S. stock market has been conspicuously calm for most of 2023, prompting some analysts to question whether investors might be overdue for a powerful jolt of volatility.

    It’s been 113 trading sessions since the S&P 500 has seen a daily drop of 2% or more, the longest such stretch since Feb. 21, 2020, according to Dow Jones Market Data.

    The last time the large-cap index fell by 2% or more through the close was Feb. 21, 2023, when the index dropped by 2% exactly. That was nearly six months ago.

    Such subdued volatility is perhaps the most pertinent indication of just how much has changed for markets since 2022.

    When measured by the total number of 2% swings in either direction, last year was the most volatile for U.S. stocks since 2009. The S&P 500 recorded 46 daily swings of 2% or more in either direction last year, compared with 55 in 2009, Dow Jones data show. Of those, roughly half were down days.

    This quiet streak has been good for stocks: Since Feb. 21, the S&P 500 has gained nearly 13%, according to FactSet data. And as of Thursday, it was up more than 18% for the year.

    But as August has gotten off to a rocky start, with the S&P 500 and Nasdaq Composite on track to finish lower for the first week of the month following a three-day streak of losses, some are wondering if the market might be overdue for a larger and perhaps more aggressive drop.

    To the extent that the market’s past performance can tell investors anything useful about the future, historical data compiled by Dow Jones Market Data show that streaks of relative calm have endured for much longer in the not-too-distant past.

    However, investors have often paid the price eventually.

    The longest streak in recent memory without a 2% drop for the S&P 500 ended on Feb. 1, 2018 after 351 trading days — nearly 18 months. It encompassed all of 2017, a memorably tranquil year for markets that saw the Cboe Volatility Index fall to an all-time low in single-digit territory.

    A few days later, stocks would see one of their biggest daily routs in years during the now-infamous “Volmageddon” episode on Feb. 5, 2018 when the Dow Jones Industrial Average fell by 1,175 points while the Cboe Volatility Index, otherwise known as the VIX, doubled, jumped by a record 20 points from 18.44 to a high of 38.40, FactSet data show.

    At the time, it was the biggest daily point decline on record for the Dow. Data also show that the index has traded lower one year after the end of such streaks two out of five times.

    Date Streak Ended

    		 Length of Streak

    		 6-Month Performance

    		 1-Year Performance
    10/08/2014

    		 125

    		 5.74%

    		 2.26%
    6/26/2015

    		 179

    		 -1.93%

    		 -3.05%
    02/01/2018

    		 351

    		 -0.31

    		 -4.09%
    10/09/2018

    		 129

    		 -0.07%

    		 1.36%
    02/21/2020

    		 124

    		 1.78%

    		 17.05%

    SOURCE: DOW JONES MARKET DATA

    Ryan Detrick, chief market strategist at Carson Group, said stocks might be ripe for a larger pullback in August, although he acknowledged that streaks of low volatility have often persisted for much longer.

    “While these periods of low volatility can increase the odds of some type of near-term pull back, these trends can last a while,” Detrick said during a phone interview with MarketWatch.

    “We might be overdue for a modest 4% to 6% pullback here, but it makes sense that this low-volatility world we’ve been living in could have legs.”

    Detrick noted that 2022 saw the biggest pullback for the S&P 500 since 2008 as the index fell 19.4%, according to FactSet data.

    To be sure, the selloff in the bond market was even more intense, with many analysts describing it as the worst year for bonds in decades, if not in the history of modern financial markets.

    “The whole apple cart got rocked last year,” he said.

    Detrick also noted that August and September tend to be more volatile months for stocks.

    “The odds are higher that we could see some seasonal volatility here,” he said. “August isn’t a great month for stocks, but it’s even worse when you’ve had a good year going into it,” he said.

    U.S. stocks rebounded on Friday following the release of the Labor Department’s July jobs report. The S&P 500
    SPX
    was up 0.8% in recent trade, while the Nasdaq Composite
    COMP
    rose by 1%. The Dow
    DJIA
    was trading 256 points, or 0.7%, higher at 35,474.

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  • USA knocked out of Women’s World Cup after loss on penalties to Sweden

    USA knocked out of Women’s World Cup after loss on penalties to Sweden

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    MELBOURNE, Australia (AP) — Lina Hurtig’s converted her penalty and Sweden knocked the United States out of the World Cup 5-4 on penalties after a scoreless draw at the Women’s World Cup.

    U.S. goalkeeper Alyssa Naeher fruitlessly argued she had saved Hurtig’s attempt, but it was ruled over the line. The stadium played Abba’s “Dancing Queen in the stadium as the Swedes celebrated.

    The United States, which has a record four World Cup titles overall and was trying to win an unprecedented third consecutive tile, was eliminated in the Round of 16 for the first time in team history.

    The Americans’ worst finish had been third place, three times.

    It was the first match at this World Cup to go to extra time.

    It was the was the fourth time a U.S. match at the World Cup went to extra time. All of the three previous matches went to penalties, including the 2011 final won by Japan. The U.S. won on penalties in a 2011 quarterfinal match against Brazil, and in the 1999 final at the final at the Rose Bowl against China.

    Sweden knocked the United States out of the 2016 Olympics in the quarterfinals on penalties.

    Sweden goes on to the quarterfinals to play Japan, the 2011 World Cup winner, which defeated Norway 3-1 on Saturday night.

    Sweden has never won a major international tournament, either the World Cup or the Olympics. The closest the team has come is World Cup runner-up in 2003. They finished in third in the 1999, 2011 and 2019 editions, and won silver medals in the last two Olympics.

    The Americans struggled through group play with just four goals in three matches. They were nearly eliminated last Tuesday by first-timers Portugal, but eked out a 0-0 draw to fall to second in their group for just the second time at a World Cup.

    The Americans looked far better against Sweden, dominating possession and outshooting the Swedes 5-1 in the first half alone. Lindsey Horan’s first-half header hit the crossbar and a second-half blast was saved by goalkeeper Zecira Musovic, who had six saves in regulation.

    Sweden won all three of their group games, including a 5-0 rout of Italy in its final group match. Coach Peter Gerhardsson made nine lineup changes for the match, resting his starters in anticipation of the United States.

    It was tense from the opening whistle.

    Naeher punched the ball away from a crowded goal on an early Sweden corner kick. Three of the Swedes’ goals against Italy came on set pieces.

    Trinity Rodman’s shot from distance in the 18th minute was easily caught by Musovic, who stopped another chance by Rodman in the 27th.

    Horan’s header off Andi Sullivan’s corner in the 34th hit the crossbar and skipped over the goal. Horan was on target in the 53rd minute but Musovic dove to push it wide. Horan crouched to the field in frustration while Musovic was swarmed by her teammates.

    The United States was without Rose Lavelle, who picked up her second yellow card of the tournament in the group stage finale against Portugal and has to sit out against Sweden.

    In Lavelle’s absence, U.S. coach Vlatko Andonovski started Emily Sonnett, who was making her first start for the team since 2022. The addition of Sonnett allowed Horan to move up higher in the midfield.

    Sweden pressed in the final 10 minutes of regulation. Sofia Jakobsson, who came in as a substitute in the 81st minute, nearly scored in the 85th but Naeher managed to catch it for her first save of the tournament.

    Neither Caroline Seger of Megan Rapinoe started the match, but Rapinoe came in as a sub for Alex Morgan in the first overtime period.

    Seger, whose 235 appearances for Sweden are the most for any woman in Europe, was on the bench to start the match. The 38-year-old has been struggling with a calf problem all year and trained alone in the two days of practice leading into the showdown with the U.S.

    Rapinoe, also 38, previously announced that this would be her last World Cup. She has taken on a smaller role for the Americans in her final tournament. She was a substitute in the United States’ first and third games of group play and didn’t get off the bench in the middle match. She made her 200th appearance for the national team at the World Cup.

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  • U.S. adds 187,000 jobs in July and points to hiring slowdown. Wages still high

    U.S. adds 187,000 jobs in July and points to hiring slowdown. Wages still high

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    The numbers: The U.S. added a more modest 187,000 new jobs in July, perhaps a sign the economy is cooling enough to drive inflation lower and even stave off further increases in interest rates.

    Employment growth has fallen below 200,000 two months in a row for the first time since the onset of the pandemic in 2020.

    The unemployment rate, meanwhile, dipped to 3.5% from 3.6%, the government said Friday.

    After the report, stocks rose and bond yields fell.

    Senior officials at the Federal Reserve will decide whether to raise interest rates again in September after reviewing a handful of reports on jobs, wages and inflation.

    A sign advertises job openings in Illinois. The economy created 187,000 jobs in July.


    Scott Olson/Getty Images

    Higher rates work to slow inflation by depressing the economy, but they also raise the risk of recession. The Fed is aiming to extinguish high inflation without triggering a downturn — what economists call a “soft landing.”

    The good news? Inflation has slowed a bit faster than expected recently. Yet while the labor market appears to be cooling, a shortage of workers is keeping upward pressure on wages.

    Wages rose 0.4% in July. The increase over the past 12 months was unchanged at 4.4%.

    Fed officials want to see annual wage growth return to pre-pandemic levels of 3% or less.

    The pace of hiring is also faster than the Fed would like. The economy probably only needs to add 100,000 jobs a month to absorb all the people entering the labor force in search of work, Fed officials said.

    Key details: The increase in hiring in July was concentrated in just a handful of areas, mostly health care and social assistance.

    Some 87,000 jobs — or 47% of July’s total — were created by medical providers and social programs.

    Hiring also rose slightly in leisure and hospitality, finance, wholesale and government.

    While the economy is still creating lots of new jobs, fewer industries are hiring. The percentage of firms adding jobs vs. the share reducing them fell close to a record low last month. That’s a sign the labor market is cooling off.

    Hiring in June and May was also weaker than previously reported.

    Job gains in June were reduced to 185,000 from 209,000, marking the smallest increase since the end of 2020.

    The increase in employment in May was cut to 281,000 from 306,000.

    Another sign of a softening labor market: The number of hours people work fell a tick to 34.3 and matched a post-pandemic low. Businesses tend to cut hours before resorting to layoffs when the economy slows.

    The share of people working or looking for work, meanwhile, was unchanged at a post-pandemic high of 62.6%.

    High labor-force participation can also help to reduce inflation. When more people are looking for work, companies don’t have to raise wages as much to obtain labor.

    Big picture: Can the Fed really pull off a soft landing — something it’s only done once or twice since World War Two? Senior officials are increasingly convinced it’s doable.

    The Fed economic staff recently dropped its forecast of a recession and a majority of Wall Street economists now say a downturn is unlikely in the next year.

    The economy still isn’t out of danger, though. The Fed has raised interest rates to the highest level in a few decades and some key parts of the economy are suffering.

    If progress on reducing inflation wanes and rates go even higher, the economy would be more vulnerable to a recession.

    Looking ahead: “Today’s July jobs report is consistent with a soft landing in the U.S. economy,” said chief economist Gus Faucher of PNC Financial Services. “Job growth is gradually slowing to a more sustainable pace.”

    “The July employment report should not change the Fed’s hawkish lean,” said Nationwide Chief Economist Kathy Bostjancic. “But officials will want to see the August employment report and the next two inflation monthly readings before deciding whether they can remain on hold or if further rate hikes are required to cool labor demand and inflationary pressures.”

    Market reaction: The Dow Jones Industrial Average
    DJIA
    and S&P 500
    SPX
    were set to open higher in Friday trades. The yield on the 10-year Treasury BX:TMUBMUSD10Y fell to 4.1%.

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  • Service side of the economy slows slightly, ISM finds, but ‘sales have been steady’

    Service side of the economy slows slightly, ISM finds, but ‘sales have been steady’

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    The numbers: A measure of business conditions for service sector companies like hotels, restaurants and hair salons slowed in July, but still signaled an expanding economy.

    The service-sector index fell to 52.7% from 53.9% in the prior month.

    That was a larger drop than economists predicted. Economists forecast the Institute for Supply Management’s survey to slow to 53.3%.

    The index has been in expansionary territory for seven months in a row, however. Numbers above 50% indicate growth.

    “I think we’re on solid footing right now. It’s just hard to see what might happen down the road,” said Anthony Nieves, chairman of the survey.

    Key details:

    • The index of new orders dipped to 55.0%  from 55.5%. “Sales have been steady,” a senior construction executive told ISM.

    • The production gauge fell 2.1 points to 57.1%

    • The employment barometer dropped 2.4 points to 50.7% 

    • The prices-paid index, a measure of inflation, grew to 56.8% from 54.1% the prior month. “Supplier costs (are) not coming down as much as expected,” a wholesale trade executive told ISM.

    Big picture: Demand for services has been strong in the aftermath of the pandemic. People’s desire to travel and go to restaurants has been a balancing force while the industrial side of the economy remains stuck.

    Looking ahead: “Even though the risks of a recession may be easing, that doesn’t mean the economy is set to enjoy a strong performance over the second half of the year,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.

    Market reaction: The Dow Jones Industrial Average
    DJIA
    and S&P 500
    SPX
    fell slightly in Thursday trades.

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  • What Fitch’s U.S. credit downgrade means for investors

    What Fitch’s U.S. credit downgrade means for investors

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    As you’ve probably heard by now, Fitch Ratings late Tuesday cut the U.S. federal government’s credit rating to AA+ from AAA.

    Here’s a look at what it means for investors and markets:

    What’s a credit rating?

    A credit rating is an independent assessment of the ability of an organization, including corporations and governments, ranging from school boards to cities, counties, states and countries, that have issued debt to meet their obligations. Fitch — alongside S&P Global and Moody’s Investors Service — is one of the world’s big three ratings firms.

    Need to Know: The U.S. is downgraded. How much does it matter to markets? And the surprise asset that may benefit.

    The ratings firms use scales that employ letters, and in Moody’s case also include numbers, to provide a guide to creditworthiness. At the top of the list is the AAA rating from S&P and Fitch, or Aaa, in the case of Moody’s. AA+ is the second-highest rating.

    Ratings that employ Cs are at the bottom of the scales, with Fitch and S&P using D ratings in cases of default or bankruptcy.

    Any rating below BBB- from Fitch and S&P, or Baa from Moody’s, is considered below “investment grade.” Such debt is often termed “junk.”

    Why did the U.S. rating get cut

    Fitch had warned in May that a cut was possible, with the ratings firm expressing dismay over what it termed another round of “brinkmanship” around the U.S. government’s debt ceiling. The warning came amid a battle between congressional Republicans and the Biden administration over lifting or suspending the federal government’s debt ceiling.

    The limit has been a frequent source of political squabbling. While the showdown was resolved with a two-year suspension of the limit, the battle underlined the high stakes. Failure to reach a deal could have led to a default. In Tuesday’s decision, Fitch said that the past two decades have seen “a steady deterioration in standards of governance” in the U.S., the debt-ceiling agreement notwithstanding.

    How does the U.S. rating stack up to other countries

    Fitch isn’t the first of the big three ratings firms to strip the U.S. of its AAA rating. S&P did so in 2011, amid an earlier debt-limit battle. That leaves Moody’s as the only firm to still assign the U.S. its top rating.

    The pool of triple-A sovereign ratings, meanwhile, continues to dwindle. Only a handful of countries carry triple-A ratings across the board from all three ratings firms.

    See: Here are the countries that still have Triple-A credit ratings across the board

    What does rating cut mean to investors?

    The cut isn’t seen having much lasting effect on investor demand for U.S. Treasurys. The market for Treasurys is the largest and most liquid debt market in the world. Despite the lack of triple-A ratings, Treasurys are viewed and treated by investors as being virtually “risk-free,” or equivalent to cash. Other types of debt are often quoted in terms of the yield premium, or spread, demanded by investors to hold them over Treasurys.

    That isn’t going to change overnight. Analysts have emphasized that investors don’t buy Treasurys based on the credit rating. And any outflows from funds that are required to hold only triple-A rated bonds are expected to be limited.

    See: $25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time

    “Many major Treasury holders, such as funds and index trackers, have already prepared for the move by changing mandates to specifically refer to Treasurys rather than AAA credit, and are unlikely to be forced into selling given the importance of the asset class,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a Wednesday note.

    How are markets reacting?

    The downgrade was blamed for a weak tone across global equity markets, with U.S. stocks following suit. The Dow Jones Industrial Average
    DJIA
    dropped around 315 points, or 0.9%, while the S&P 500
    SPX
    shed 1.3%. The moves come after a strong run of gains, however.

    Treasury yields, which move opposite to price, were higher. The selling, however, took hold only after data from ADP that showed a stronger-than-expected rise in private-sector payrolls. Treasurys took the downgrade in stride in earlier trading, with yields moving lower.

    The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    was up around 2 basis points near 4.02%.

    Marcelli recalled that in 2011 the yield on the 10-year U.S. Treasury fell around 50 basis points, or half a percentage point, in the three days after the S&P downgrade to 2.6% on Aug. 5. Even 15 trading days later, yields were still down 40 basis points from the day of the downgrade, and around 80 basis points lower compared with where they were 15 trading days before the move.

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  • Stock futures slide after Fitch’s U.S. downgrade sours the market mood

    Stock futures slide after Fitch’s U.S. downgrade sours the market mood

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    U.S. stock futures stumbled Wednesday after markets were rattled by a downgrade to the U.S. government’s credit rating.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      -0.73%
      dipped 42 points, or 0.9%, to 4559

    • Dow Jones Industrial Average futures
      YM00,
      -0.51%
      fell 257 points, or 0.7%, to 35500

    • Nasdaq 100 futures
      NQ00,
      -1.04%
      lost 204 points, or 1.3%, to 15613

    On Tuesday, the Dow Jones Industrial Average
    DJIA
    rose 71 points, or 0.2%, to 35631, the S&P 500
    SPX
    declined 12 points, or 0.27%, to 4577, and the Nasdaq Composite
    COMP
    dropped 62 points, or 0.43%, to 14284.

    What’s driving markets

    Equity-index futures are succumbing to a broad risk off tone across markets after rating agency Fitch downgraded the U.S.’s credit rating from AAA to AA+, citing “expected fiscal deterioration” and an “erosion of governance”.

    Fitch’s move follows a similar downgrade by S&P more than a decade ago. The U.S. Treasury market acts as a global benchmark upon which many financial products are based and so uncertainty about its stability can cause anxiety for investors.

    The news found a stock market arguably vulnerable to unwelcome surprises, with the S&P 500 having already gained 19.2% this year and the tech-heavy Nasdaq Composite up 36.5%.

    The CBOE VIX Index , an option-based gauge of expected S&P 500 volatility, jumped 16% to 16.2, its highest in nearly four weeks.

    Traditional perceived havens saw demand, with the Japanese yen
    USDJPY,
    -0.41%
    gaining 0.7%, gold
    GC00,
    +0.34%
    nudging up to $1,950 an ounce, and benchmark German government bond yields
    BX:TMBMKDE-10Y
    moving lower. U.S. 10-year Treasury yields
    BX:TMUBMUSD10Y
    were little changed at 4.03%.

    However, most analysts did not see the downgrade causing the stock market much long term damage.

    “While debt downgrades seldom, if ever, have long legs, investors may pause and let the dust settle before re-entering risk markets. However, within this super market-friendly environment of stable growth and a Fed close to the end of its hiking cycle creating fertile ground for stock gains, its unlikely risk sentiment will wander too far off the soft landing path,” said Stephen Innes, managing partner of SPI Asset Management.

    Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said “the market remains sensitive as the final throes of earnings season rumble on, but 82% of S&P 500 companies that have reported results so far have surprised to the upside, offering a bit of a sentiment buffer.”

    Earnings results due Wednesday include CVS Health
    CVS,
    -0.99%    ,
    Humana
    HUM,
    +0.28%
    and Carlyle Group
    CG,
    -0.56%
    before the opening bell, followed after the close by PayPal
    PYPL,
    -0.38%    ,
    Shopify
    SHOP,
    -0.19%
    and Qualcomm
    QCOM,
    -0.07%    .

    U.S. economic updates set for release on Wednesday include the ADP employment report at 8:15 a.m. Eastern.

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  • ‘You’re too honest’: Donald Trump’s alleged Jan. 6 conspiracies, explained

    ‘You’re too honest’: Donald Trump’s alleged Jan. 6 conspiracies, explained

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    Once is an accident, twice is a coincidence and three times is a conspiracy.

    Former President Donald Trump is accused by federal prosecutors of engaging in three major conspiracies ahead of the Jan. 6, 2021, Capitol riot to subvert the process of counting and certifying the vote before Congress in his bid to hold on to power despite having lost the 2020 election.

    While spreading lies about how votes had been illegally cast, tampered with or miscounted in order to build mistrust among the public about the election’s outcome, special counsel Jack Smith says Trump and a group of six unnamed lawyers and advisers plotted to illegally meddle with the very basis of how presidential elections have been run in the U.S since its founding.

    A four-count indictment unsealed in federal court in Washington on Tuesday alleges that the group worked unrelentingly to tamper with how several states counted their ballots and the process by which states sent electors to Washington to finalize their vote. The indictment also accused Trump of pressuring the Justice Department and Vice President Mike Pence to intervene even though they had no standing to do so.   

    “Each of theses conspiracies — which built upon the widespread mistrust the defendant was creating through pervasive and destabilizing about election fraud — targeted a bedrock function of the United States federal government: the nation’s process of collecting, counting, and certifying the results of the presidential election,” the indictment read.

    Trump has dismissed the charges as being purely politicized.

    “The lawlessness of these persecutions of President Trump and his supporters is reminiscent of Nazi Germany in the 1930s, the former Soviet Union, and other authoritarian, dictatorial regimes,” a statement released by his campaign read. “President Trump has always followed the law and the constitution, with advice from many highly accomplished attorneys.”

    The charges allege three acts of conspiracy and one of obstructing an official proceeding. Here are the main legal arguments Smith makes against the former president:

    ‘We have lots of theories’

    Prosecutors say that starting almost immediately after the election on Nov. 3, 2020, Trump began a campaign to get officials in key states like Arizona, Nevada, New Mexico, Pennsylvania, Michigan, Wisconsin and Georgia to overturn the election results.

    Trump pressured state officials to throw the vote out based on allegations ranging from dead people voting to non-citizens casting ballots, and from voting machines being tampered to ballot-box stuffing, despite there being no evidence any of it had occurred. 

    “We don’t have evidence, but we have lots of theories,” one of Trump’s co-conspirators allegedly told the speaker of the house of Arizona, a Trump-backer, when asked what proof they had about electoral malfeasance.

    When officials in the states refused to go along with Trump’s request to decertify the results, the president continued to publicly trumpet false claims about voter fraud and attack local officials as “terrible people” who were in on the fraud, the indictment said.

    Smith said that Trump continued to make the claims despite having been told repeatedly by numerous people in multiple agencies — many of them his own supporters — that there was no truth to it and having lost case after case in court. 

    “When our research and campaign team can’t back up any of the claims made by our Elite Strike Force Legal Team, you can see why we’re 0-32 on our cases,” one senior campaign advisor said, according to the indictment. “It’s tough to own any of this when it’s all just conspiracy s*** beamed down from the mothership.”

    Smith argues that this effort amounted to using deceit to subvert the election’s result, which is against the law. 

    Phony electors

    One key component of the conspiracy case against Trump revolves around efforts to create a competing slate of electors from each challenged state.

    As part of the presidential electoral process, every state sends electors to Washington to deliver the vote to congress. It’s a mostly ceremonial procedure, but Trump’s legal team is accused of hatching a plot to send a second group of electors who backed Trump from several states in order to create confusion in Congress and force legislators in Washington to have to debate the election’s outcome.  

    No matter that the second slate of electors hadn’t been approved by officials in the states they purported to represent and were not authorized in any way, the indictment says. The effort was so patently bogus that Trump’s team even referred to the group as “phony electors” in their own correspondence, the indictment stated. 

    In the indictment, Smith said the effort amounted to a conspiracy to commit fraud.  

    ‘You’re too honest’

    A third leg of the conspiracy allegedly involved pressuring officials at the Justice Department and Pence to intervene in the election even though they had no standing to do so.  

    The indictment says Trump and his co-conspirators repeatedly communicated with then acting attorney general Jeffrey Rosen and insisted that he declare ahead of the Jan. 6 certification of the election by Congress that there had been evidence of fraud.

    When Rosen said he would not do that because there was no such evidence, Trump allegedly threatened to replace him with one of the unnamed co-conspirators included in the indictment. 

    At one point, a deputy White House counsel told the co-conspirator that “there is no world, there is no option in  which you do not leave the White House,” and warned that there would be “riots in the streets” if Trump attempted to remain in office, to which the co-conspirator allegedly said: “That’s why there is an Insurrection Act.”

    For weeks ahead of the Jan. 6 certification hearing in Congress, Trump and his cohorts pressured Pence to refuse to certify the vote tally, a purely ceremonial task the vice president has presided over since the country’s founding. 

    Pence steadfastly refused to do so, saying his legal team had told him there was no constitutional basis for the vice president to be able to overturn an election at the last minute. In a phone call less than a week before Jan. 6, Trump allegedly berated Pence and told him, “You’re too honest.”

    When a senior White House advisor told one of the unnamed co-conspirators that if Pence tried to overturn the election it would lead to violence in the streets, the co-conspirator allegedly said that there had been times in the country’s history where violence was necessary to protect the Republic, the indictment said.

    In the days and hours leading up to the Jan. 6 riot, Trump posted several messages on Twitter stating that Pence had the authority to overturn the election and continuing to pressure him to do so. 

    Exploiting the chaos

    On Jan. 6, after Pence issued a statement saying he did not have the authority to not certify the vote, protests outside Congress turned violent, with hundreds of rioters clashing with police and storming the building, delaying the proceedings.

    During the standoff, some of Trump’s co-conspirators tried to reach members of Congress and the Senate to convince them to further delay the certifying process in order to buy Trump more time to convince state legislatures to nullify the already-approved votes, the indictment says.

    Later that afternoon, Trump tweeted: “See, this is what happens when they try to steal an election. These people are angry. These people are really angry about it. This is what happens.” 

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  • Trump indicted by special counsel over efforts to overturn 2020 election

    Trump indicted by special counsel over efforts to overturn 2020 election

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    Former President Donald Trump on Tuesday was indicted by a grand jury in Washington, D.C., in connection with the Justice Department’s probe into efforts to overturn the 2020 presidential election, including the Jan. 6, 2021, attack on the U.S. Capitol.

    Special counsel Jack Smith has been examining Trump’s actions leading up to the Jan. 6 attack. On that day, a mob of Trump supporters stormed the Capitol building in an attempt to disrupt the congressional certification of the election results.

    In Tuesday’s 45-page indictment, Trump was hit with four charges: conspiracy to defraud the U.S., conspiracy to obstruct an official proceeding, obstruction of and attempt to obstruct an official proceeding and conspiracy against rights.

    “The attack on our nation’s capitol on Jan. 6, 2021, was an unprecedented assault on the seat of American democracy,” Smith said at a news conference.

    “As described in the indictment, it was fueled by lies — lies by the defendant targeted at obstructing a bedrock function of the U.S. government, the nation’s process of collecting, counting and certifying the results of the presidential election.”

    Trump is expected to be arraigned on Thursday in Washington.

    “In this case, my office will seek a speedy trial so that our evidence can be tested in court and judged by a jury of citizens,” Smith also said.

    The indictment said Trump had six co-conspirators, and it indicated that four of the individuals were attorneys, one was a political consultant and another was a Justice Department official.

    Trump has denied wrongdoing and is the overwhelming favorite in polls for the GOP nomination for the 2024 presidential race, far ahead in a crowded field that includes Florida Gov. Ron DeSantis, former Vice President Mike Pence, former New Jersey Gov. Chris Christie and entrepreneur Vivek Ramaswamy. The former president on July 18 said he’d gotten a letter informing him he is a target of that probe. He said he anticipated being indicted.

    Read: Trump says he’s a target of special counsel Jack Smith’s Jan. 6 case

    The indictment ratchets up legal pressure for Trump as he seeks the 2024 GOP nomination and aims to challenge Democratic President Joe Biden. The former president is already facing federal charges in Florida that he mishandled classified documents after leaving the White House, and criminal charges in New York over a hush-money case. A separate election-interference investigation is underway in Georgia.

    Read more: Trump has now been indicted in a third case. Here’s where all the investigations stand.

    “This is nothing more than the latest corrupt chapter in the continued pathetic attempt by the Biden crime family and their weaponized Department of Justice to interfere with the 2024 presidential election, in which President Trump is the undisputed frontrunner, and leading by substantial margins,” said Trump’s 2024 campaign in a statement.

    “The lawlessness of these persecutions of President Trump and his supporters is reminiscent of Nazi Germany in the 1930s, the former Soviet Union, and other authoritarian, dictatorial regimes,” the statement also said.

    In addition, Trump’s campaign made an effort to raise money off the latest indictment, sending an email from the 45th president that asked supporters to “make a contribution to show that you will NEVER SURRENDER our country to tyranny as the Deep State thugs try to JAIL me for life.”

    Trump’s former vice president, Mike Pence, who’s also seeking the GOP presidential nomination, said in a statement late Tuesday: “Today’s indictment serves as an important reminder: anyone who puts himself over the Constitution should never be president of the United States,” adding he will have more to day after reviewing the indictment.

    An indictment does not disqualify Trump from mounting a White House campaign. The only requirements to run for president, as laid out in the Constitution, are being a natural-born citizen at least 35 years old and a resident of the U.S. for 14 years.

    Washington Watch: Donald Trump indicted again. Can he still run for president?

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  • Interactive: Search for the latest PCE inflation trends of almost 400 items

    Interactive: Search for the latest PCE inflation trends of almost 400 items

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    The personal consumption expenditures price index, which is released by the U.S. Department of Commerce, is the Federal Reserve’s preferred measure of inflation. It is released each month and measures the change in prices of goods and services in the United States.

    The Fed uses core PCE, which excludes the volatile categories of food and energy, to help set monetary policy. The consumer-price index is another measure of inflation and is reported by the Bureau of Labor Statistics. 

    See more: MarketWatch’s breakdown of CPI inflation

    PCE measures the expenses of both urban and rural consumers by United States residents. According to the Commerce Department, the index “consists of the purchase of new goods and services from private businesses.” Though additional purchases are included, such as those from the government and expenditures by third-party payers on behalf of households.

    PCE by type of product is divided into three broad categories: durable goods, nondurable goods and services. 

    Use our searchable table to look up the most recent price data for almost 400 products reported by the the Commerce Department.

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  • German economy stagnated in the second quarter

    German economy stagnated in the second quarter

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    The German economy was stagnant in the second quarter after two periods of decline.

    The Federal Statistical Office reported zero quarter-on-quarter change, after a 0.1% drop in the first quarter and a 0.4% drop in the fourth quarter of 2022. Most countries outside the U.S. report GDP on a quarterly, and not annualized, basis.

    Consumer spending by private households stabilized in the second quarter of 2023 after the weak winter half-year, it said.

    Over the last year, the eurozone’s largest economy dropped by 0.6%.

    Sentiment is dark for Germany’s economy, with the key Ifo index of business climate sliding in July to an eight-month low.

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  • Trump asked staffer to delete Mar-a-Lago camera footage, updated indictment alleges

    Trump asked staffer to delete Mar-a-Lago camera footage, updated indictment alleges

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    WASHINGTON — Donald Trump faced new charges Thursday in a case accusing him of illegally possessing classified documents, with prosecutors alleging that he asked a staffer to delete camera footage at his Florida estate in an effort to obstruct a federal investigation into the records.

    The indictment includes new counts of obstruction and willful retention of national defense information, adding fresh detail to an indictment issued last month against Trump and a close aide. The additional charges came as a surprise at a time of escalating anticipation of a possible additional indictment in Washington over his efforts to overturn the results of the 2020 presidential election. The updated allegations make clear the vast — and unknown — scope of legal exposure faced by Trump as he seeks to reclaim the White House in 2024 while fending off criminal cases in multiple cities.

    The new allegations from special counsel Jack Smith center on surveillance footage at Trump’s Mar-a-Lago estate in Palm Beach, evidence that has long been vital to the case. Trump is alleged to have asked to have the footage deleted after FBI and Justice Department investigators visited in June 2022 to collect classified documents he took with him after leaving the White House. The new indictment also charges him with i llegally holding onto a document he’s alleged to have shown off to visitors in New Jersey.

    A Trump spokesperson dismissed the new charges as “nothing more than a continued desperate and flailing attempt” by the Biden administration “to harass President Trump and those around him” and to influence the 2024 presidential race.

    Prosecutors accuse Trump of scheming with his valet, Walt Nauta, and a Mar-a-Lago property manager, Carlos De Oliveira, to conceal the footage from federal investigators after they issued a subpoena for it. Video from the property would ultimately play a significant role in the investigation because, prosecutors said, it captured Nauta moving boxes of documents in and out of a storage room — including one such incident a day before a Justice Department visit to the property.

    According to the indictment, Nauta met with De Oliveira on June 25, 2022, at Mar-a-Lago, where they went to a security guard booth where surveillance video was displayed on monitors and walked with a flashlight through a tunnel where the storage room was located, observing and pointing out surveillance cameras.

    Two days later, according to the indictment, De Oliveira walked with an unidentified Trump employee to an audio room, where De Oliveira asked how many days the server retained footage.

    De Oliveira, prosecutors said, told the other employee “that ‘the boss’ wanted the server deleted” and asked, “What are we going to do?”

    During a voluntary interview with the FBI last January, prosecutors say, De Oliveira lied when he said he “never saw nothing” with regard to boxes at Mar-a-Lago.

    De Oliveira was added to the indictment, charged with obstruction and false statements related to an interview he gave the FBI earlier this year. His lawyer declined to comment Thursday evening.

    The new charges were filed as Trump is bracing for the prospect of charges related to his efforts to undo the 2020 election in the run-up to the Jan. 6, 2021, riot at the U.S. Capitol. Last week, he revealed he had received a letter from the Justice Department informing him he was a target in that probe, suggesting that charges could be forthcoming, and his lawyers met with prosecutors on Smith’s office earlier Thursday to discuss that case.

    But despite the anticipation. the only charges filed Thursday were in Florida, not Washington.

    The superseding indictment also charges Trump with an additional count of willfully retaining national defense information, relating to a document he showed off to visitors at his Bedminster, New Jersey, golf club during an July 2021 interview for a memoir by his onetime chief of staff Mark Meadows. Prosecutors have described the document as a Pentagon plan of attack and Meadows, in his subsequent book, said the country it concerned was Iran.

    According to the indictment, Trump returned that document, which was marked as top secret and not approved to show to foreign nationals, to the federal government on Jan. 17, 2022.

    Trump has denied he had secret documents before him when he spoke.

    “There wasn’t a document. I had lots of paper. I had copies of newspaper articles, I had copies of magazines, I had copies of everything,” he said in an interview with Fox News host Bret Baier.

    The count was notable because prosecutors until now had mostly been focused on the records that Trump had refused to return in response to a Justice Department subpoena last year.

    Both Trump and Nauta have pleaded not guilty to the original 38-count indictment. De Oliveira is due in court in Florida on Monday.

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  • U.S. stocks drift higher as tech earnings, Fed rate decision loom

    U.S. stocks drift higher as tech earnings, Fed rate decision loom

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    U.S. stocks were modestly higher on Tuesday as the Dow’s winning streak continued for now, while investors waited for big tech company earnings after the bell and the Federal Reserve’s interest rate decision on Wednesday.

    How stocks are trading

    • The S&P 500 climbed 5 points, or 0.1%, to 4,560

    • The Dow Jones Industrial Average gained 12 points, or 0%, to 35,423

    • The Nasdaq Composite increased 51 points, or 0.3%, to 14,110

    On Monday, the Dow Jones Industrial Average
    DJIA,
    +0.21%
    rose 184 points, or 0.52%, to 35411, the S&P 500
    SPX,
    +0.30%
    increased 18 points, or 0.4%, to 4555, and the Nasdaq Composite
    COMP,
    +0.66%
    gained 26 points, or 0.19%, to 14059.

    What’s driving markets

    The Dow Jones Industrial Average is on an 11-session winning streak, its best run in more than six years, as hopes build that the Federal Reserve’s remaining interest rate hikes this year will not cause a recession as inflation cools.

    Whether the Dow can make it an even dozen days of gains and extend its rally even further to fresh 15-month highs will likely depend on the next few days containing corporate earnings reports and Fed comments.

    Dow components 3M
    MMM,
    +5.58%
    and Verizon Communications Inc.
    VZ,
    +0.60%
    both reported results before the bell. So did big name companies like General Electric
    GE,
    +5.97%
    and General Motors
    GM,
    -4.44%    .

    After the bell, come Microsoft
    MSFT,
    +1.18%
    and Visa
    V,
    -0.28%    ,
    with non-Dow member Alphabet
    GOOG,
    +0.11%
    also a highlight. Coca-Cola
    KO,
    -0.23%
    and Boeing
    BA,
    -1.67%
    are among those Dow members presenting their numbers on Wednesday.

    Investors will be want to hear from Alphabet and Microsoft about their cloud businesses, the ongoing impact and use of artificial intelligence and their general outlooks for American and global markets, David Sekera, chief U.S. market strategist at Morningstar, said in a phone interview.

    Meanwhile, equity markets are in “a little bit of a holding period” ahead of the events to come, he noted.

    Read also: IMF sees signs global economy is headed in the right direction

    Wednesday also sees the Fed’s latest monetary policy decision. The market is certain the central bank will increase its policy interest rate by another 25 basis points to a range of 5.25% to 5.50%.

    But investors are less sure of whether that will be the last hike of the current cycle, so the Fed’s accompanying statement and what Chair Jerome Powell says at his press conference will be the main drivers of bonds, equities and forex around the event.

    “Our view is the Fed is one and done,” Sekera said. Even with expectations that central banks will continue to “talk tough” on inflation, Sekera said Morningstar’s base case is that July’s 25-basis point hike is the last, while inflation continues to cool over the second half of the year. Rate cuts could occur as early as February, he said.

    At Vanguard, Andrew Patterson, senior international economist, said in a note that the Fed could reach its terminal rate “with 1 or 2 more hikes.” The central bank is “likely to remain on hold through at least the end of the year.  If inflation proves persistent, this may be a sign of a higher neutral rate and the Fed may need to go to 6% or beyond in order to bring inflation back to target,” he said.

    Others think there’s more rate hikes to go. “There is a great chance that the Fed will spoil your mood if you are among those thinking that this week’s rate hike will be the last for this tightening cycle in the U.S.,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

    Read also: ‘No chance we’re having a soft landing’: Stock-market strategist David Rosenberg gives Powell’s Fed no credit — and no mercy

    Meanwhile, helping underpin sentiment on Tuesday was a rebound in Chinese stocks, notably property developers after Beijing signaled support for the heavily-indebted sector.

    In other economic data Tuesday, home prices increased for the fourth consecutive month in May, according to the S&P Case-Shiller Index. May’s strongest price gains were in Midwest cities, but the overall gains underscore the ongoing lack of supply of homes.

    While home prices are rising, so is consumer confidence. One gauge on consumer sentiment reached a two-year high, according to data out Tuesday. The Conference Board’s index for July increased to 117.0, which was above economists’ expectations and up from a revised 110.1 last month.

    While mood is brightening, the index is still below pre-pandemic levels as consumers contend with the toll of high prices and rising interest rates.

    Companies in focus

    • General Electric Co.
      GE,
      +5.97%
      shares up more than 6% and approaching a nearly five-year high after second quarter results from the aerospace and renewable energy company that topped expectation. The company reported net income of $946 million, or 86 cents per share, from a loss of $1.25 billion, or $1.13 a share one year ago, while free cash flow and revenue also beat estimates.

    • Verizon Communications Inc.
      VZ,
      +0.60%
       shares are up more than 0.7% after the telecommunications company topped profit expectations in its latest earnings but came just below revenue expectations. The company reported $1.21 earnings per share, above FactSet consensus for $1.17 earnings per share.

    • General Motors Co.
      GM,
      -4.44%
      shares are more than 3% lower after the car maker delivered better than expected second quarter earnings and raised its guidance. The company had adjusted earnings per share of $1.91, topping the $1.86 consensus according to FactSet.  

    • 3M Co.
      MMM,
      +5.58%
      shares are more than 6% higher Tuesday after results showing the company booked a loss in connection with a litigation settlement over “forever chemicals.” But taking away the one-time charge, the company still topped adjusted profit expectations and raised its full-year outlook.

    • Spotify Technology
      SPOT,
      -13.68%
      shares tumbled about 12% Tuesday after the streaming giant easily surpassed subscriber-growth expectations for its latest quarter but failed to sport upside on its key financials.

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  • Here are 4 of the biggest changes to the Nasdaq 100 from Monday’s special rebalancing

    Here are 4 of the biggest changes to the Nasdaq 100 from Monday’s special rebalancing

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    New weightings for the largest stocks in the Nasdaq 100 are taking effect on Monday following the index’s second “special rebalancing” in 25 years.

    See: Nasdaq rebalancing is coming, and it’s boosting interest in Friday’s $2.3 trillion option expiration

    These new levels were shared ahead of time with Goldman Sachs Group Chief U.S. Equity Analyst David Kostin. Kostin and his team have published a report on the changes that was shared with Goldman clients and the press last week.

    Here are four of the most important shifts highlighted in Kostin’s note:

    • The seven stocks with the heaviest weightings in the Nasdaq 100 are seeing their collective weight reduced to 44% from 56%.

    • At the sector level, information technology will continue to account for roughly half of the index, but the sector’s weight will decline to 49% from 51%.

    • Apple Inc.
      AAPL,
      +0.56%
      and Microsoft Corp.
      MSFT,
      +0.19%
      will remain the index’s largest constituents, but their index weights will be reduced by roughly four percentage points — to 12% and 10%, respectively.

    • Broadcom’s index weight is seeing the biggest increase, and will see its weighting increase by 64 basis points to 3%.

    The Goldman analyst summarized how the new weightings would impact the index’s 25 largest constituents in the chart below.


    GOLDMAN SACHS

    According to Nasdaq representatives, the Nasdaq 100 is the most popular of the exchange’s indexes. So far this year, it has outperformed the Nasdaq Composite, a broader index including every company traded on the exchange. The Nasdaq 100 is up 41.2%, to the Composite’s 34.4%, according to FactSet data.

    EPFR data show $261 billion in mutual fund and exchange-traded fund assets are benchmarked to the Nasdaq 100, including the Invesco QQQ Trust Series
    QQQ,
    +0.11%    ,
    better known by its ticker QQQ. More than $250 billion of this money is invested in passive benchmark-tracking strategies.

    Nasdaq decided to implement the special rebalancing earlier this month to try and ward off concentration risk after its seven largest components surged earlier this year. According to its official index-management methodology, Nasdaq aims to keep the combined weighting of its largest constituents to 40%.

    Kostin said he doesn’t expect these changes to have much of an impact on markets, arguing that the previous special rebalancing didn’t move the index much, either.

    Both the Nasdaq 100 and Nasdaq Composite were slightly lower on Monday as big-tech names continued to lag the S&P 500 and suddenly high-flying Dow Jones Industrial Average
    DJIA,
    +0.57%    ,
    just like they did last week.

    Nasdaq 100-tracking QQQ
    QQQ,
    +0.11%
    was off by 0.2% at $374 per share Monday morning, while the Nasdaq Composite
    COMP,
    +0.19%
    was down 0.2% at 14, 013.

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  • Biden would beat Trump even if a third-party candidate joins White House race: poll

    Biden would beat Trump even if a third-party candidate joins White House race: poll

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    Voters are more interested in another Joe Biden administration than any third-party option or Donald Trump in 2024, according to polling data from Monmouth University.

    In another Biden vs. Trump election, a combined 47% of voters say they would definitely or probably vote for President Biden and 40% of voters would definitely or probably vote for ex-President Trump. But majorities would not vote for either Biden or Trump, the poll found.

    The electorate is seemingly disheartened with these two choices, but they’re not exactly enticed by a third-party option, either.

    Biden still had more support than Trump, even when a third-party “fusion ticket” with one Democrat and one Republican was added to the mix, Monmouth found.

    With a fusion ticket as an option, 37% of respondents would definitely or probably vote for Biden whereas 28% would definitely or probably vote for Trump. Thirty percent of respondents would entertain voting for the fusion ticket.

    Democrats have expressed concern that a third-party ticket would siphon votes from Biden and spoil his chances in 2024. The presence of a third-party fusion ticket detracts votes from both Biden and Trump, but not enough for the ticket to be a “spoiler,” the polling report said.

    Support for a fusion option declines when actual candidates are named on the ticket.

    When the poll introduced a potential ticket of Democratic West Virginia Sen. Joe Manchin and Republican former Utah Gov. Jon Huntsman, 44% of respondents definitely would not vote for the option. Only 2% of respondents definitely would vote for the hypothetical Manchin-Huntsman ticket.

    Manchin and Huntsman headlined a town hall on Monday hosted by the nonprofit No Labels, which is pursuing ballot access to enter a “unity” ticket, similar to the Monmouth poll’s fusion ticket, in the 2024 race. The event heightened speculation that Manchin could have presidential aspirations for 2024.

    Read: Sen. Joe Manchin fuels rumors of a third-party 2024 presidential bid

    If 2024 turns out to be a Biden vs. Trump vs. Manchin-Huntsman race, Biden would likely get 40% of the vote, Trump 34% and Manchin-Huntsman 16%, the poll found.

    “Some voters clearly feel they have to back a candidate they don’t really like. That suggests there may be an opening for a third party in 2024, but when you drill down further, there doesn’t seem to be enough defectors to make that a viable option,” Patrick Murray, director of the Monmouth Polling Institute, said.

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  • Lionel Messi set to make his Inter Miami debut in Leagues Cup opener against Cruz Azul

    Lionel Messi set to make his Inter Miami debut in Leagues Cup opener against Cruz Azul

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    FORT LAUDERDALE, Fla. (AP) — Lionel Messi’s debut gameday with Inter Miami has arrived.

    Messi is expected to play Friday night when Inter Miami takes on Cruz Azul in a Leagues Cup match at his new home stadium. Team officials say all tickets — about 21,000, in a newly expanded stadium — have been sold, though thousands were available for resale on secondary markets Friday morning.

    It’s unclear how much Messi, a World Cup champion for Argentina and someone who Inter Miami co-owner David Beckham calls the best player ever, will be on the field in his debut. He signed a 2-1/2 year contract with Inter Miami this past weekend, and the deal will pay him between $50 million and $60 million annually. That will almost certainly work out to more than $1 million per match.

    He was introduced to his new home fans on Sunday and officially trained for the first time as a member of the club Tuesday.

    Messi made the decision in June to join Inter Miami and come to Major League Soccer. He considered a return to Barcelona, the club with whom he spent almost the entirety of his career, after spending the last two seasons with Paris Saint-Germain.

    But Inter Miami and MLS found a way to land the seven-time Ballon d’Or winner in Messi, setting the stage for an unprecedented era for the club that has largely sputtered during its first four seasons.

    Leagues Cup is a tournament between clubs from MLS and Liga MX, the top Mexican league. Cruz Azul won the inaugural version of this event in 2019.

    Neither club has enjoyed much success this season. Inter Miami has the fewest points in the MLS standings; Cruz Azul is the only team in the Mexican league yet to record a standings point through the season’s first three matches.

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  • Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

    Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

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    U.S. stocks finished mostly lower Thursday, with the Nasdaq and S&P 500 dragged down by disappointing earnings, while the Dow Jones Industrial Average rose for a ninth straight day for its longest winning streak in nearly six years.

    How stocks traded

    • The S&P 500
      SPX,
      -0.68%
      fell 30.85 points, or 0.7%, to close at 4,534.87.

    • The Dow
      DJIA,
      +0.47%
      rose 163.97 points, or 0.5%, to finish at 35,225.18. The winning streak is its longest since a nine-day run that ended on Sept. 20, 2017, according to Dow Jones Market Data.

    • The Nasdaq Composite
      COMP,
      -2.05%
      ended at 14,063.31, down 294.71 points, or 2.1%.

    What drove markets

    After lagging behind the S&P 500 and Nasdaq for most of the year, the Dow Jones Industrial Average has climbed over the past two weeks. The blue-chip gauge is now heading for its longest streak of daily gains since Sept. 20, 2017, according to Dow Jones Market Data.

    It’s the latest milestone as value stocks and other lagging sectors of the market appear to be playing “catch up,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, during a phone interview with MarketWatch. Although the Dow’s year-to-date gains are still well behind those of the S&P 500, with the blue-chip gauge up 6.6% since Jan. 1, FactSet data show.

    On Wednesday, the S&P 500 and Nasdaq closed at their highest levels in nearly 16 months.

    “We’re finally seeing the rotation to value,” he said. “The Dow is playing catch up with the S&P 500 and the Nasdaq.”

    See: Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

    Technology stocks were lagging following earnings from Netflix Inc.
    NFLX,
    -8.41%
    released late Wednesday, which showed that revenue fell short. Shares fell 8.4%.

    Tesla Inc.
    TSLA,
    -9.74%
    shares fell 9.7% after the electric vehicle maker beat Wall Street expectations for its second quarter but not in the blowout fashion that some market observers were expecting.

    “Netflix missed sales estimates and issued lower-than-expected Q3 guidance, while Tesla’s results showed shrinking profitability with squeeze on margins,” said Henry Allen, strategist at Deutsche Bank.

    Semiconductor shares also took it on the chin, with the PHLX Semiconductor Index
    SOX,
    -3.62%
    falling 3.6%. The drop came after Taiwan Semiconductor Manufacturing Co. 
    TSM,
    -5.05%
    topped second-quarter earnings expectations but reported margins that contracted, while providing a somewhat downbeat outlook.

    Meanwhile, shares of IBM Corp.
    IBM,
    +2.14%
    and Johnson & Johnson
    JNJ,
    +6.07%
    drove the Dow higher after both companies beat earnings expectations.

    Bad news for Netflix seemed to infect other megacap technology names, as Alphabet Inc. Class A
    GOOGL,
    -2.32%
    and Alphabet Inc.
    GOOG,
    -2.65%
    retreated, as did shares of Apple Inc.
    AAPL,
    -1.01%
    and Microsoft Corp.
    MSFT,
    -2.31%
    after the latter hit a record this week.

    Investors also digested earnings from American Airlines Group Inc.
    AAL,
    -6.24%
    and Blackstone Inc.
    BX,
    -0.61%
    which reported before the opening bell. After the close, investors will hear from Capital One Financial Corp.
    COF,
    -2.52%    ,
    CSX Corp.
    CSX,
    -0.27%
    and First Financial Bancorp
    FFBC,
    -0.54%    ,
    along with a few others.

    In U.S. economic data, weekly jobless benefit claims data showed the number of Americans applying for first-time unemployment benefits fell to a two-month low. Meanwhile, the Philadelphia Fed’s gauge of manufacturing activity came in at negative 13.5 in July, up from 13.7 during the prior month.

    Existing home sales fell in June, while leading index of economic indicators dropped 0.7% in June, falling for the 15th month in a row.

    Companies in focus

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  • Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

    Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

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    A 2023 stock-market rally led by megacap tech names is stirring fears another bubble may be forming as the Nasdaq Composite index significantly outpaces strong gains for the S&P 500.

    But a longer term look at the tape indicates the Nasdaq may merely be playing catch-up with the large-cap U.S. benchmark, argued Jessica Rabe, co-founder of DataTrek Research, in a Thursday note, who also warned against losing sight of how dismal 2022 was for stocks.

    The Nasdaq
    COMP,
    -2.05%
    was up 37.2% year-to-date through Wednesday’s close, far outpacing the S&P 500’s
    SPX,
    -0.68%
    18.9% rally, but over the last three years, the S&P 500, up 42%, has outpaced the Nasdaq’s 37% rise, Rabe observed.

    DataTrek ran the three-year rolling returns for both the S&P 500 and the Nasdaq Composite over the last 50 years to put 2022’s losses and 2023’s rebounds into a larger context. Rabe said they chose those time frames because the three-year period helps smooth out year-to-year seasonality and volatility, and five decades capture a variety of business, interest rate and valuation cycles (see chart below).


    DataTrek Research

    The Nasdaq Composite tends to outperform the S&P 500 over a 3-year time horizon but it is also more volatile, as would be expected, Rabe noted. The three-year average price return for the Nasdaq was 41.% versus 29% for the S&P 500 back to 1974.

    The Nasdaq Composite is up 37.1% over the last three years, versus 42% for the S&P 500, making this year’s performance look like a reversion to the longer term mean.

    “The Nasdaq has underperformed the S&P by almost 500 basis points over the last three years, when the Comp typically outperforms by a much larger margin (+1,220 bps). It therefore makes sense that the Nasdaq is playing some catch-up in 2023,” the analyst said.

    The data also show 3-year returns rarely go negative and that they continue to trade in similar bands to prior cycles. “Barring a geopolitical or economic shock, both the Nasdaq and S&P tend to generate positive, double-digit returns over three-year periods,” she said.

    Even with the Nasdaq and S&P’s double-digit rallies this year, three-year returns for both indexes are relatively ordinary as compared with historical norms, Rabe noted. The Composite’s 37.1% return over the last three years is slightly below the average of 41.2% but well within one standard deviation to the downside. The S&P 500’s 42% rise over the same stretch tops its average of 29% but is well within standard deviation to the upside, she said.

    What does it all mean? Rabe acknowledged that stock valuations are rich and that companies need to keep delivering on earnings, but said it’s also worth noting that part of the impressive rallies for both indexes can be explained in part as a reversion to historical averages. She noted that the S&P 500 and Nasdaq’s 2022 performances were nearly or just as bad as those seen in the 1973-74 oil crisis and recession, the period around the bursting of the dot-com bubble, the lead-up to the second Gulf War, and the 2007-09 financial crisis.

    “This year’s gains so far have gotten them back closer to their 3-year average returns but are nowhere near bubble territory,” she said.

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  • Powerball finally has a winner for its jackpot worth over $1 billion

    Powerball finally has a winner for its jackpot worth over $1 billion

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    A winning ticket has been sold in California for the Powerball jackpot worth an estimated $1.08 billion, the sixth largest in U.S. history and the 3rd largest in the history of the game.

    The winning numbers for Wednesday night’s drawing were: white balls 7, 10, 11, 13, 24 and red Powerball 24. The California Lottery said on Twitter that the winning ticket was sold in Los Angeles at Las Palmitas Mini Market.

    Final ticket sales pushed the jackpot beyond its earlier estimate of $1 billion to $1.08 billion at the time of the drawing, moving it from the seventh largest to the sixth largest U.S lottery jackpot ever won.

    Read: What you should do if you won $1 billion

    The winner can choose either the total jackpot paid out in yearly increments or a $558.1 million, one-time lump sum before taxes.

    The game’s abysmal odds of 1 in 292.2 million are designed to build big prizes that draw more players. The largest Powerball jackpot was $2.04 billion Powerball in November.

    The last time someone had won the Powerball jackpot was April 19 for a top prize of nearly $253 million. Since then, no one had won the grand prize.

    Powerball is played in 45 states, as well as Washington, D.C., Puerto Rico and the U.S. Virgin Islands.

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