OPENING CALL
Stock futures and Treasury yields moved cautiously higher on Tuesday with investors hesitant to make big moves ahead of quarterly earnings from Nvidia.
Traders were piling into Nvidia’s shares and options bets ahead of its earnings on Wednesday, with some wagering on a huge move in the stock after the results. Call options pegged to the shares hitting $135 and $140 have been active in recent sessions.
Traders were betting on a roughly 11% swing in Nvidia shares after its earnings through Friday, according to Cboe Global Markets data.
Up ahead:
Data readings on home prices, consumer confidence and mid-Atlantic factory activity are due.
Earnings from Nordstrom are slated for after the market close.
Premarket Movers
CAVA Group fell 8% in premarket trading after top executives disclosed stock sales. On Monday, shares rallied to a new record, following strong earnings last week.
Leslie’s named Jason McDonell as chief executive. The stock was up 2.6%.
Edgar Bronfman withdrew his bid for Paramount Global , paving the way for the company to be sold to Skydance Media. Paramount shares fell nearly 5% premarket.
U.S.-listed shares of Temu’s parent company PDD gained 3% premarket. They tumbled Monday after the company–which once threatened to outpace Alibaba as the most valuable Chinese e-commerce stock–issued a gloomier outlook.
U.S.-listed shares of Trip.com were rising 10% after the company posted strong second-quarter earnings as revenue rose 14% on growth in accommodation bookings and packaged tours.
Monday’s Post Close Movers
Apple said that its top finance executive would step down next year. Kevan Parekh, the company’s current vice president of financial planning and analysis is expected to succeed Luca Maestri as financial chief. Shares were flat.
Trinity Biotech boosted the revenue outlook for its rapid HIV test. The Dublin biotechnology company said it received a substantial increase in orders for TrinScreen HIV. Shares rose 40%.
XWell inked a deal that will give members of Priority Pass access to the company’s spas. Shares rose 22%.
Today’s Top Headlines/Must Reads:
– The IPO Market Gets Cold Feet
– Warren Buffett Is Selling Bank of America. Maybe You Should Buy It.
– The Disconcerting Signal Behind China’s Epic Bond Rally
MARKET WRAPS
Forex:
The dollar traded steady after recovering some ground in the previous session, although the news was very thin on the ground, at least for currency markets, Commerzbank sa
ING said the dollar has limited scope to depreciate further unless the market prices in a recession, ING said.
A soft landing is priced for the economy, which could see the Fed cut interest rates to 3.0% late next year from the current range of 5.25% to 5.5%, ING said.
Much lower dollar levels would require much weaker economic activity data that prompt markets to price in a recession with the focus on the August jobs report on September 6, it said.
“The DXY dollar index looks set to consolidate in a 100.50-101.60 range for now.”
Sterling could extend its gains as U.K. money markets are yet to fully react to Bank of England Governor Andrew Bailey’s cautious remarks about cutting interest rates at the Jackson Hole symposium, ING said.
Unlike Powell, Bailey remained concerned over “intrinsic” inflation and felt the economic costs of tighter policy have lessened, ING said.
“His comments stand to keep a wedge between U.S. and U.K. rates, where money markets continue to price a shallower and slower easing cycle for the BOE.”
Bonds:
Large volumes of Treasury issuance this week could push yields higher, especially in light of potentially excessive interest-rate cut expectations, Pepperstone said.
Aggressive interest-rate cuts by the Federal Reserve as priced by money markets–around 100 basis points for the year–are likely not warranted barring an exogenous economic shock and Treasury yields could correct upwards accordingly, it said.
Treasury supply includes $69 billion in two-year notes to be auctioned on Tuesday, $70 billion in five-year notes on Wednesday and $44 billion in seven-year notes on Thursday.
Energy:
Oil prices fell, paring some gains after a strong rally on Monday on Middle East and Libya tensions.
Crude prices had particularly gained on the news that Libya’s eastern government–which is internationally unrecognized–is shutting down its oilfields in response to “attacks on the leadership and employees of the Central Bank of Libya,” Swissquote Bank said.
The eastern government produces around 1 million barrels of oil a day, a substantial portion of Libya’s overall production. The $78-$80 a barrel range for crude reflects mounting tensions of all sorts, though slowing global growth worries will keep further upside limited, it added.
Phillip Nova said OPEC’s output blueprint could be pivotal for oil prices.
While oil markets rallied on Powell’s recent comments signaling the start of monetary policy easing, the possibility of OPEC rolling back some production cuts is capping oil price gains, it added.
Markets are trying to estimate the likelihood of extra supply coming on the market, and weighing persistent concerns about an escalation in the Middle East, Philip Nova said.
Markets have been downplaying geopolitical risks recently as there’s been no major oil supply disruption but that could change quickly. “For now, the only thing that looks constant in oil markets is volatility.”
Metals:
Gold futures fell as the dollar was now tracking around its lowest level since July, 2023 on rate cut optimism, a boon for gold which typically has a negative relationship with the greenback, Commonwealth Bank of Australia said.
This correlation did temporarily break down earlier this year as the precious metal rallied despite a stronger dollar on central bank, retail and safe-haven demand, but gold’s ability to find support in a falling and rising dollar environment fuels the belief that gold futures have price risks skewed to the upside, CBA added.
TODAY’S TOP HEADLINES
Mark Zuckerberg Says White House Was ‘Wrong’ to Pressure Facebook on Covid
WASHINGTON-Meta Platforms Chief Executive Mark Zuckerberg said it was improper for the Biden administration to have pressured Facebook to censor content in 2021 related to the coronavirus pandemic, vowing that the social-media giant would reject any such future efforts.
Zuckerberg also said he didn’t plan to repeat efforts to fund nonprofits to assist in state election efforts, a Covid-era push that had drawn Republican criticism and sparked many Republican-leaning states to ban the practice.
Private Equity Ownership Is Coming to the NFL
Private-equity firms have been gobbling up chunks of professional sports teams in recent years, but the holy grail remained out of reach.
The National Football League, the most lucrative league around, has long barred firms from owning a piece of its teams. Its policy was simple: team owners should be actual people, not corporate entities. That meant eschewing the free-flowing cash infusions from institutions that now line the pockets of owners in the National Basketball Association, the English Premier League and Major League Baseball, among others.
5 Investments to Beat Cash When the Fed Cuts Rates
The Fed is getting ready to cut interest rates. For investors, who’ve been keeping record amounts of money on the sidelines, it’s time to consider putting that cash to work.
After months of wait-and-see uncertainty, Federal Reserve chairman Jerome Powell appeared to signal a September interest rate cut was imminent at the Fed’s Jackson Hole meeting last week.
Weight-Loss Drugs Get More Good News. For Investors, It’s Still Too Soon to Celebrate.
The news keeps getting better for the new GLP-1 weight-loss drugs from Eli Lilly and Novo Nordisk.
Lilly last week unveiled new data showing its drug can prevent the onset of type-2 diabetes. That builds on positive trials over the past year in sleep apnea and heart failure. Early evidence has suggested GLP-1 drugs could also help with addiction and Alzheimer’s disease.
Cannabis Reclassification Would Expand Banking Access to Industry, Advocate Says
A congressional advocate for the federal legalization of cannabis says changes are coming that could lead to better access to banking services for companies that grow or sell the drug.
The co-founder and co-chair of the Congressional Cannabis Caucus, Rep. Earl Blumenauer (D., Ore.) has pushed to liberalize marijuana laws throughout his political career. Elected to Congress in 1996, Blumenauer says recent moves by the Biden administration toward rescheduling cannabis from a Schedule I drug-alongside substances such as heroin and LSD-to a less restrictive Schedule III drug will open opportunities for the growing industry, which is legal in some form in 38 states, but still not under federal law.
Kamala Harris’s Tax Increases and Cuts Take Shape
WASHINGTON-Vice President Kamala Harris’s tax proposals pick up the unfinished business of the Biden administration, pushing to raise taxes on corporations and high-income households while leaving most Americans’ taxes unchanged or lower.
Harris, the Democratic nominee for president, would increase taxes by about $5 trillion over the next decade and cut other taxes by more than $4 trillion. The federal government’s total collections-projected at $63 trillion over 10 years-would be little changed, but the Harris agenda would shift who pays.
Special Counsel Pushes to Revive Trump Prosecution on Classified Documents
A federal judge in Florida made a series of grievous errors and ignored decades of precedent when she dismissed the case charging Donald Trump with illegally retaining classified documents after he left the White House, special counsel Jack Smith told an appeals court Monday.
(MORE TO FOLLOW) Dow Jones Newswires
August 27, 2024 06:25 ET (10:25 GMT)
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