What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.34%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.75%.
Stocks this morning are moderately higher. Strength in Nvidia and other chip stocks are leading technology stocks and the overall market higher. Higher T-note yields today are limiting the upside in stocks along with concerns about China’s debt crisis.
U.S. stock indexes have negative carryover from the slide in the Shanghai Stock Index to a 7-1/4 month low today on concern that the property debt crisis in China was worsening. Country Garden Holdings, one of China’s biggest property developers, is seeking to extend a maturing bond for the first time and halted trading in local yuan notes. Also, liquidity concerns in China have ramped up after a unit of Zhongzhi Enterprise Group, one of China’s top private wealth managers, missed payments on multiple high-yield investment products.
The markets are discounting the odds at 11% for a +25 bp rate hike at the September 20 FOMC meeting and 41% for that +25 bp rate hike at the November 1 FOMC meeting.
Global bond yields are higher. The 10-year T-note yield rose to a 9-month high of 4.213% and is up +2.5 bp at 4.178%. The 10-year German bund yield climbed to a 1-week high of 2.651% and is up +1.3 bp at 2.636%. The 10-year UK gilt yield climbed to a 1-month high of 4.548% and is up +3.3 bp at 4.560%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.15%. China’s Shanghai Composite Index today closed down -0.34%. Japan’s Nikkei Stock Index closed down -1.27%.
Today’s stock movers…
Chip stocks are climbing today and lending support to the overall markets. Micron Technology (MU) is up more than 5% to lead gainers in the S&P 500 and Nasdaq 100. Also, Marvell Technology (MRVL) is up more than +2%. In addition, Advanced Micro Devices (AMD), Globalfoundries (GFS), Analog Devices (ADI), Broadcom (AVGO), Texas Instruments (TXN), ON Semiconductor (ON), and Lam Research (LRCX) are up more than +1%.
Nvidia (NVDA) is up more than -4% after Morgan Stanley said the recent selloff in the stock is at a good entry point before its earnings update next week.
Teledyne Technologies (TDY) is up more than +4% after Goldman Sachs said the recent pullback in the stock presents a buying opportunity.
U.S. Steel (X) is up more than +27% after it said it rejected a takeover offer from Cleveland-Cliffs and said it would instead start a review of its strategic options.
Monday.com (MNDY) is up more than +11% after reporting Q2 revenue of $175.7 million, better than the consensus of $169.3 million, and forecasting Q3 revenue of $181 million-$183 million, stronger than the consensus of $178.8 million.
Okta (OKTA) is up more than +4% after Goldman Sachs raised its recommendation on the stock to buy from sell, saying subscription revenue is likely to bottom.
PayPal Holdings (PYPL) is up more than +2% after it named Alex Chriss, who led Intuit’s QuickBooks business, as CEO and President.
Weakness in regional bank stocks is weighing on the overall market. KeyCorp (KEY) is down more than -3% to lead losers in the S&P 500. Also, Comerica (CMA) is down more than -3%. In addition, Citizens Financial Group (CFG), Truist Financial (TFC), Fifth Third Bancorp (FITB), Zions Bancorp (ZION), Huntington Bancshares (HBAN), and US Bancorp (USB) are down more than -2%.
Mining stocks are under pressure today after the price of copper dropped to a 6-week low and silver fell to a 1-1/2 month low. As a result, Freeport McMoran (FCX) is down more than -2%, and Newmont (NEM) and Southern Copper (SCCO) are down more than -1%.
Charles Schwab (SCHW) is down more than -2% after saying it’s experiencing temporarily lower net flows of client money as it sees attrition of some retail and advisory clients’ assets while integrating TD Ameritrade into its business.
Fertilizer stocks are falling today on downgrades from Barclays. Mosaic (MOS) is down more than -3% after Barclays downgraded it to underweight from equal weight, and CF Industries (CF) is down more than -2% after Barclays downgraded it to equal weight from overweight.
Tesla (TSLA) is down more than -1% after it rolled out a new round of price cuts in China, fueling concern the move could restart a price war among electric vehicle makers.
Mariott International (MAR) is down more than -1% after Bernstein downgraded the stock to market perform from outperform.
Across the markets…
September 10-year T-notes (ZNU23) today are down -6 ticks, and the 10-year T-note yield is up +2.5 bp at 4.178%. Sep T-notes today dropped to a 1-week low, and the 10-year T-note yield jumped to a 9-month high of 4.213%. Negative carryover from last Friday’s stronger-than-expected U.S. Jul PPI report weighs on T-note prices. Also, higher European government bond yields are pressuring T-note prices after the 10-year UK gilt yield rose to a 1-month high of 4.583%, and the 10-year German bund yield rose to a 1-week high of 2.651%.
The dollar index (DXY00) today is up by +0.53% and posted a 5-week high. Higher T-note yields today have strengthened the dollar’s interest rate differentials and support the dollar. Also, concerns about China’s worsening debt crisis has knocked the yuan down to a 6-week low against the dollar today.
EUR/USD (^EURUSD) today is down by -0.59% and posted a 5-week low. Dollar strength today is undercutting the euro. Also, today’s fall in German Jul wholesale prices for the fourth consecutive month is dovish for ECB policy and bearish for EUR/USD.
The German Jul wholesale price index fell -2.8% y/y, the fourth consecutive month prices have declined year over year.
USD/JPY (^USDJPY) is up by +0.40%. The yen today sank to a 9-month against the dollar and has fallen for six consecutive sessions. Higher T-note yields today are weighing on the yen. Also, central bank divergence is bearish for the yen, with the Fed, the BOE, and ECB raising interest rates while the BOJ continues to hold interest rates at record lows.
October gold (GCV3) today is down -11.0 (-0.57%), and Sep silver (SIU23) is down -0.0303 (-1.33%). Precious metals prices this morning are moderately lower, with gold falling to a 6-week low and silver falling to a 1-1/2 month low. A rally in the dollar index today to a 5-week high is pressuring metals prices. Also, higher global bond yields today are bearish for precious metals. In addition, silver prices have a negative carryover from a slump in copper prices to a 6-week low today on concerns that worsening China’s debt crisis will curb Chinese industrial metals demand.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
