Stock futures edged up slightly on Wednesday as Wall Street eagerly awaited a long-anticipated rate decision from the Federal Reserve. This follows a prolonged period of aggressive rate hikes aimed at curbing high inflation. The Fed is set to announce its latest policy decision at 2 p.m. ET, with expectations of a rate reduction of at least a quarter percentage point. However, there is some uncertainty among traders regarding the exact size of the cut.

European markets experienced a decline on Wednesday. The U.K.’s inflation rate for August was reported at 2.2% by the Office for National Statistics, remaining unchanged from July and meeting expectations. This data precedes the upcoming Bank of England meeting, where a decision on interest rate policy is anticipated later this week.

Asia-Pacific markets saw a positive trend on Wednesday, with Australia’s S&P/ASX 200 continuing its multi-day winning streak to reach an all-time high. In Japan, the Ministry of Finance reported that imports and exports for August increased by 2.3% and 5.6%, respectively, compared to the previous year. However, these figures fell short of the Reuters poll estimates, which had projected growth of 13.4% for imports and 10% for exports. Meanwhile, markets in South Korea and Hong Kong remained closed, and mainland China resumed trading following a three-day national holiday.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include GIS. After the bell includes SCS.

News & Technicals’

This week’s Federal Open Market Committee (FOMC) meeting is shrouded in uncertainty, as analysts debate whether the Federal Reserve will opt for the traditional 25-basis-point rate reduction or take a more aggressive approach with a 50-basis-point cut. The decision is eagerly anticipated by Fed watchers, who remain divided on the likely outcome. In addition to the rate cut decision, the meeting promises to be eventful, featuring updates on future rate cut projections and adjustments to economic estimates.

All seven independent directors of 23andMe resigned from the company’s board on Tuesday, effective immediately. These directors had formed a special committee in March to assist the struggling company in finding a new direction. In a memo to employees, CEO Anne Wojcicki expressed her surprise and disappointment at their decision to step down.

Tupperware Brands, along with some of its subsidiaries, filed for Chapter 11 bankruptcy protection on Tuesday. This decision comes in response to declining demand for its once-iconic food storage containers and increasing financial losses. CEO Laurie Goldman stated in a press release that the company’s financial position has been significantly affected by the challenging macroeconomic environment over the past several years.

At Salesforce’s annual Dreamforce conference in San Francisco, CEO Marc Benioff discussed the practical applications of the company’s new artificial intelligence product, “Agentforce,” with CNBC’s Jim Cramer on Tuesday. Benioff highlighted how the technology can assist overworked medical professionals, particularly those experiencing burnout after the pandemic. He emphasized that Agentforce can handle tasks such as scheduling and various aspects of patient interaction, which he believes will help alleviate the burnout issue among doctors and nurses.

The anticipated rate decision is just around the corner at 2 PM Eastern today followed by the Powell press conference.  The entire financial world will be tuned into this decision and traders should be prepared for just about anything from big point moves and fast intrada whipsaws as the market reacts.  Will it be a 25-basis point or 50-basis point?  Will the market celebrate or be disappointed?  We will soon find out, so buckle up for a wild afternoon as the market reacts.

Trade Wisely,

Doug

Investors are keenly awaiting the release of August retail sales data on Tuesday, which will provide crucial insights into the health of the U.S. consumer just before the Federal Reserve’s rate decision. Economists surveyed by Dow Jones predict a 0.2% decline in retail sales, though they expect a 0.2% increase when excluding auto sales. These figures could significantly influence the Fed’s decision on rate cuts. Wall Street is particularly attentive, with the possibility of a 50-basis point cut still on the table. However, the chief global strategist advocates for a more measured approach, suggesting a 25-basis point reduction would be more prudent.

European stocks experienced an uptick on Tuesday, driven by anticipation surrounding upcoming central bank meetings. Commerzbank shares reached a 12-year high following reports that UniCredit is seeking European Central Bank approval to acquire a 30% stake in the company, although the shares later leveled off to trade nearly flat. In the retail sector, stocks rose by 2.15%, with British home improvement firm Kingfisher leading the charge, surging 6.4% after raising the lower end of its profit forecast due to improved sales.

In August, Singapore’s non-oil domestic exports saw a significant increase of 10.7% compared to the same period last year. Meanwhile, India’s wholesale prices for August are expected to show a year-on-year increase of 1.85%, a slight decrease from the 2.04% rise observed in July. Additionally, Chinese appliance manufacturer Midea Group made a strong debut on the Hong Kong stock exchange, with its shares surging over 9% following the city’s largest IPO in more than three years.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include FERG.  There are no notable reports after the bell today.

News & Technicals’

The Biden administration has granted Intel up to an additional $3 billion under the CHIPS and Science Act for the “Secure Enclave” program, aimed at boosting the supply of microelectronics for the Department of Defense. This funding supports Intel’s efforts to construct foundry plants in four states, enhancing domestic semiconductor manufacturing capabilities for various suppliers. Earlier in March, Intel received up to $8.5 billion under the same act, underscoring the administration’s commitment to strengthening the U.S. semiconductor industry and ensuring a secure supply chain for critical technologies.

Amazon CEO Andy Jassy has announced a new directive requiring corporate employees to work from the office five days a week, a shift from the previous policy of three days a week. This change aims to foster greater collaboration and productivity. Additionally, Amazon is restructuring its corporate hierarchy by reducing the number of managers in each organization, which is intended to streamline operations and enhance decision-making efficiency.

Amazon CEO Andy Jassy has announced a new directive requiring corporate employees to work from the office five days a week, a shift from the previous policy of three days a week. This change aims to foster greater collaboration and productivity. Additionally, Amazon is restructuring its corporate hierarchy by reducing the number of managers in each organization, which is intended to streamline operations and enhance decision-making efficiency.

On Monday, Apple unveiled iOS 18, the latest iteration of its iPhone software, marking the company’s most significant update of the year. Despite the anticipation, this version does not feature Apple Intelligence, the company’s upcoming AI system. The release focuses on enhancing user experience with various improvements and new features, setting the stage for future innovations. As users explore iOS 18, the tech community eagerly awaits the integration of Apple Intelligence in subsequent updates.

Oracle Chairman Larry Ellison has ascended to the position of the second-richest person in the world, boasting a net worth of $206 billion. This milestone unseats Amazon founder Jeff Bezos, who had intermittently held the title since 2016. Oracle’s shares surged by 20% in September, setting them on course for their best month since October 2022. This remarkable stock performance is largely attributed to Oracle’s pivotal role in the burgeoning artificial intelligence sector.

As we wait on the highly anticipated rate decision from the FOMC, we will still have to parse the results August retail sales and industrial production reports early this morning.  The T2122 indicator is nearly at its upper limit so once again watch for a potential whipsaw on this morning’s gap up open that may finally make a near record high in the SPY.  Don’t be too surprised after the morning volatility if choppy price action conditions return with the uncertainty of the Fed decision looming.

Trade Wisely,

Doug

On Sunday night, stock futures remained relatively stable as investors eagerly awaited the Federal Reserve’s highly anticipated policy meeting. This meeting, scheduled for Tuesday and Wednesday, is expected to result in the first rate cut since 2020. The current overnight lending rate stands at 5.25% to 5.5%, and traders are divided on whether the Fed will reduce rates by 25 or 50 basis points, according to the CME Group’s FedWatch tool. This decision is being closely watched, as it could have significant implications for the financial markets.

On Monday, European stocks showed a mixed performance as investors braced for a significant week of interest rate decisions. Mining stocks declined by 0.6%, while the retail sector saw a modest increase of 0.4%. Despite the mixed start to the week, the regional benchmark closed higher on Friday, gaining 1.09% over the week as positive momentum returned to the market. Investors are particularly focused on the upcoming Bank of England meeting on Thursday, with the market divided on whether the central bank will opt to cut rates for the second time in two months.

Markets in mainland China and South Korea are closed in observance of the Mid-Autumn Festival, while Japan’s markets are shut for Respect for the Aged Day. Over the weekend, China released concerning economic data, revealing that August’s factory output, retail sales, and investment figures fell short of expectations. Additionally, the urban jobless rate climbed to a six-month high, and year-on-year home prices experienced their steepest decline in nine years. Meanwhile, Typhoon Bebinca has caused significant disruptions, leading to the cancellation of hundreds of flights in China, with Shanghai bracing for what could be the strongest storm since 1949.Economic Calendar

Economic Calendar

Earnings Calendar

There are no Noteworthy earnings reports before or after the bell on Monday.

News & Technicals’

The Federal Reserve’s highly anticipated two-day meeting, starting on Tuesday, is set to take center stage this week. In addition to the Fed, Brazil’s central bank will hold its policy meeting on Wednesday. Thursday will see decisions from the Bank of England, Norway’s Norges Bank, and South Africa’s Reserve Bank. The week of central bank activity will conclude with the Bank of Japan’s latest rate decision on Friday. This series of meetings is expected to have significant implications for global financial markets.

Pfizer announced that its experimental drug, ponsegromab, has shown promising results in a midstage trial for treating cancer cachexia, a serious condition that leads to appetite and weight loss in cancer patients. The trial revealed that patients taking ponsegromab experienced improvements in body weight, muscle mass, quality of life, and physical function. These positive outcomes suggest that ponsegromab, a monoclonal antibody, could potentially become the first approved treatment specifically for cancer cachexia, offering new hope for patients suffering from this debilitating condition.

Analysts are examining the link between China’s real estate slump and local government financing to understand the country’s persistent consumption slowdown. According to Wenyin Huang, director at S&P Global Ratings, macroeconomic challenges are undermining the revenue-generating capabilities of local governments, particularly through taxes and land sales. Additionally, Morgan Stanley’s chief Asia economists, Chetan Ahya and Robin Xing, noted in a September report that weak investment is resulting in sluggish nominal GDP growth. This, in turn, is pressuring the corporate sector to cut wages and contributing to a sharp rise in debt ratios.

Columbus, Ohio, experienced a significant cyberattack over the summer, attributed to a new wave of ransomware from a group known as Rhysida, which some security experts suspect is linked to Russia or neighboring states. An IT researcher in Columbus, who monitors the dark web and cybercrime, accessed three terabytes of hacked data, taking over eight hours to download. He alerted the media that the breach was far more extensive than the city had disclosed to residents. In response, the city sued the researcher, claiming legal action was necessary to protect sensitive information. This move surprised experts, who warned it could have a chilling effect on hacking disclosures and public transparency.

New record highs look very possible as we wait for the anticipated policy meeting and the FOMC rate decision on Wednesday afternoon.  However, I would not rule whipsaws keeping in mind the corporate buyback blackout, uncertainty over next quarter earnings, possible government shutdown on the 30^th, and of course the last two weeks of September track record of being historically volatile.

Trade Wisely,

Doug

U.S. stock futures edged higher on Thursday as investors prepared for upcoming PPI inflation data following a turbulent session triggered by the release of the August consumer price index. Wall Street is keenly awaiting the August producer price index, with economists surveyed by Dow Jones predicting a 0.2% increase in both the headline and core readings, up from the previous month’s 0.1% and 0.0%, respectively. Additionally, initial jobless claims data for the week ending September 7 is expected to show a slight decrease to 225,000 from 227,000 the previous week.

On Thursday, European stocks surged, with tech and mining stocks leading the charge, rising by 2.69% and 2.87%, respectively. Investors are anticipating a 25-basis point rate cut from the European Central Bank (ECB), which would be the first reduction since June. Additionally, European markets are reacting to the latest U.S. consumer price index (CPI) report, which showed a 0.2% increase in consumer prices for August, bringing the annual inflation rate down to 2.5%, the lowest since February 2021

On Thursday, Asia-Pacific markets experienced an upswing, mirroring the positive momentum from Wall Street, which was driven by a rally in the tech sector. In Japan, the producer price index (PPI) for August increased by 2.5% year-on-year, falling short of the anticipated 2.8% and the 3% rise observed in July. Meanwhile, India is set to release its consumer price index (CPI) for August later today.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include CAL, KR, LOVE, & SIG After the bell include ADBE, & RH.

News & Technicals’

Norfolk Southern has announced the immediate departure of CEO Alan Shaw, who will be replaced by the company’s finance chief, Mark George. Shaw’s exit follows an investigation by the railroad’s board into an allegedly inappropriate relationship with the company’s chief legal officer, Nabanita Nag. Mark George, who has been with Norfolk Southern as CFO for nearly five years, will step into the role of CEO.

Moderna has announced plans to reduce its expenses by $1.1 billion by 2027 as it navigates the downturn in its Covid-related business. The biotech company aims to secure approvals for 10 new products by 2027, signaling a strategic shift towards diversifying its portfolio. However, this transition involves deprioritizing certain parts of its pipeline, leading to the suspension or discontinuation of some projects.

China has issued a stern warning of retaliation in response to a U.S. bill that could lead to the closure of Hong Kong’s trade offices. The proposed legislation mandates the U.S. secretary of state to conduct annual reviews of the “privileges, exemptions, and immunities” granted to Hong Kong’s Economic and Trade Offices. Beijing has urged the U.S. to halt the progression of this act to avoid further straining China-U.S. relations and has vowed to take “strong and resolute countermeasures” if the bill is enacted.

Eli Lilly has announced a significant investment of $1.8 billion to enhance its manufacturing capabilities in Ireland, focusing on its newly approved Alzheimer’s drug and popular weight loss and diabetes treatments. The pharmaceutical giant plans to allocate $1 billion to expand its existing site in Limerick, aiming to boost the production of active ingredients, including those used in its Alzheimer’s treatment, Kisunla. Additionally, Eli Lilly will invest $800 million in expanding its facility in Kinsale, which began producing drugs last year to meet the growing demand for its diabetes and weight loss medications.

After the massive reversal yesterday can the bulls follow though with the upcoming PPI inflation data and Jobless claims report?  One thing for sure is with the tremendous volatility traders should be prepared for just about anything remembering about 50% of the companies will be in their blackout period by the end of this week, ending corporate buyback activity. 

Trade Wisely,

Doug

U.S. stock futures declined on Wednesday as investors anticipated the release of the August CPI report. According to economists surveyed by Dow Jones, the headline Consumer Price Index (CPI) is expected to have increased by 0.2% from the previous month and 2.6% year-over-year. Kristina Hooper, chief global market strategist at Invesco, suggested that the Federal Reserve is likely to implement a 25-basis-point rate cut next week. She noted that a larger 50-basis-point cut could trigger alarm and be perceived as an admission of economic concerns.

European stocks saw an uptick as global markets awaited the latest U.S. inflation data. The tech sector experienced a 1.1% rise, while health care stocks dipped by 0.5%. Retail stocks performed notably well, climbing 1.77%, driven by a 4.2% increase in Spanish fashion house Inditex’s shares following a sales rebound. However, the U.K.’s FTSE 100 slightly declined by 0.02%, as new data revealed the economy remained stagnant in July, missing analysts’ forecast of a 0.2% growth.

Asia-Pacific markets experienced a downturn on Wednesday, with Japan’s Nikkei index suffering the most significant losses in the region. In contrast, South Korea reported a positive economic indicator, with August unemployment dropping to 2.4%, the lowest level since the data series began in 1999, as per Statistics Korea. Meanwhile, Bank of Japan board member Junko Nakagawa announced that the central bank would persist in raising interest rates, provided that the economy and inflation align with their projections.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include OXM. After the bell include CAL, KR, LOVE, & SIG.

News & Technicals’

Shares of GameStop fell by 10% in premarket trading after the video game retailer amended an open market sale agreement with the U.S. Securities and Exchange Commission. This amendment permits GameStop to sell up to 20 million additional shares of its Class A common stock. The move likely raised concerns among investors about the potential dilution of existing shares, contributing to the drop in stock price. This development highlights the market’s sensitivity to changes in corporate financing strategies.

Chinese artificial intelligence models might currently lag behind their U.S. counterparts by at least six months, according to Kai-Fu Lee, founder of the startup 01.AI and former head of Google China. However, Lee predicts that Chinese AI applications will likely see rapid growth, potentially outpacing those in the U.S. by early next year. He attributes this anticipated surge to the significantly reduced costs of training effective AI models. This suggests a dynamic shift in the AI landscape, where the speed of application development could become a critical factor in technological leadership.

The U.K. economy remained stagnant in July, with no month-on-month growth, according to preliminary data from the Office for National Statistics. This performance fell short of the 0.2% growth forecasted by economists polled by Reuters. The services sector, which is a major component of the U.K. economy, saw a modest increase of 0.1%. However, this was offset by declines in production and construction output, which fell by 0.8% and 0.4%, respectively. These figures highlight the ongoing challenges facing the U.K. economy, particularly in its production and construction sectors.

JPMorgan Chase shares dropped by 5% on Tuesday following comments from the bank’s president, Daniel Pinto, who indicated that analysts’ expectations for net interest income and expenses in 2025 were overly optimistic. Pinto stated that the current estimate of approximately $90 billion for 2025 is unrealistic due to the Federal Reserve’s interest rate cuts. Additionally, he noted that the expense forecast of around $94 billion for next year is also too optimistic, citing ongoing inflation and new investments. This decline marked JPMorgan’s worst stock performance since June 2020, according to FactSet.

Today all eyes around the world are focused on the August CPI report that will be out before bell.  Although futures currently point to a bearish open anything is possible as the market reacts to this inflation data and what it might mean for next Wednesday’s FOMC rate decision.  Big moves are possible, and I would not rule out big point whipsaws after the open. Keep in mind that Thursday brings us the Producer Prices report as you plan forward.

Trade Wisely,

Doug

Stock futures remained mostly flat on Tuesday, following a rebound from the worst week of 2024 for major averages. Traders are closely monitoring two significant economic reports expected to influence stock movements: the consumer price index (CPI) report for August, due on Wednesday, and the producer price index (PPI) report, set for release on Thursday. Historically, September tends to be a weak month for equities, adding to investor caution. Additionally, the looming U.S. presidential election on November 5th contributes to the prevailing uncertainty in the market.

European stocks showed a mixed performance on Tuesday, following a more optimistic start to the week. The U.K. saw a slight improvement in its unemployment rate, which eased to 4.1% from May to July 2024. However, annual growth in regular employee earnings declined to 5.1% during the same period. Tech stocks experienced a modest gain of 0.63%, while the healthcare sector dropped by 0.87%, largely due to AstraZeneca’s significant 4.33% fall. The British pharmaceutical giant’s shares plummeted to the bottom of the FTSE 100 after it reported disappointing results from a lung cancer drug trial.

Asia-Pacific markets displayed a mixed performance on Tuesday. China’s exports surged by 8.7% year-on-year in August, surpassing the forecast of 6.5%, while imports saw a modest increase of 0.5%, falling short of the expected 2%. Japan’s Nikkei 225, after initial gains, closed 0.16% lower at 36,159.16, primarily due to a downturn in the health-care sector. Meanwhile, Hong Kong’s Hang Seng index rose by 0.37% in the final hour of trading, and mainland China’s CSI 300 remained relatively stable at 3,195.76.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ASO, & CGNT. After the bell include GME, PLAY, & WOOF.

News & Technicals’

Oracle reported strong fiscal first-quarter results on Monday, surpassing expectations on both the top and bottom lines. This positive performance led to a rise in the company’s stock during extended trading. Additionally, Oracle announced plans to offer its database services on Amazon Web Services (AWS), the leading cloud infrastructure platform. This strategic move is expected to enhance Oracle’s cloud capabilities and expand its market reach.

Goldman Sachs is set to incur a pretax hit of approximately $400 million in its third-quarter results as it continues to dismantle its troubled consumer business. CEO David Solomon announced at a conference on Monday that the bank’s decision to offload its GM Card business and a separate loan portfolio would negatively impact revenues next month. Additionally, Solomon noted that trading revenue for the quarter is expected to decline by 10%, attributed to challenging year-over-year comparisons and difficult trading conditions in the fixed-income markets during August.

Europe’s top court ruled against Apple on Tuesday in a decade-long legal battle concerning its tax practices in Ireland. The case originated in 2016 when the European Commission mandated that Ireland recover up to 13 billion euros ($14.4 billion) in back taxes from Apple. The Commission had determined that Apple received “illegal” tax benefits from Ireland over a span of two decades. This ruling marks a significant development in the ongoing scrutiny of multinational corporations’ tax arrangements in Europe.

Europe’s also upheld a 2.4-billion-euro ($2.65 billion) fine against Google on Tuesday for abusing its dominant market position by favoring its own shopping comparison service. This fine results from a 2017 antitrust investigation by the European Commission, the EU’s executive arm, which concluded that Google had unfairly prioritized its own service over those of its competitors. This ruling reinforces the EU’s stance on maintaining competitive fairness in the digital marketplace.

As the market waits for the Wednesday CPI report the futures trade mostly Flat this morning. A hurry up and wait choppy Tuesday is not out of the question with very little inspiration coming for either earnings or economic today.  Try to avoid trading out of boredom keeping mind the potential market moving report before the bell tomorrow that could create significant gaps both up or down. 

Trade Wisely,

Doug

U.S. stock futures indicate a significant gap up on Monday as Wall Street attempts to recover from last week’s steep losses. According to Adam Crisafulli of Vital Knowledge, the rally isn’t driven by any specific news since Friday’s close but rather by modest dip buying, largely due to oversold conditions and anticipation of monetary support. Investors are also looking ahead to the release of August’s consumer and producer price reports, scheduled for Wednesday and Thursday mornings, respectively.

European stocks saw an uptick on Monday, managing to rise despite the negative sentiment from Wall Street and Asia-Pacific markets. Most sectors and all major bourses were trading positively. Technology stocks led the gains with a 1.32% increase, closely followed by travel and leisure stocks, which were up by 1.30%. However, Burberry shares fell by 5.19%, dragging down the luxury sector due to declining fortunes in that market segment.

Asia-Pacific markets experienced a downturn on Monday, with Hong Kong’s Hang Seng Index (HSI) leading the losses. The HSI dropped by 1.77% in the final hour of trading, driven by China’s inflation rate, which grew by only 0.6% year-on-year, falling short of the 0.7% expected by economists polled by Reuters. Mainland China’s CSI 300 also saw a decline, falling 1.19% to 3,192.95, marking a seven-month low. Additionally, Japan’s second-quarter GDP growth was reported at 2.9% on an annualized basis, below the anticipated 3.2%.

Economic Calendar

Earnings Calendar

Notable reports for Monday have no reports before the bell but after the bell include CVGW, AVO, ORCL, & RBRK.

News & Technicals’

The unwinding of the yen carry trade is anticipated to persist in September, posing a risk of another substantial sell-off, according to Kathy Lien, managing director of forex strategy at BK Asset Management. Yen traders are expected to closely monitor equity prices and take cues from them, as September is typically a volatile month for stocks. Lien suggests that the unwind could be more aggressive, like what was observed in August, if there is a significant sell-off in stocks. She also notes that the yen remains significantly undervalued, which could impact valuations over the next one to two years.

Huawei has garnered significant attention with over 2.7 million pre-orders for its new tri-fold smartphone, the Mate XT, as revealed on its website on Monday. The Chinese tech giant began accepting pre-orders at midday on Saturday, strategically positioning the launch more than two days ahead of Apple’s anticipated iPhone 16 release, scheduled for early Tuesday morning Beijing time. This early interest highlights the competitive landscape in the smartphone market, with Huawei aiming to capture consumer interest before Apple’s latest offering hits the shelves.

The European Union needs radical reforms through a new industrial strategy to maintain its competitiveness, enhance social equality, and achieve climate targets, according to a highly anticipated report by economist and politician Mario Draghi. The report outlines proposals that would necessitate an additional annual investment of 750 billion to 800 billion euros, as estimated by the European Commission. It also highlights other critical areas, such as supply chain security and defense spending, underscoring the comprehensive approach required to address these multifaceted challenges.

Norfolk Southern’s board is investigating allegations that CEO Alan Shaw engaged in an inappropriate workplace relationship, according to sources familiar with the situation. Shaw, who has been CEO since 2022, has already navigated significant challenges, including a toxic rail derailment and a contentious proxy fight. The company has enlisted outside legal advisors to assist with the probe, which is still in its early stages and may not reveal any misconduct.

With a big overnight buy the dip gap up open as the market attempts to recover watch for the potential of whipsaws after the open.  Keeping in mind that we face a CPI reading on Wednesday and a PPI report on Thursday, it is also possible we could chop sideways with considerable volatility as we wait.  That said be very careful with the fear of missing out and chasing this morning big gap remembering that SPY, QQQ, and IWM are under their 50-day averages.

Trade Wisely,

Doug

U.S. stock futures declined on Wednesday following a rough start to September, with the S&P 500 experiencing its worst day since early August. The downturn on Wall Street was exacerbated by pressure on chip stocks, driven by two reports indicating a slowdown in U.S. manufacturing production. Investors are now turning their attention to upcoming economic data releases, including the U.S. trade deficit, job openings and labor turnover (JOLTS) survey, and factory orders, to gauge the health of the economy.

European stocks faced a significant downturn in morning trading on Wednesday, mirroring the losses seen on Wall Street and in Asia-Pacific markets. The pan-European Stoxx 600 index fell by 0.93% as of 11:08 a.m. in London, with all sectors experiencing declines. Technology stocks were hit the hardest, dropping by 2.68%, while travel stocks also saw a notable decrease of 1.1%.

The Nikkei experienced its worst day since the early August sell-off, with significant declines in Asian markets led by the Taiex. The tech sector was particularly hard hit, as major chip manufacturers Samsung Electronics and SK Hynix, both key suppliers to Nvidia, saw their shares plummet by 3.45% and 8.02%, respectively. Despite the widespread downturn, mainland Chinese and Hong Kong indexes managed to limit their losses, faring better than other markets in the region.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include DKS, DLTR, CRMT, CIEN, CNM, HRL, REVG, & CURV. After the bell include AVAV, AI, CASY, CHPT, CPRT, BASE, CRDO, DSGX, HPE, PHR, CXM, VRNT, & YEXT.

News & Technicals’

Global semiconductor and related stocks experienced a significant decline on Wednesday, triggered by a sharp drop in Nvidia’s share price in the U.S. the previous night. On Tuesday, Nvidia saw an unprecedented $279 billion wiped off its market value, marking the largest one-day market capitalization loss for a U.S. stock in history. The downward trend continued in post-market trading, with Nvidia shares falling an additional 2% following reports from Bloomberg that the company had received a subpoena from the Department of Justice as part of an antitrust investigation.

DraftKings and White Hat Gaming were fined a combined $22,500 by the state of Connecticut for operating an online slot machine game, Deal or No Deal Banker’s Bonanza, which failed to pay out any winnings on over 20,600 spins during a week in August 2023. The game was advertised to return nearly 95 cents for every dollar wagered. However, from August 15 to August 21, 2023, 522 players in Connecticut wagered almost $24,000 on the game across 20,659 spins without receiving any payouts, as reported by Connecticut’s Department of Consumer Protection.

SpaceX’s satellite internet service, Starlink, announced it will comply with court orders to block the social network X in Brazil. Both companies are owned by Elon Musk. Brazil’s supreme court mandated the suspension of X due to non-compliance with federal regulations on content moderation and the appointment of a legal representative in the country. Musk has been vocally critical of Brazil’s administration for months, even threatening “reciprocal seizure of government assets” in response to the court’s actions against his businesses.

Management at German automotive giant Volkswagen is preparing for a contentious townhall meeting with workers on Wednesday, where senior business leaders will outline potential job cuts. On Monday, Volkswagen warned that it could no longer rule out the possibility of closing plants in Germany. This announcement has drawn sharp criticism from Volkswagen’s work council and the major German industrial union IG Metall, both of which have vowed to oppose the proposed cuts.

Although we had a rough start to September keep in mind one day does not make a trend.  The follow-though of the price action will be critical today.  If the bears continue to gain ground, we fear could spike price adding to the volatility.  However, if the bulls can defend support levels and 50 day moving average levels it will ease the minds of traders.  Keep in mind corporate buybacks could ride to the rescue of the market at least for the short term. 

Trade Wisely,

Doug

U.S. stock futures declined on Tuesday as traders prepare for a potentially challenging month following a strong yet volatile August. Investors are eagerly awaiting the first major economic report of the month, which will be released on Friday when the U.S. government publishes the August jobs report. Additionally, Wall Street faces seasonal headwinds, as September has historically been the worst month for the S&P 500 over the past decade.

European stocks saw a slight decline on Tuesday, extending a tepid start to September trading. According to data from the British Retail Consortium, total sales in August increased by 1% year-on-year. This growth was driven primarily by food sales, which rose by 2.9% annually over the three months leading up to August. In contrast, non-food sales experienced a 1.7% decline.

Asia-Pacific markets experienced a downturn on Tuesday, with most indices showing declines. Notably, South Korea’s headline inflation for August eased to 2% from 2.6%, marking its lowest year-on-year level since March 2021. Meanwhile, Mainland China’s CSI 300 index hover near a seven-month low, according to futures data.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include MOMO. After the bell include GTLB, PD, & ZS.

News & Technicals’

German carmaker Volkswagen issued a warning that it may no longer be able to avoid plant closures in the country, citing the need for significant cost-cutting measures to “future-proof” the company. Volkswagen announced its decision to terminate its employment protection agreement, a job security program in place since 1994, to facilitate “urgently needed structural adjustments.” VW brand CEO Thomas Schäfer emphasized the gravity of the situation, stating that it is “extremely tense and cannot be resolved through simple cost-cutting measures.”

Russia has signaled potential changes to its official nuclear weapons policy in response to ongoing incursions by Ukraine into the Kursk border region. Deputy Foreign Minister Sergei Ryabkov announced on Sunday that Russia is revising its nuclear doctrine, which outlines the conditions under which nuclear weapons may be deployed. This shift is attributed to what Russia perceives as the West’s escalating involvement in the conflict in Ukraine. The adjustments to the nuclear doctrine reflect the heightened tensions and the evolving dynamics of the war.

Brazil’s telecommunications regulator, Anatel, has threatened sanctions against Elon Musk’s satellite internet firm, Starlink, amid escalating tensions over Brazil’s decision to block Musk’s social media company, X. Artur Coimbra, a commissioner at Anatel, stated that Starlink is the only company refusing to comply with the court order to block X. This public confrontation highlights the growing friction between Brazil and Musk, as regulatory authorities push for adherence to legal decisions while Musk’s companies resist compliance.

Huawei is set to hold a product launch event on September 10 at 2:30 p.m. Beijing time, just hours after Apple’s iPhone 16 unveiling. While the specifics of Huawei’s new product remain unclear, Richard Yu, the company’s consumer and automotive technology executive, has described it as an “epoch-making product.” Huawei’s resurgence in the Chinese market has posed a significant challenge to Apple, which lost its position among the top five smartphone vendors in China during the second quarter.

Although the current bullishness appears unstoppable keep in mind that September is a potentially challenging month historically.  Plan on corporate buybacks to dwindle my mid-month with about 50% of companies slipping into their blackout period according to Goldman.  Until then continue to ride the bullish wave but consider raising stops and watch carefully for a pullback in this extended condition.

Trade Wisely,

Doug

Stock futures rose on Thursday as investors aimed to rebound from the previous session’s declines the a GDP in focus. Wall Street seemed to shrug off Nvidia’s post-earnings dip, with attention shifting to upcoming economic reports, including GDP, International Trade, and Jobless Claims data, set to be released before the market opens. Additionally, the market is expected to find direction from earnings reports, particularly those with a retail focus, throughout the day.

European markets traded higher on Thursday as investors focused on economic data from the region. While oil and gas stocks saw a slight pullback, the tech sector experienced a notable rise of 1.87%. Germany’s preliminary consumer price index for August was reported at 2.2%, and economic sentiment improved in both the euro area and the European Union.

Asia-Pacific markets experienced a downturn on Thursday, primarily driven by declines in tech stocks following Nvidia’s second-quarter results. South Korean and Taiwanese indexes were notably impacted, with South Korean chip giant SK Hynix plummeting 5.35% and Samsung Electronics dropping over 3%. These significant losses in tech stocks led to the Kospi falling by 1.02%, closing at 2,662.28, marking the steepest decline in the region.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include FLWS, SEO, BBY, BIRK, BF.B, BURL, DG, GMS, MBUU, MCFT, OLLI, PLAB, RY, & TITN. After the bell include ADSK, DELL, DOMO, ESTC, GAP, HCP, LULU, MRVL, & MDB.

News & Technicals’

Nvidia shares declined in U.S. premarket trading on Thursday, even though the company’s fiscal second-quarter results surpassed estimates. The high expectations for the chipmaker meant that merely beating estimates wasn’t enough to boost the stock significantly. Analysts noted that Nvidia would have needed to exceed all expectations by a substantial margin to see a positive reaction in its stock price. This pullback follows an impressive rally, with Nvidia’s shares having surged over 150% this year. The recent dip highlights the challenges of maintaining momentum after such a significant rise.

Salesforce reported strong fiscal second-quarter results, surpassing estimates and prompting the company to raise its full-year profit outlook. In addition to the positive financial news, Salesforce announced that its Chief Financial Officer, Amy Weaver, will be stepping down. Weaver will remain with the company until a successor is appointed and will continue to serve as an advisor. This transition comes amidst a period of robust performance for Salesforce, highlighting both its financial strength and commitment to smooth leadership transitions.

CrowdStrike reported stronger-than-expected quarterly results but lowered its full-year guidance due to incentives offered in a customer commitment package following a widespread outage on July 19. The cybersecurity software company issued an apology to its customers and partners for the disruption. However, it now faces class action lawsuits and a legal threat from Delta Air Lines. This situation underscores the challenges CrowdStrike is navigating despite its robust performance.

Shares of Super Micro plummeted 19% on Wednesday following the company’s announcement that it would not file its annual report for the fiscal year on time. This decline was further exacerbated by Hindenburg Research’s disclosure of a short position in the company, accompanied by allegations of “fresh evidence of accounting manipulation.” However, analysts at JPMorgan have expressed skepticism about Hindenburg’s claims, describing the report as “largely void of details around alleged wrongdoings from the company.” This situation has created significant uncertainty and volatility for Super Micro’s stock.

Traders should brace for volatility this morning as the market opens higher, influenced by the recent Nvidia report and GDP in focus. The current gap up continues to reflect an overbought condition, so it’s crucial to tighten stops to safeguard gains and be prepared for potential whipsaws. Looking ahead, it’s important to keep in mind that Friday will bring the Fed’s preferred Core PCE inflation report, which could further impact price volatility.

Trade Wisely,

Doug