ReportWire

Tag: NQ00

  • Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

    Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis


    Oil futures popped higher Sunday evening, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East.

    West Texas Intermediate crude for March delivery
    CL00,
    +1.22%

    CL.1,
    +1.22%

    CLH24,
    +1.22%
    was up $1.09, or 1.4%, at $79.10 a barrel on the New York Mercantile Exchange. March Brent crude
    BRN00,
    +1.15%

    BRNH24,
    +1.14%    ,
    the global benchmark, gained $1.11, or 1.3%, to trade at $84.66 a barrel on ICE Futures Europe.

    Much will ultimately depend on the U.S. response and whether Iran takes action aimed at shutting down the Strait of Hormuz, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch on Sunday afternoon.

    “We are on the cusp of this escalating, which could seriously impact the flow of crude oil,” he said.

    Three U.S. service members were killed and more than two dozen injured in a drone strike on a U.S. base in northeast Jordan, according to U.S. Central Command. They were the first U.S. fatalities in months of attacks on U.S. bases by Iran-backed militias since the start of the Israel-Hamas war in October.

    President Joe Biden attributed the Sunday attack to an Iran-backed militia group and said the U.S. “will hold all those responsible to account at a time and in a manner (of) our choosing.” News reports said U.S. officials were still working to conclusively identify the precise group responsible for the attack, but have assessed that one of several Iranian-backed groups is to blame.

    Some congressional Republicans called for direct retaliation on Iran.

    “We must respond to these repeated attacks by Iran & its proxies by striking directly against Iranian targets & its leadership. The Biden administration’s responses thus far have only invited more attacks. It is time to act swiftly and decisively for the whole world to see,” wrote Sen. Roger Wicker of Mississippi, the senior Republican on the Senate Armed Services Committee, in a post on X.

    Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth.

    “Crude already has the wind to its back, so this will only offer further upside,” Chris Weston, head of research at Australian brokerage Pepperstone told MarketWatch in an email.

    With the U.S. election later this year, “Biden needs to strike a balance between increasing aggression that potentially puts U.S. serviceman lives in danger and could potentially raise the cost of living…while also showing a defiant stance that shows his resolve against terror,” Weston said.

    Oil prices have seen short-lived rallies around developments in the Middle East since the start of the Israel-Hamas war, but have failed to build in a lasting geopolitical risk premium. West Texas Intermediate crude
    CL00,
    +1.22%

    CL.1,
    +1.22%    ,
    the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude
    BRN00,
    +1.15%    ,
    the global benchmark, pushed back above $80 a barrel last week.

    Attacks by Iran-backed Houthi militants on Red Sea shipping have forced a rerouting of tankers and cargo ships. For crude, that’s had implications for the physical market but hasn’t interrupted the flow of crude from the Middle East.

    A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation chokepoint, remains a top worry.

    The strait is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just two miles, separated by a two-mile buffer zone.


    Energy Information Administration

    Around 21 million barrels a day of crude moved through the waterway in the first half of 2023, equivalent to around a fifth of daily global consumption, according to the U.S. Energy Information Administration.

    The U.S. stock market has largely looked past Middle East tensions, with the S&P 500
    SPX
    returning to record territory this month, while the Dow Jones Industrial Average
    DJIA
    has also set a series of records.

    Dow futures
    YM00,
    -0.20%
    were off 94 points, or 0.3% as Asian trading got under way, while S&P 500 futures
    ES00,
    -0.22%
    fell 12 points, or 0.2%, and Nasdaq-100 futures
    NQ00,
    -0.24%
    lost 0.3%.

    Read: Stock-market rally faces Fed, tech earnings and jobs data in make-or-break week

    Away from oil, there were no signs of a significant surge in demand for instruments that traditionally serve as havens during periods of increased geopolitical tension. Futures on U.S. Treasurys
    TY00,
    +0.21%
    saw a modest rise of 0.2%, while the U.S. dollar
    DXY
    was little changed versus major rivals and gold futures
    GC00,
    +0.41%
    ticked up 0.4%.

    Escalating Middle East tensions won’t go unnoticed by traders, but probably doesn’t warrant a “solid derisking,” Weston said, particularly with investors facing a barrage of major market events in the week ahead.

    For U.S.-focused investors, the week ahead features a Federal Reserve policy meeting, earnings from tech industry heavyweights and a crucial December jobs report.

    The Middle East situation “won’t take us too far off the rates, growth track, but we have an eye on whether this escalates,” Weston said.

    —Associated Press contributed.





    Source link

  • Dow ends nearly 400 points higher as tech rally leads stocks to highest close since September

    Dow ends nearly 400 points higher as tech rally leads stocks to highest close since September

    U.S. stocks ended sharply higher Friday, more than shaking off weakness seen the previous session in the aftermath of a poor Treasury bond auction and fresh signs that interest rates may stay higher for longer.

    Technology stocks drove the bounce, with the Nasdaq Composite leading major indexes to the upside as it and the S&P 500 logged their highest finishes since September.

    What happened

    • The Dow Jones Industrial Average
      DJIA
      rose 391.16 points, or 1.2%, to close at 34,283.10.

    • The S&P 500
      SPX
      ended with a gain of 67.89 points, or 1.6%, at 4,415.24.

    • The Nasdaq Composite
      COMP
      advanced 276.66 points, or 2%, to finish at 13,798.10.

    The rally left the Dow with a weekly gain of 0.7%, while the S&P 500 advanced 1.3% and the Nasdaq booked a rise of 2.4%. The Dow saw its highest close since Sept. 20, while the S&P 500 ended at its highest since Sept. 19 and the Nasdaq at its highest since Sept. 14.

    Market drivers

    Tech was in the driver’s seat. Shares of Microsoft Corp.
    MSFT,
    +2.49%
    jumped 2.5%, with the Dow component scoring its third record close in four sessions. Intel Corp. shares
    INTC,
    +2.80%
    rose 2.8% to lead Dow gainers.

    Meanwhile, the S&P 500 tested important chart resistance at the 4,400 to 4,415 level, which marks the confluence of previous resistance and the 61.8% Fibonacci retracement of the July-October drop, according to Matthew Weller, global head of research at Forex.com, in a note (see chart below).


    Forex.com

    “From a bigger picture perspective, bulls will need to see the index conclusively break above 4415 before declaring that the post-July streak of lower lows and lower highs is over,” Weller wrote.

    The S&P 500 and Nasdaq Composite ended their longest winning streaks since November 2021 on Thursday, after a poorly-received $24 billion sale of 30-year Treasury bonds.

    A calmer bond market may have helped set the tone for stocks. The yield on the 30-year Treasury bond
    BX:TMUBMUSD30Y
    fell 3.2 basis points to 4.733%, after it nearly notched its biggest one-day jump since June 2022. The yield still saw a weekly decline, its third straight.

    It was unclear whether the Treasury auction had been affected by a reported ransomware attack against the U.S. unit of the Industrial & Commercial Bank of China that apparently disrupted the U.S. Treasury market.

    See: How ransomware attack on ICBC rattled the Treasury market and shook up a 30-year bond auction

    Thursday’s setback was also tied to comments from Federal Reserve Chairman Jerome Powell, who told an International Monetary Fund panel on Thursday that the central bank was wary of “head fakes” from inflation, and the “2% goal was not assured.”

    Much of Powell’s language was nearly identical to remarks he made on Nov. 1, when investors rallied stocks and bonds after the Fed chair didn’t explicitly commit to a further interest rate hike. But the subsequent rally for stocks after the Nov. 1 Fed meeting, with the S&P 500 jumping more than 6% over eight days, and a 50 basis point drop in the 10-year Treasury yield were “overdone and not governed by facts,” said Tom Essaye, founder of Sevens Report Research, in a note.

    “Meanwhile, if we think about what the Fed said last week, namely that the rise in the 10-year yield was doing the Fed’s work for it and as a result they may not have to hike rates, then the short/sharp decline in the 10-year yield we’ve seen could essentially remove the reason for the Fed not having to hike rates — and that could put a rate hike back on the table!” he wrote. “That’s essentially what Powell reminded us of yesterday and that, along with the poor Treasury auction, pushed yields higher,” setting up pressure on stocks.

    U.S. consumer sentiment fell in November for the fourth month in a row due to worries about higher interest rates as well as war in the Middle East. The preliminary reading of the sentiment survey declined to 60.4 from 63.8 in October, the University of Michigan said Friday. It’s the weakest reading since May.

    Investors were also tuning into more comments by Fed officials Friday, including San Francisco Fed President Mary Daly, who said she didn’t know if rates were high enough to bring inflation back down to the central bank’s 2% target.

    Companies in focus

    Source link

  • A wall of debt rolling over: Here’s what’s scaring Bridgewater’s co-CIO

    A wall of debt rolling over: Here’s what’s scaring Bridgewater’s co-CIO

    A weak session is setting up for Tuesday, with oil under pressure after unexpectedly downbeat China export data. So the preference is for bonds this morning, as stock futures tilt south.

    Onto our call of the day, which deals with another worry — a wall of government debt that will be with us for decades. It comes from Bridgewater’s highly regraded co-chief investment officer Bob Prince, who was speaking at the Global Financial Leaders’ Investment Summit on Tuesday, hosted by the Hong Kong Monetary Authority.

    Prince touches on asset liability mismatches, such as what was seen during the banking crisis earlier this year. He explains that one big factor behind a crisis is when a certain economic regime exists for an extended period of time and “people extrapolate that into the future on the basis of leverage and asset liability mismatches. Then you get a shift in that regime.”

    The events of March, which saw the collapse of SVB, Signature Bank and Silvergate, were a perfect example of that, Prince says. Then he turns to what he calls the “broader effects of a transition from 15 years of abundant free money,” that was first used to battle deleveraging pressures in the financial system in 2008 and then the pandemic.

    One long-term effect of that gets particular attention by Prince, who points out how U.S. government Treasury debt to GDP was about 70% in 2008, around where it had been for decades.

    “The after effects of offsetting deleveraging and pandemic, you’ve had a massive wealth shift from the public sector to the private sector and that’s left the government with debt to GDP up from 70% up to 120%. And the particular vulnerability of that is in the debt rollovers and the gross issuance that you’re going to see in the coming decades . You’re stuck with that debt until you pay it off and that means you have to roll it over like anybody else does,” said Prince.

    “Gross debt issuance will be running at 25% for as far as the eye can see, that means every year you’re issuing 25% of GDP in debt. In 1960, the average amount of debt issuance was 12% of GDP,” he said.

    Prince says most people really don’t pay attention to debt rollovers because they just assume those will get done, but notes that when countries have experienced balance of payments crisis in the past, mostly emerging markets, that is because they have been unable to roll over that debt.

    In the U.S. case, it’s crucial to look at who is holding the debt, particularly the 27% held by foreign investors and 18% by central banks. “Foreign investors would normally be a reliable source of investment but it does heighten sensitivity to geopolitical risk, and so geopolitical risk converges with debt rollovers and gross issuance of the Treasury is an issue that you need to pay attention to in the coming years.

    While not an “acute problem,” he says, it’s a lingering one, and when it comes to central banks it’s also unclear whether their holdings also present a “rollover risk.”

    Prince also touches on the fact that that all that “abundant free money” has fueled a private-equity boom, but with interest rates now at 8% instead of 2% or 3%, “the pace and transaction cycle is bound to slow,” and they are starting to see that.

    “When we talk to institutional investors around the world, many of them are experiencing liquidity issues right now and the liquidity issues result from the fact so much money was allocated to private assets and the transaction cycle is slowing,” he said.

    MarketWatch 50: Forget U.S. stocks for now. Invest here instead, says Bridgewater’s co–investment chief

    A team of analysts at Citigroup led by Nathan Sheets have also weighed in on government debt, telling clients in a new note that “it’s unwise for policy makers to experiment or test” where the threshold for too much debt lies. Here’s their chart showing the bleak trajectory:

    Dirk Willer, head of global asset allocation at Citigroup, said a debt crisis scenario in the U.S. would likely mean a selloff of risk assets globally. He notes that bonds in rival countries may not be the best bet as they don’t always benefit. And both gold and bitcoin underperformed during the U.K. gilt crisis, so those may be out.

    Also in attendance at the conference in Hong Kong, Deutsche Bank’s CEO is worried geopolitics could create another market event and Citadel’s Ken Griffin said investors should put money in China.

    Read: ‘Stock-market correction is over’ after broad surge amid ‘epic’ market rallies

    The markets

    Stock futures
    ES00,
    -0.02%

    NQ00,
    +0.31%
    are pointing to a weak to flat session ahead, while the 10-year Treasury yield
    BX:TMUBMUSD10Y
    eases back. U.S. crude
    CL.1,
    -2.20%
    is under $80 a barrel after worse-than-forecast China exports signaled more economic bumps in the global growth engine. The dollar
    DXY
    is up.

    The buzz

    Planet Fitness stock
    PLNT,
    -0.27%
    is surging on upbeat results and an improved growth outlook. Uber
    UBER,
    +0.82%
    is up as earnings beat forecasts, but revenue fell short. D.R. Horton
    DHI,
    -0.96%
    stock is also getting a boost from results. EBay
    EBAY,
    -0.44%    ,
    Occidental Petroleum
    OXY,
    -2.00%    ,
    Akamai Tech
    AKAM,
    -0.06%
    and Gilead Sciences
    GILD,
    -0.55%
    after the close.

    Reporting late Thursday, Tripadvisor
    TRIP,
    +2.29%
    delivered blowout results and the stock is surging, while Sanmina
    SANM,
    -1.03%
    is down 14% after the manufacturing services provider’s disappointing results.

    UBS
    UBS,
    -0.49%

    UBSG,
    +2.79%
    swung to a $785 million quarterly loss on lingering effects of its Credit Suisse takeover, but it pulled in $33 billion in new deposits and shares are up.

    After a decade of turmoil, office-sharing group WeWork
    WE,
    -24.73%
    filed for Chapter 11 bankruptcy protection on Monday. 

    The U.S. trade deficit climbed 5% in September to $61.5 billion as imports rebounded. Still to come is consumer credit at 3 p.m. Fed Vice Chair for Supervision Michael Barr speaks at 9:15 a.m., followed by Fed Gov. Christopher Waller at 10 a.m.

    The International Monetary Fund boosted its China outlook for 2023 and 2024.

    Best of the web

    Big banks are cooking up new ways to offload risk.

    Retirees continue to flock to places where climate risk is high.

    How to know when it’s time to retire

    The chart

    According to this recent JPMorgan survey, two-thirds of investors are ready to start pumping more money into equities, while just 19% plan to increase bond exposure. Also, note that 67% also said they did not expect performance of the Magnificent 7 stocks — Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta — to “crack before the end of the year.”

    Top tickers

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

    TSLA,
    -0.31%         		Tesla
    AMC,
    +2.15%         		AMC Entertainment
    NVDA,
    +1.66%         		Nvidia
    AAPL,
    +1.46%         		Apple
    NIO,
    -3.16%         		NIO
    GME,
    -2.45%         		GameStop
    AMZN,
    +0.82%         		Amazon.com
    PLTR,
    -1.85%         		Palantir Technologies
    MULN,
    +3.88%         		Mullen Automotive
    MSFT,
    +1.06%         		Microsoft
    NVDA,
    +1.66%         		Nvidia

    Random reads

    Fifteen people ended up with eye pain and sight issues after a Bored Ape NFT event.

    A death metal band asked for singers on social media. A choir responded.

    undefined

    Source link

  • The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

    The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

    Stock investors are showing some hesitancy for Tuesday, with big signals on the economy coming this week via consumer prices and retail sales. Ahead of that, Apple is expected to tempt consumers with yet another new iPhone on Tuesday.

    How much should investors be worrying right now? Our call of the day from Pershing Square Capital Management manager Bill Ackman says that in the near term, we can relax a little, but it isn’t all roses.

    Read: Hedge funds have bailed on the U.S. consumer in a big way, Goldman Sachs data finds

    He told the Julia La Roche Show in an interview where he felt like he had a “crystal ball of what was going to happen,” starting in January 2020 with the COVID-19 outbreak, and that carried on through interest rates and the economy. Indeed, the manager reportedly made nearly $4 billion on a couple of pandemic-related bets.

    “I would say the crystal ball has clouded a bit in the last period. I think these are unusual economic times and perhaps we always say that, but I don’t think this is a pattern that has been repeated…or it hasn’t been for more than 100 years,” he said.

    But he remains near-term upbeat. “For two years, people have been saying that recession’s around the corner and you know we’ve had a very different view, and continue to have this view that I think people are coming around to, that the economy is actually still quite strong,” he said.

    And while those on lower-income rungs have burned through a lot of COVID savings, he thinks the economy has yet to really see impact from the big fiscal stimulus seen in recent years.

    Looking down the road though, Ackman has got a stack of concerns over the economy. He sees about a third of federal debt due to get repriced meaning that over a relatively short period of time, “interest expense will become a much bigger part of the deficit that is not going to be a contributor to the economy.”

    And while higher interest rates do help savers, ultimately that will be a big drag on the economy, he said, adding that rising inflation, mortgage rates, car payments and credit card rates, are all set to slow the economy.

    “We’re still in the midst of a war and there’s political uncertainty you know with an upcoming election,” he said. That partly explains Pershing Square’s hedge via a short position on the 30-year Treasury bond
    BX:TMUBMUSD30Y
    that he laid out in a tweet in early August.

    For roughly a year, long-term Treasury yields have been trading below short-dated ones, which is known as an inverted yield curve, a phenomenon that’s often seen as a precursor to recession.

    “I don’t see inflation getting back to 2% so quickly, if at all, and if in fact we’re in a world of persistent 3% inflation, you know it doesn’t make sense to have a 4.3%, 4.25% Treasury yield,” he said.

    Other risks? Ackman remains worried about regional banks following the spring crisis, as many have big fixed-rate portfolios of assets that have gotten less and less valuable as rates rise. “I would say the commercial real estate picture has not gotten better, if anything, you know, you’re going to start seeing real defaults, particularly with office assets,” he said.

    “Regional banks have the most exposure to construction loans so they are going to be a lot of construction loans that won’t be able to repaid. There will be a lot of restructurings, so either the investors groups are gonna have to put in a lot more equity or the banks are going to start taking some losses,” he said.

    Ackman says investors also face a presidential campaign that could add some stress. The hedge-fund manager said he’s surprised there have not been “more and better alternative candidates” for the 2024 campaign over President Joe Biden and former President Donald Trump.

    He’d like to see JPMorgan Chase & Co. CEO Jamie Dimon toss his hat in the ring and believes Biden is “beatable,” by a strong candidate.

    Ackman himself said it’s “possible,” he himself could run someday, but he’s more focused on having a better investment track record over Berkshire Hathaway Chairman and CEO Warren Buffett — and needs some 30 years to match the Oracle of Omaha.

    Read: Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

    The markets

    Stock futures
    ES00,
    -0.36%

    NQ00,
    -0.45%
    are tilting south, led by tech, with Treasury yields
    BX:TMUBMUSD02Y

    BX:TMUBMUSD10Y
    steady to a touch lower and the dollar
    DXY
    recovering some ground.

    Read: Watch this ‘canary in the coal mine’ for signs of trouble in markets, Neuberger Berman CIO says

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

    The buzz

    Oracle shares
    ORCL,
    +0.31%
    are down 10% in premarket trading after disappointing guidance from the cloud database group.

    Apple’s
    AAPL,
    +0.66%
    big event kicks off at 1 p.m. Eastern, with the launch of the pricier iPhone 15 expected to be on the agenda.

    Hot ticket. Arm Holdings’ IPO is already 10 times oversubscribed and bankers will stop taking orders by Tuesday afternoon, Bloomberg reports, citing sources.

    Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

    Upbeat results are boosting shares of convenience-store operator Casey’s General Stores
    CASY,
    -1.02%    .

    Packaging giant WestRock
    WRK,
    -1.48%
    and rival Smurfit Kappa
    SK3,
    -8.87%
    have announced a stock and cash tie up. WestRock shares are up 8% in premarket.

    Read: U.S. budget deficit will double this year to $2 trillion, excluding student loans

    Best of the web

    No better than gambling? Amateur investors are piling into 24-hour options.

    Demand for oil, coal, gas to peak this decade, IEA chief says

    U.S. takes on tech giant Google in landmark case.

    The chart

    Bank of America’s global fund manager survey for September sees investors still bearish, but no longer on the extreme side. Here’s the chart:

    Read: Fund managers just made their biggest shift ever into U.S. stocks — and out of emerging markets

    The tickers

    These were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern:

    Ticker

    		 Security name
    TSLA,
    +10.09%         		Tesla
    AMC,
    +2.23%         		AMC Entertainment
    CGC,
    +81.37%         		Canopy Growth
    NVDA,
    -0.86%         		Nvidia
    GME,
    -3.90%         		GameStop
    AAPL,
    +0.66%         		Apple
    ACB,
    +72.17%         		Aurora Cannabis
    NIO,
    +2.89%         		Nio
    MULN,
    +5.77%         		Mullen Automotive
    AMZN,
    +3.52%         		Amazon

    Random reads

    “Worst investment ever.” Brady Bunch fan buys original house for cut-price $3.2 million.

    And the house from the “Halloween” slasher films just sold for $1.8 million.

    China may ban clothes that hurt people’s feelings.

    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 financial columnist James Rogers and economist Stephanie Kelton.

    Source link

  • U.S. stock futures edge higher ahead of data that could show hiring slowdown

    U.S. stock futures edge higher ahead of data that could show hiring slowdown

    U.S. stock futures pointed higher on Friday, ahead of data that could show a slowing pace of hiring, which would reassure investors that the Federal Reserve won’t take interest rates much higher.

    What’s happening

    • Dow Jones Industrial Average futures
      YM00,
      +0.39%
      rose 78 points, or 0.2%, to 34869.

    • S&P 500 futures
      ES00,
      +0.34%
      gained 9 points, or 0.2%, to 4525.

    • Nasdaq 100 futures
      NQ00,
      +0.17%
      increased 12 points, or 0.1%, to 15551.

    On Thursday, the Dow Jones Industrial Average
    DJIA
    fell 168 points, or 0.48%, to 34722, the S&P 500
    SPX
    declined 7 points, or 0.16%, to 4508, while the Nasdaq Composite
    COMP
    gained 16 points, or 0.11%, to 14035.

    What’s driving

    Ahead of Friday’s barrage of heavy-hitting economic data, U.S. stocks saw modest pressure, as inflation data was largely benign but jobless claims dented an emerging picture of an economic slowdown. Dollar General’s
    DG,
    -12.15%
    profit warning, however, pointed to a consumer under pressure.

    Friday will see the release of nonfarm payrolls data at 8:30 a.m. Eastern, with expectations that 170,000 jobs were created in August. That would be the weakest showing since Dec. 2020, a month that saw 268,000 jobs lost.

    “There have been indicators that the U.S. jobs market is finally starting to lose some of its tightness, and if the NFP print confirms this trend, it will be one less thing for the FOMC to worry about given labor market resilience has long been a source of inflationary pressure,” said Tim Waterer, chief market analyst at KCM Trade.

    There’s also the Institute for Supply Management’s manufacturing index, as well as monthly auto sales, that will get released. Thursday’s after hours releases saw mixed responses, with Dell Technologies
    DELL,
    +0.99%
    stock rallying but Broadcom shares
    AVGO,
    +3.43%
    wilting after results.

    In China, August Caixin manufacturing PMI came in above expectations, rising to 51, a level that indicates improving conditions, as the country also lowered down-payment requirements on homes. The Hong Kong market was shut over storm-related concerns.

    Source link

  • Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
    SPX
    and Nasdaq Composite
    COMP.
    That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.

    Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.

    Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.

    “We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.

    Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
    NVDA,
    -0.49%    ,
    Microsoft
    MSFT,
    +0.94%
    or Meta
    META,
    +0.51%    .


    Goldman Sachs Investment Research

    “The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.

    While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.

    Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”

    Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.

    “For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.

    Here is a taster of their long-term AI beneficiaries basket:


    Goldman Sachs

    And a few more:


    Goldman Sachs

    Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn

    The markets

    U.S. stocks
    SPX

    COMP
    are trading mixed. The yield on the 10-year Treasury
    BX:TMUBMUSD10Y
    is steady at 4.33%.

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

    The buzz

    Microsoft
    MSFT,
    +0.94%
    has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
    ATVI,
    +1.09%
    buyout. Activision shares and Ubisoft
    UBI,
    +9.93%
    surged in Paris.

    On the heels of a 7% surge, EV-maker Tesla
    TSLA,
    +2.77%
    is up 1.8%.

    Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat

    Lowe’s shares
    LOW,
    +3.34%
    are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.

    Among Monday’s late earnings news: Fabrinet
    FN,
    +27.25%
    is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
    ZM,
    -4.15%
    is up 4% after reporting an earnings jump and guidance.

    Read: Why Amazon is this analyst’s top internet stock pick

    The world’s biggest miner BHP
    BHP,
    -0.98%
    reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.

    Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.

    Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.

    Best of the web

    ‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

    New video shows the day police raided 98-year old Kansas newspaper owner’s home.

    Hitler’s birth house in Austria will be turned into a police station with a human rights training center.

    The tickers

    These were the top tickers on MarketWatch as of 6 a.m.:

    Ticker

    		 Security name
    TSLA,
    +2.77%         		Tesla
    NVDA,
    -0.49%         		Nvidia
    AMC,
    -17.31%         		AMC Entertainment
    NIO,
    -1.87%         		Nio
    APE,
    -11.32%         		AMC Entertainment Holdings preferred shares
    TTOO,
    -6.13%         		T2 Biosystems
    GME,
    -3.63%         		GameStop
    AAPL,
    +0.63%         		Apple
    MULN,
    -19.19%         		Mullen Automotive
    AMZN,
    +0.15%         		Amazon.com

    The chart

    Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
    XLK
    :


    @scottcharts

    “It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report. 

    Random reads

    “We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.

    No, Tropical Storm Hilary didn’t flood Dodger Stadium.

    These thirsty beer-drinking thieves are raccoons.

    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 financial columnist James Rogers and economist Stephanie Kelton.

    Source link

  • 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

    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.

    Source link

  • 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

    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.

    Source link

  • 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

    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.

    Source link

  • This Bud’s for investors. Buy the stock even if Bud Light sales never recover, says analyst.

    This Bud’s for investors. Buy the stock even if Bud Light sales never recover, says analyst.

    The summer haze settling over stocks doesn’t look ready to budge Thursday, with the S&P 500 index
    SPX,
    -0.52%
    in the throes of its longest losing streak since May.

    On the bright side, the index is looking at a 6% gain for the June quarter, whose end is just a few days away.

    In other corners of the market, the quarter has been less forgiving. Consumer staples, those things you can’t live without, have lost over 1%, perhaps reflecting the tougher economic times we are living in. Within that sector, though, is beer and one name that has indeed had a quartarius horriblis.

    Anheuser-Busch InBev’s
    ABI,
    +1.82%

    BUD,
    -0.05%
    U.S.-listed shares are down about 15%, as Bud Light sales have tumbled following consumer backlash to a social-media campaign featuring trans activist Dylan Mulvaney in April.

    But our call of the day from Deutsche Bank says it’s time to buy this unloved stock, even if those Bud Light sales never recover. A team of analysts led by Mitch Collett have upgraded Anheuser-Busch shares to buy from hold and lifted their price target to €60 euros from €59 euros (they didn’t offer an ADR price target).

    Recent underperformance of the stock “implies a permanent reduction in ABI’s U.S. business. Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges,” said Collett.

    The analysts pointed to recent Nielson data that showed ABI’s U.S. business currently down 12%, with Bud Light sales off 24% and the rest of its portfolio down 7%. But an analysis of distribution data shows ABI itself isn’t “losing shelf presence” as sales velocity is the primary driver of the decline, which bodes well if consumer sentiment improves, said Deutsche Bank.

    Those declines are about a 12% headwind to ABI’s annual net income, which is in line with European underperformance seen by the stock, added Collett and the team.

    Read: Bud Light dethroned as top-selling beer by Modelo, as boycott cuts into sales

    Deutsche Bank conducted its own survey that showed 24% of Bud Light consumers are no longer buying that brand, with 18% buying less, but 21% buying more and 37% buying the same amount. Those findings are largely consistent with Nielson;s, said the analysts.

    Deutsche Bank’s own survey also showed that 42% of Bud Light drinkers expect to be buying Bud Light again in three to six months, versus 29% who see that as unlikely. And 50% expect that battered beer’s reputation will recover in time, versus 30% who says it won’t. “We believe this bodes well for the brand, recapturing some of its lost share,” said Collett and the team.

    Analysts at RBC Capital also recently pushed back on the selloff for the stock, saying the hit to the shares and forecasts for the stock are “excessive,” as they don’t see Bud Light’s troubles hurting AB InBev outside the U.S.. They said AB InBev is a “nerve-racking buying opportunity.”

    Ahead of Thursday’s open, U.S.-listed Bud shares were up about 1.3%, tracking gains from its Belgian shares.

    The markets

    U.S. stock index futures
    ES00,
    -0.25%

    YM00,
    -0.27%

    NQ00,
    -0.31%
    are drifting lower, with bond yields
    TMUBMUSD02Y,
    4.730%

    TMUBMUSD10Y,
    3.743%
    on the rise and oil prices
    CL.1,
    -1.82%
    also weaker. The Norwegian krone
    USDNOK,
    -0.80%
    is up 1.5% against the dollar after the country’s central bank hiked interest rates 50 basis points. Switzerland also hiked rates, but the Swiss franc is steady
    USDCHF,
    +0.12%    .
    The British pound
    GBPUSD,

    is higher after the Bank of England also hiked interest rates by 50 basis points. The Turkish lira was falling slightly after the central bank, under new management, hiked interest rate to 15% from 8.5%, against forecasts for a hike to 20%.

    China markets were closed for a holiday, with losses elsewhere, such as Japan
    NIK,
    -0.92%
    and Australia
    XJO,
    -1.63%    .

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

    The buzz

    Federal Reserve Chair Jerome Powell’s second day of testimony on Capitol Hill kicks off at 10 a.m. Eastern. On Wednesday, he said higher interest rates should be expected , but didn’t offer any clues on timing. U.S. weekly jobless benefit claims and current account data are due at 8:30 a.,m. ET, with leading indicators also at 10 a.m., alongside a speech from Cleveland Fed President Loretta Mester. Richmond Fed President Tom Barkin will speak at 4:30 p.m.

    The Bank of England will announce an interest-rate decision at 7 a.m. ET and after worse-than-expected inflation data on Wednesday, a 50 basis-point hike hasn’t been ruled out.

    Darden Restaurants
    DRI,
    +0.36%
    will report ahead of the open, with Smith & Wesson
    SWBI,
    +0.52%
    due after the close.

    Tesla stock
    TSLA,
    -5.46%
    is down 2% in premarket trading on the heels of the EV maker’s worst loss in two months.

    Joining recent actions by other big stakeholders cashing in on big gains for Nvidia
    NVDA,
    -1.74%    ,
    a board member just sold $51 million in stock.

    Best of the web

    Amazon allegedly duped people into subscribing to Prime and made it nearly impossible to cancel. Here’s how the feds say they did it.

    The Biden administration is reportedly exploring whether it can mount a campaign against Chinese tech giants like Alibaba and Huawei.

    A giant drilling machine is moving Stockholm toward an emissions-free future

    Wife of missing Titanic exploring sub pilot Stockton Rush is reportedly a descendant of two first-class passengers who died on the ship.

    The tickers

    These were the top searched tickers on MarketWatch as of 6 a.m. :

    Ticker

    		 Security name
    TSLA,
    -5.46%         		Tesla
    MULN,
    +24.24%         		Mullen Automotive

    NVDA,
    -1.74%         		Nvidia
    AMC,
    -1.31%         		AMC Entertainment
    APE,
    -2.30%         		AMC Entertainment preferred holdings
    NIO,
    -2.99%         		Nio
    PLTR,
    -7.28%         		Palantir Technologies
    MANU,
    +1.11%         		Manchester United
    SPCE,
    -4.99%         		Virgin Galactic Holdings
    AAPL,
    -0.57%         		Apple

    Random reads

    Are Elon Musk and Mark Zuckerberg ready for a cage match?

    It’s summertime. Let your kids get bored.

    Tokyo streets now offer the chance to snuggle an alpaca

    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.

    Source link

  • U.S. stock futures slip after three-day break

    U.S. stock futures slip after three-day break

    U.S. stock index futures slipped lower Tuesday after a three-day break, with Chinese equities wilting on disappointment over the monetary stimulus efforts in the world’s number-two economy.

    What’s happening

    • Dow Jones Industrial Average futures
      YM00,
      -0.31%
      fell 109 points, or 0.3%, to 34,495.

    • S&P 500 futures
      ES00,
      -0.26%
      dropped 11 points, or 0.2%, to 4,442.

    • Nasdaq 100 futures
      NQ00,
      -0.16%
      decreased 28 points, or 0.1%, to 15,239.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    -0.32%
    fell 109 points, or 0.32%, to 34299, the S&P 500
    SPX,
    -0.37%
    declined 16 points, or 0.37%, to 4410, and the Nasdaq Composite
    COMP,
    -0.68%
    dropped 93 points, or 0.68%, to 13690.

    What’s driving markets

    Investors were in a cautious mood following the U.S. long weekend in honor of the Juneteenth federal holiday, but that’s after a strong run. The S&P 500 gained 2.6% last week, its fifth week in a row of gains, as the tech-heavy Nasdaq Composite took its winning run to eight weeks.

    Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, said both retail and institutional investor sentiment are at their highest levels in over two years.

    “We note that the consensus is right about 80% of the time, which means such shifts in sentiment and positioning can often be right as the collective intelligence of the market knows best,” he said. “However, given our fundamental view on growth, we find it hard to get on board with the current excitement and narrative supporting it. In other words, if second half growth re-accelerates as expected, then the bullish narrative being used to support equity prices will be proven correct.”

    One event that investors have to weigh is the resumption this fall of student loan payments, and what that may mean for consumers’ disposable income. Student loan payments have been paused since the start of the pandemic in March 2020.

    China cut its 1- and 5-year lending rates by 10 basis points, which investors viewed to be modest, particularly after a Friday state council meeting didn’t result in other concrete measures. According to Societe Generale, there were expectations the 5-year rate, the benchmark for mortgages, would be cut by 15 basis points.

    The Hang Seng
    HSI,
    -1.54%
    fell 1.5% in Hong Kong.

    Alibaba
    BABA,
    -0.11%    ,
    the Chinese internet giant, also was in the spotlight after announcing that its CEO and chairman will step down to focus on the cloud division, with Brooklyn Nets owner Joseph Tsai becoming chairman.

    Tuesday’s economic data include housing starts data, which showed a 21.7% rise in May after a revised 2.9% drop in April. Building permits also climbed 5.2% in May.

    A panel later Tuesday will include both New York Federal Reserve President John Williams and Fed Vice Chair for Supervision Michael Barr. On Wednesday Fed Chair Jerome Powell is due to deliver semi-annual congressional testimony.

    Companies in focus

    Source link

  • Goldman economists: U.S. Treasury funds will be exhausted by June 9

    Goldman economists: U.S. Treasury funds will be exhausted by June 9

    Goldman Sachs economists Alec Phillips and Tim Krupa say the Treasury’s early June deadline for the debt ceiling looks “very accurate, in our view.” Their calculation is that by June 2, the Treasury’s room under the debt ceiling will barely exceed $30 billion — the minimum cash the Treasury has targeted in prior debt-limit projections — and entirely dry by June 9. They say odds are highest that a deal will be announced late Friday or Saturday. They give an 80% chance to a full-fledged deal, a 10% probability of a short-term patch and a 10% chance Congress doesn’t act in time.

    Source link

  • Suddenly booming U.S. stocks set for pause as futures inch higher

    Suddenly booming U.S. stocks set for pause as futures inch higher

    U.S. stock futures paused Friday after a two-day rally, as investors focused on debt-ceiling talks and an address from Federal Reserve Chair Jerome Powell.

    What’s happening

    • Dow Jones Industrial Average futures
      YM00,
      +0.10%
      rose 17 points, or 0.1%, to 33635.

    • S&P 500 futures
      ES00,
      +0.15%
      gained 4 points, or 0.1%, to 4216.

    • Nasdaq 100 futures
      NQ00,
      +0.18%
      increased 12 points, or 0.1%, to 13906.

    On Thursday, the Dow Jones Industrial Average
    DJIA,
    +0.34%
    rose 115 points, or 0.34%, to 33536, the S&P 500
    SPX,
    +0.94%
    increased 39 points, or 0.94%, to 4198, and the Nasdaq Composite
    COMP,
    +1.51%
    gained 188 points, or 1.51%, to 12689.

    What’s driving markets

    The benchmark S&P 500 closed at its highest levels since Aug. 25, as the Nasdaq 100 also finished with a boom.

    Investors who had been betting against stocks appear to be scrambling to buy them as the U.S. economy shows signs of continuing to grow, while mostly hopeful signs have emerged from negotiations to lift the debt ceiling.

    Fed Chair Jerome Powell is due to step up to the mic at 11 a.m. Eastern — in a conversation with former Fed Chair Ben Bernanke — following recent commentary from central bank officials including Dallas Fed President Lorie Logan who seem ready to at least consider raising interest rates next month.

    Friday also will see the expiration of key options contracts.

    One segment missing out has been U.S.-listed Chinese stocks, as the KraneShares CSI China Internet ETF
    KWEB,
    -4.18%
    ended 4% lower on Thursday and has dropped 11% this year. The Hang Seng
    HSI,
    -1.40%
    closed 1.4% lower on Friday.

    Source link

  • JPMorgan to take over First Republic after fourth bank failure of the year

    JPMorgan to take over First Republic after fourth bank failure of the year

    JPMorgan Chase has won the auction to take over fallen First Republic Bank, the Federal Deposit Insurance Corp. announced early Monday morning.

    The deal will see America’s largest bank JPM assume all the deposits and “substantially all the assets” of First Republic FRC, which became the fourth U.S. bank to fail this year.

    “Our government invited…

    Source link

  • JPMorgan to take over First Republic after regional bank was closed

    JPMorgan to take over First Republic after regional bank was closed

    JPMorgan Chase has won the auction to take over fallen First Republic Bank, the Federal Deposit Insurance Corp. announced early Monday morning.

    The deal will see America’s largest bank JPM assume all the deposits and “substantially all the assets” of First Republic FRC.

    The deal will see First Republic depositors — which include 11 leading…

    Source link

  • Dow futures flip higher after March jobs report in thin Good Friday trading

    Dow futures flip higher after March jobs report in thin Good Friday trading

    U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.

    Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.

    What stock-index futures are doing

    With…

    Source link

  • Dow futures flip higher after March jobs report in thin Good Friday trading

    Dow futures flip higher after March jobs report in thin Good Friday trading

    U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.

    Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.

    What stock-index futures are doing
    • Futures on the Dow Jones Industrial Average
      YM00,
      +0.19%
      rose 64 points, or 0.2%, to 33,723.

    • S&P 500 futures
      ES00,
      +0.24%
      gained 9.75 points, or 0.2%, to 4,141.75.

    • Nasdaq-100 futures
      NQ00,
      +0.10%
      ticked up 13.50 points, or 0.1%, to 13,184.25.

    With the exception of the Dow industrials, U.S. stocks finished the holiday-shortened week lower on Thursday after three consecutive weekly gains for the S&P 500 and the tech-heavy Nasdaq. The Dow
    DJIA,
    +0.01%
    rose 0.6% for the week, while the S&P 500
    SPX,
    +0.36%
    shed 0.1% and the Nasdaq
    COMP,
    +0.76%
    slumped 1.1%, after scoring its best quarter since 2020.

    Market drivers

    The U.S. added 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring and possibly making it harder for the central bank to tame inflation. Economists polled by The Wall Street Journal had forecast 238,000 new jobs.

    The unemployment rate, meanwhile, slipped to 3.5% from 3.6%. Wages rose 0.3% last month.

    “This month’s report indicates that interest rate hikes have yet to impact tight unemployment conditions,” said Steve Rick, chief economist at CUNA Mutual Group, in emailed comments.

    Treasury yields popped higher and the dollar rose, though traders noted conditions were thin due to the holiday. Fed-funds futures showed traders pricing in a nearly 70% chance the Federal Reserve will lift interest rates by a quarter-point in May and a roughly 30% chance policy makers will leave rates unchanged. Traders had seen a roughly 50-50 split on Thursday.

    “Today’s jobs report is consistent with a slow-moving recession unfolding in the U.S. and one that does not point to immediate resolution of inflation concerns,” said Jason Pride, chief investment officer of private wealth at Glenmede, in a note. “As such, the odds of another quarter-point rate hike in May should go higher as the data does not appear to justify a Fed pause.”

    That said, policy makers and investors will see a raft of data before the next Fed meeting, including next week’s consumer-price index reading, Pride noted.

    See: Jobs report ‘likely tips the scales toward another rate hike in May’ — economists react to March release

    Good Friday is a market holiday but not a U.S. federal holiday. That means the U.S. Labor Department released its March jobs report, as usual. Bond traders will see a half day of trading, with Sifma recommending a noon ET close to allow a reaction to the data.

    Read: Why Good Friday complicates how stock-market traders will digest March jobs report

    Investors saw a stream of jobs-related data over the course of the past week. Data on Tuesday showed the number of U.S. job openings dropped below 10 million to a 21-month low, indicating a hot jobs market may be starting to lose some sizzle.

    ADP on Wednesday said the private sector added 145,000 jobs in March, well below the 210,000 expected by economists. Weekly jobless claims data on Thursday morning showed first-time applications for benefits last week came in higher than expected.

    Source link

  • The commodity supercycle is still young, these strategists say. Here’s why.

    The commodity supercycle is still young, these strategists say. Here’s why.

    Be careful what you wish for. U.S. job openings dropped below 10 million, a symbolic sign that the Federal Reserve’s efforts to combat inflation by sapping labor-market demand was working — and U.S. stocks promptly fell. Perhaps the bigger issue is that investors were not willing to push stocks out of the 3,800 to 4,200 range the S&P 500
    SPX,
    -0.48%
    has been trading in for months.

    It might not be the most obvious time to be discussing a commodity supercycle, with recession talk growing, but then that’s what makes this call more interesting. Strategists at Wells Fargo investment Institute argue it’s year three of a commodity supercycle, which they say has plenty more room to run.

    John LaForge, head of real asset strategy, and Mason Mendez, investment strategy analyst, say commodities are like black holes, in that escaping the gravity of a supercycle is difficult for any individual commodity. They point to this chart, looking at commodity momentum since 1800, plotted in 10-year moving averages, which shows that food, energy and the commodity complex as a whole tend to follow each other around.

    Right now nearly all the signs, both technical and fundamental, point to a commodity bull market, they say. The early signs are mostly shifting prices and technical indicators, and the latter signs are more fundamental in nature, like restrained supplies. “The bottom line is that the key early technical indicators are confirming to us that a new supercycle likely began in 2020.”

    The analysts went further into depth on what they call washed-out sentiment. They say the process goes something like this: near the end of a commodity bull supercycle, prices go so high that oversupplies become rampant and need to be worked off, which results in investment stopping to flow into production. They say that in both corn
    C00,
    +0.80%
    and gold
    GC00,
    -0.17%
    — not commodities with much in common — supply growth rates have turned negative in recent years. Both showed similar conditions at the start of the last supercycle, in 1999.

    They advise using commodities as portfolio diversifiers, which certainly would have helped last year, when both stocks and bonds fell but the Bloomberg commodity index rose nearly 16%. They highlight commodity prices typically move differently than stocks or bonds over the long run. And they say that supercycles have historically lasted a decade or longer, and the shortest commodity bull market on record was nine years.

    One caveat: the speed of technology advances. Sometimes technology can help fuel demand, but conversely, to the extent technology can make commodities easier to extract, it can also buoy supplies. The obvious example here, not pointed out in the note, is the shale-oil revolution. There’s an interesting article in The Economist (subscription required), how copper has yet to be the beneficiary of a technology boost.

    The market

    U.S. stock futures
    ES00,
    -0.36%

    NQ00,
    -1.08%
    edged lower. Oil prices
    CL.1,
    -0.62%
    fell but held over $80 per barrel. The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.295%
    turned lower after the latest jobs data.

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

    The buzz

    ADP reported a slowdown in private-payrolls growth to 145,000 jobs in March, as well as a slowing pace of pay growth. Shortly after the open comes the the Institute for Supply Management’s services index. Cleveland Fed President Loretta Mester said interest rates would need to be increased “somewhat” from here.

    Overseas, New Zealand’s central bank made a larger-than-expected 50 basis point rate hike, while a joint forecast of Germany’s leading institutes upgraded its view on the eurozone’s largest economy, now expecting a 0.3% advance.

    Walmart
    WMT,
    +1.33%
    forecast earnings in a range of $5.90 to $6.05 per share for its fiscal year, below the FactSet-compiled analyst estimate of $6.11.

    Johnson & Johnson
    JNJ,
    +3.44%
    proposed to pay up to $8.9 billion over 25 years to settle claims connected with cosmetic-talc litigation.

    Alphabet’s
    GOOGL,
    -0.63%
    Google says its chips are faster and more power efficient than comparable chips from Nvidia
    NVDA,
    -3.41%    .

    Western Alliance Bancorp
    WAL,
    -16.47%
    shares fell in premarket trade after the regional lender detailed the latest losses in its portfolio of loans and securities.

    Brandon Johnson was elected mayor of Chicago, the country’s third-largest city. Former President Donald Trump was defiant in a speech to supporters after his indictment.

    Best of the web

    A popular Fed program is draining funds from the banking system.

    Instant videos could be the next leap in artificial-intelligence technology.

    OpenAI, the tech company backed by Microsoft
    MSFT,
    -1.14%    ,
    is facing what is believed to be its first defamation lawsuit over a claim by its ChatGPT chatbot that an Australian mayor served time in prison for bribery.

    Top tickers

    These were the most active stock-market tickers as of 6 a.m. Eastern.

    Ticker

    		 Security name
    TSLA,
    -3.01%         		Tesla
    AMC,
    +2.04%         		AMC Entertainment
    BBBY,
    -5.09%         		Bed Bath & Beyond
    GME,
    -3.44%         		GameStop
    BUD,
    +0.34%         		Anheuser-Busch InBev
    APE,
    -0.89%         		AMC Entertainment preferreds
    MULN,
    -4.85%         		Mullen Automotive
    NIO,
    -4.18%         		Nio
    AAPL,
    -1.13%         		Apple
    AI,
    -14.35%         		C3.ai
    The chart

    Sure, higher gasoline prices naturally drive demand for electric vehicles. But at what point do high electricity prices make it more cost-effective to buy old gas guzzlers? This chart from Barclays breaks it down — roughly, 10 cents per kilowatt hour equates to $1 per gallon. Right now it’s cheaper to fill a car at the pump than recharge at peak hours.

    Random reads

    Easter means the annual production of a 15,000-egg omelette.

    This man was successful in his marriage proposal, at the cost of a one-year ban from Dodger Stadium.

    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.

    Source link

  • Asian stocks tumble after Credit Suisse takeover

    Asian stocks tumble after Credit Suisse takeover

    BEIJING (AP) — Asian stock markets fell Monday after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of a Federal Reserve meeting to decide on more possible interest rate hikes.

    Shanghai, Tokyo and Hong Kong declined. Oil prices retreated, and U.S. equity futures were tilting lower after initially rising on the takeover news.

    Swiss authorities on Sunday announced UBS would acquire its smaller rival as regulators try to ease fears about banks following the collapse of two U.S. lenders. Central banks announced coordinated efforts to stabilize lenders including a facility to borrow U.S. dollars if necessary.

    Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation. That caused prices of bonds and other assets on their books to fall, fueling unease about the industry’s financial health.

    “Investors are waiting to see where the dust settles on the banking saga before making any bold moves,” Stephen Innes of SPI Asset Management said in a report.

    The Hang Seng
    HSI,
    -2.65%
    in Hong Kong lost 3% to 18,920 and the Nikkei 225
    NIK,
    -1.42%
    in Tokyo shed 1.2% to 26,990.25.

    The Shanghai Composite Index
    SHCOMP,
    -0.48%
    lost 0.2% to 3,241 after the Chinese central bank on Friday freed up additional money for lending by reducing the amount of money commercial are required to hold in reserve. Hong Kong shares of HSBC
    5,
    -6.23%
    dropped over 6%.

    The Kospi
    180721,
    -0.69%
    in Seoul retreated 0.6% to 2,382.03 and Sydney’s S&P-ASX 200
    XJO,
    -1.38%
    lost 1.4% to 6,900.00.

    India’s Sensex opened down 1.1% at 57,341.79. New Zealand and Southeast Asian markets also declined.

    The Swiss government said UBS will acquire Credit Suisse for almost $3.25 billion after a plan for the troubled lender to borrow as much as $54 billion from Switzerland’s central bank failed to reassure investors and customers.

    U.S. regulators have also sought to calm fears over threats to banking systems. The Federal Reserve said cash-short banks had borrowed about $300 billion from the Federal Reserve in the week up to Thursday.

    Separately, New York Community Bank
    NYCB,
    -4.66%
    agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday. The FDIC said $60 billion in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.

    Concerns persist about other lenders with shaky finances. Credit Suisse is among 30 institutions known as globally systemically important banks. Ahead of its takeover, Wall Street’s benchmark S&P 500 index
    SPX,
    -1.10%
    lost 1.1% on Friday to 3,916.64.

    Shares of First Republic Bank
    FRC,
    -32.80%
    sank nearly 33% to bring their plunge for the week to 71.8%.

    The Dow Jones Industrial Average
    DJIA,
    -1.19%
    lost 1.2% to 31,861.98. The Nasdaq Composite
    COMP,
    -0.74%
    fell 0.7% to 11,630.51. Dow futures
    YM00,
    -0.70%
    fell 0.3% early Monday, while S&P 500 futures
    ES00,
    -0.60%
    and Nasdaq-100 futures
    NQ00,
    -0.33%
    were steady.

    The unexpectedly large, fast rate hikes by the Fed and other central banks to cool inflation that is close to multi-decade highs have caused prices of bonds and other assets on their books to fall.

    Traders expect last week’s turmoil to push the Fed to limit a rate hike at its meeting this week to 0.25 percentage points. That would be the same as the previous increase and half the margin traders expected earlier.

    A survey released Friday by the University of Michigan showed inflation expectations among American consumers are falling. That matters to the Fed, which has said such expectations can feed into virtuous and vicious cycles.

    In energy markets, benchmark U.S. crude
    CL.1,
    -3.27%
    sank 93 cents to $64.81 in electronic trading on the New York Mercantile Exchange. The contract fell $1.61 on Friday to $66.74. Brent crude
    BRN00,
    -3.29%    ,
    the price basis for international oils, declined $1.05 cents to $71.92 per barrel in London. It retreated $1.73 the previous session to $72.97.

    The dollar
    DXY,
    +0.13%
    gained to 131.83 yen from Friday’s 131.67 yen. The euro
    EURUSD,
    -0.11%
    declined to $1.0676 from $1.0681.

    MarketWatch contributed to this report.

    Source link

  • U.S. stock-market futures edge higher after historic deal to rescue Credit Suisse

    U.S. stock-market futures edge higher after historic deal to rescue Credit Suisse

    U.S. stock-index futures opened with modest gains Sunday evening as investors assessed a historic deal to rescue troubled Swiss lender Credit Suisse, the latest maneuver by authorities attempting to prevent a deeper loss of confidence in the global banking system.

    Swiss bank UBS Group
    UBS,
    -5.50%
    agreed to buy rival Credit Suisse
    CS,
    -6.94%

    CSGN,
    -8.01%
    for more than $3 billion, a substantial discount to its Friday closing price, in a deal shepherded by Swiss regulators and closely watched by monetary and economic policy makers around the world.

    Don’t miss: Here’s why UBS’s deal to buy Credit Suisse matters to U.S. investors

    Also Sunday, the Federal Reserve and five other major central banks announced they were taking steps to ensure that U.S. dollars remained readily accessible throughout the global financial system.

    Futures on the Dow Jones Industrial Average
    YM00,
    +0.64%
    rose 123 points, or 0.4%, while futures on the S&P 500
    ES00,
    +0.65%
    and Nasdaq-100
    NQ00,
    +0.42%
    were also up 0.4%,

    Oil futures ticked higher after suffering their worst week of 2023 and ending Friday at their lowest since December 2021, with analysts tying the plunge largely to rising recession fears. April West Texas Intermediate crude
    CL.1,
    +0.55%

    CL00,
    +0.55%

    CLJ23,
    +0.55%
    rose 0.3% to $66.92 a barrel on the New York Mercantile Exchange, while May Brent crude
    BRN00,
    +0.52%    ,
    the global benchmark, ticked up 0.1% to $73.05 a barrel on ICE Futures Europe.

    The positive initial tone in markets late Sunday was reflected in a weaker tone for the Japanese yen, which has seen haven-related support this month on rising banking worries. The U.S. dollar was up 0.3% versus the Japanese currency
    USDJPY,
    +0.60%
    at 132.18 yen. The ICE U.S. Dollar Index
    DXY,
    +0.08%    ,
    a measure of the currency against a basket of six major rivals, was up 0.1%.

    Futures on U.S. Treasurys
    TY00,
    -0.82%    ,
    which also tend to serve as a haven during periods of crisis, were slightly lower. Treasurys rose sharply last week, dragging down yields, which move opposite to price, in volatile trading.

    Read: Why bond-market volatility is at its highest since the 2008 financial crisis amid rolling fallout from banks

    Credit Suisse’s 167-year run came to an end after a collapse in the value of its shares and bonds last week. Economists, investors and authorities worried that a collapse by Credit Suisse could amplify contagion fears in the global banking system after the demise earlier this month of California’s Silicon Valley Bank, or SVB.

    Economists expect U.S. banks to significantly tighten lending standards in response to the upheaval, raising the odds of the economy falling into recession.

    The Tell: ‘Hard landing’ in store for U.S. economy as bank crisis intensifies: economist

    As a result, fed-funds futures traders abandon expectations for a return to a supersized 50-basis-point, or half-percentage-point, rise in the Fed’s benchmark interest rate when policy makers complete a two-day meeting on Wednesday. The market at the end of last week showed traders saw a nearly 75% chance of a 25-basis-point hike, and a roughly 25% chance the Fed would hold rates unchanged.

    Traders also priced in the potential for significant rate cuts by the end of the year, signaling rising recession expectations. Those shifting expectations helped drive the Treasury rally, particularly for the policy-sensitive 2-year note
    TMUBMUSD02Y,
    4.003%    .

    Analysts said the Fed may be reluctant to hold off on a rate hike this week given still-elevated inflation readings and data so far that that shows the job market remains tight. Some economists see the Fed echoing the European Central Bank’s lead from last week, when it followed through with an earlier pledge to hike rates by 50 basis points while making clear that further rate moves would depend on future developments and data.

    Don’t miss: What’s at stake for stocks, bonds as Federal Reserve weighs bank chaos against inflation fight

    “While the Fed is obviously wary of contagion risks, it still views the banking sector as being well-capitalized, and it will want to stress that the inflation battle is not won, and it remains too high, so a 25-bps hike seems very likely, though like the ECB it will likely stress a high level of uncertainty, and offer no guidance, and emphasize data and financial conditions dependency,” said Marc Ostwald, London-based chief economist and global strategist at ADM Investor Services, in a note.

    Despite efforts by the Fed and other U.S. regulators to ringfence SVB and a pair of other collapsed banks while moving to backstop deposits, other regional banks have faced significant pressure. While all depositors at those banks were made whole, calls have increased for the U.S. to formally remove a $250,000 cap on insured deposits.

    Meanwhile, First Republic Bank
    FRC,
    -32.80%
    saw its credit rating downgraded further into junk territory by S&P Global Ratings, news reports said. The ratings firm cut the bank’s credit rating three notches to B-plus from BB-plus and warned further downgrades were possible, according to Reuters.

    First Republic has been a top concern for investors and regulators following the collapse of SVB. Last week a group of 11 large banks agreed to provide a combined $30 billion in deposits to First Republic in an effort to shore up confidence in the lender. Shares of First Republic have plunged more than 80% so far in March.

    U.S. stocks ended lower Friday amid banking sector fears, with the Dow
    DJIA,
    -1.19%
    booking back-to-back weekly losses.

    The S&P 500 
    SPX,
    -1.10%
    rose 1.4% last week, while the technology-heavy Nasdaq Composite 
    COMP,
    -0.74%
    climbed 4.4% in its biggest weekly percentage gain since January, according to Dow Jones Market Data.

    Source link