Wall Street is working to stabilize after a mixed session on Wednesday, with Nasdaq 100 futures rising by 1.3%. This boost was largely driven by Micron Technology, whose shares surged 14% in extended trading following the release of strong guidance for the current quarter. Traders are now looking ahead to the weekly jobless claims report, expected on Thursday, with economists surveyed by Dow Jones predicting 223,000 initial unemployment claims for the week ending September 21.

European stocks saw an uptick on Thursday morning, driven primarily by a strong performance in the mining sector, which surged over 3.6%. Technology and household goods stocks also contributed to the positive momentum, each rising around 3%. Conversely, oil and gas stocks declined by more than 2.8% following a Financial Times report indicating that Saudi Arabia is considering abandoning its unofficial oil price target of $100 per barrel. Among the notable gainers, shares of the French luxury group Kering climbed significantly.

Chinese stocks continued their upward trajectory as state media reported that the nation’s top leaders had endorsed the government’s recent economic support measures. The CSI 300 index in Mainland China extended its winning streak to seven consecutive days, reaching its highest point in approximately four months following a pivotal meeting that reaffirmed the government’s commitment to stimulus efforts. Meanwhile, South Korea’s Kospi surged by 1.9%, driven by significant gains in SK Hynix. The chip maker announced the commencement of mass production of the world’s first 12-layer HBM3E chip, designed for AI memory applications.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include CAN, KMX, JBL, & SNX. After the bell reports include COST, BB, & MTN.

News & Technicals’

Global chip stocks experienced a significant rally on Thursday following U.S. memory semiconductor maker Micron’s announcement of revenue guidance that exceeded expectations, propelling its share price upward. This positive sentiment extended to South Korea, where shares of Samsung Electronics and SK Hynix also saw gains. In Europe, Dutch semiconductor equipment maker ASML surged over 4% in early trading. Other semiconductor companies, including ASMI, BE Semiconductor, and STMicroelectronics, also posted sharp increases.

Russian President Vladimir Putin announced that Russia is making several clarifications to its nuclear doctrine, specifically defining the conditions under which nuclear weapons may be used. He mentioned that the draft amendments to the doctrine will broaden the scope of states and military alliances subject to nuclear deterrence. In a stern warning to Western nations, Putin declared that any attack on Russia by a non-nuclear state, if supported by a nuclear-armed nation, would be treated as a “joint attack,” signaling a significant shift in Russia’s strategic defense policy.

The Federal Trade Commission (FTC) is intensifying its efforts against “automation” companies that promise to launch and manage online businesses for customers in return for an upfront investment. The latest target of this crackdown is Ascend Ecom, which operated an e-commerce scheme primarily on Amazon. The FTC has accused Ascend and similar companies of misrepresentation and making deceptive earnings claims, highlighting the need for greater scrutiny and regulation in this sector to protect consumers from fraudulent business practices.

OpenAI’s board is currently deliberating plans to restructure the organization into a for-profit business. This news follows the announcement by Chief Technology Officer Mira Murati that she will be leaving the company after six and a half years. Later the same day, CEO Sam Altman revealed that Chief Research Officer Bob McGrew and Vice President of Research Barret Zoph are also set to depart. These significant leadership changes come at a pivotal moment for OpenAI as it considers a major shift in its business model.

With the earnings results out of MU the market is once again all excited about AI as the institutions work to stabilize the sector pushing new record highs in the SPY at the open.  However, it would be wise to be careful chasing at the open and watch for potential whipsaws as the market reacts to huge day of economic data and Fed speakers including the Chairman himself. 

Trade Wisely,

Doug

Stock futures dipped on Wednesday, following record-high closes for the S&P 500 and Dow, which rose by 0.25% and 0.20%, respectively. The Nasdaq Composite also saw gains, increasing by 0.56% and nearing its record high, now less than 4% away. Despite these positive movements, concerns about a slowing economy persist, especially after the Federal Reserve’s rate cut last week. Investors are now looking ahead to upcoming economic data, including new home sales for August, set to be released on Wednesday morning, and weekly jobless claims on Thursday.

European stocks edged lower on Wednesday, trimming gains from the previous session that were driven by Chinese stimulus measures. The banking sector was notably affected, with the banking index falling by approximately 0.4% as investors closely watched UniCredit’s potential acquisition of Commerzbank, Germany’s second-largest lender. Additionally, German software giant SAP saw a significant drop, landing at the bottom of the Stoxx 600, following reports from Bloomberg that the company is under investigation in the U.S. for alleged price-fixing.

China’s stock market led the Asia-Pacific region on Wednesday, driven by new stimulus measures announced by Beijing the previous day. This positive sentiment also saw the offshore yuan briefly strengthen to 6.995 against the U.S. dollar, marking the first time it broke the 7.00 level since May 2023. Hong Kong’s Hang Seng index reflected this optimism, rising by 0.63% in its final trading hour. Meanwhile, investors turned their attention to Australia’s inflation data, which showed a 2.7% year-on-year increase in the consumer price index for August.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell notable report includes CTAS. After the bell includes MU, CNXC, FUL, JEF, & WS.

News & Technicals’

Caroline Ellison, the key witness in the case against FTX founder Sam Bankman-Fried, was sentenced to two years in prison by a New York federal court in Manhattan. She was also ordered to forfeit $11 billion. Ellison, who managed the Alameda Research hedge fund linked to FTX, had agreed to a plea deal in December 2022, shortly after the cryptocurrency exchange declared bankruptcy. During sentencing, Judge Lewis Kaplan acknowledged her significant cooperation but stated he could not grant her a “literal get-out-of-jail-free card.”

The Biden administration has endorsed the latest government funding proposal, reducing the likelihood of a shutdown before the November 5 presidential election. House Speaker Mike Johnson, R-La., introduced a new three-month funding bill on Sunday after his initial proposal failed in the GOP-controlled House. This appropriations bill aims to fund the government through December 20, instead of March 2025, and notably excludes the SAVE Act, a contentious voter ID bill.

Italy’s UniCredit has surprised German authorities with a potential multibillion-euro merger involving Frankfurt-based Commerzbank. Market observers indicated to CNBC on Tuesday that this move might have caused a sense of national embarrassment for Germany’s government. Some argue that the outcome of this takeover attempt could challenge the essence of the European project. On Monday, Milan-based UniCredit announced it had increased its stake in Commerzbank to approximately 21% and has requested to raise this holding to up to 29.9%.

Japan has been facing a rice shortage in recent months, driven by a combination of adverse weather conditions and a surge in tourism. This situation has been exacerbated by Japan’s restrictive rice policies. In August, many supermarkets frequently ran out of white rice, prompting stores to limit purchases to one bag per person.

After another round of record-high closes futures suggest a bit softer open for Wednesday.  Uncertainty of 4^th quarter earnings and the pending GDP and core PCE numbers are a natural reason for choppy price action and weaker than average volume.  With the T2122 indicator continuing to register a short-term overbought condition avoid overtrading and have a plan to protect positions if a profit-taking wave begins.

Trade Wisely,

Doug

U.S. stock futures saw a slight uptick on Tuesday in response to recent policy changes in China hoping to buoy economic declining confidence. The modest gains were primarily driven by increases in the utilities and financial sectors. Traders are also anticipating new economic data, including the Conference Board’s consumer confidence reading for September and the Richmond Fed manufacturing index, both set to be released later in the morning.

By mid-morning, the pan-European Stoxx 600 index had risen by 0.8%, driven by strong performances in the mining, technology, and household goods sectors. In contrast, telecoms, health care, and utilities were the only sectors in negative territory. Auto stocks also showed significant gains, with BMW up 3%, and both Mercedes Benz Group and Volkswagen increasing by 2%.

The People’s Bank of China announced a reduction in the reserve requirement ratio by 50 basis points, aiming to stimulate economic activity. Meanwhile, Australia’s central bank maintained its benchmark policy rate at 4.35%, aligning with economists’ expectations. Following these announcements, Hong Kong’s Hang Seng index surged nearly 4%, marking its best day in over seven months. In Japan, the Nikkei 225 closed 0.57% higher at 37,940.59, and the Topix rose by 0.54% to 2,656.73, as Japanese markets resumed trading after a holiday.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include AZO & THO. After the bell reports include KBH, PRGS, SFIX, & WOR.

News & Technicals’

A year after identifying geopolitics as the world’s biggest risk, JPMorgan Chase CEO Jamie Dimon reiterated his concerns, stating that “geopolitics is getting worse, they are not getting better” in an interview with CNBC-TV18. Dimon emphasized the escalating geopolitical tensions and urged the U.S. to brace for a prolonged conflict between Ukraine and Russia.

Boeing announced it has extended its “best and final” offer, which includes higher pay and other benefits, but the union rejected it, stating it was not a negotiated proposal. Over 30,000 Boeing machinists initiated a strike on September 13 after decisively rejecting a tentative agreement. The financial repercussions of the strike will hinge on its duration, with Bank of America estimating that it is costing Boeing $50 million per day.

President Joe Biden is preparing to deliver his final annual address to the United Nations General Assembly in New York. In his speech, Biden will aim to reconcile his diplomatic achievements and objectives with the ongoing conflicts in the Middle East, Ukraine, and Sudan. Additionally, foreign leaders are taking the opportunity this week to meet with Biden’s potential successors, Vice President Kamala Harris and former President Donald Trump.

Southwest Airlines’ COO informed staff that the company will need to make “difficult decisions” to enhance profitability. The airline has already announced plans to implement assigned seating, introduce red-eye flights, and offer seats with extra legroom. Southwest is facing pressure from activist investor Elliott Investment Management, which is advocating for a change in leadership.

Big policy changes in China are helping markets around the world continue the recent bullishness but keep in mind that it also signals the major problems with the Chinese economy. With the corporate buyback blackout, a pending GDP and core PCE reading along with uncertainty of coming 4^th quarter earnings I would not be surprised to see continued choppy market conditions. Also keep and eye on the growing geopolitical tensions with the potential of pushing energy prices substantial higher. 

Trade Wisely,

Doug

Stock futures edged higher on Monday, trying to build on the rate cut momentum that pushed the Dow Jones Industrial Average to a record closing level. Investors are keenly awaiting economic data on the service and manufacturing sectors, which could provide further insights into the health of the economy. Additionally, market participants will be closely monitoring speeches from key Federal Reserve officials, including Atlanta Fed President Raphael Bostic, Chicago Fed President Austan Goolsbee, and Minneapolis Fed President Neel Kashkari, for clues on the central bank’s future monetary policy direction.

European stocks remained flat in early trading on Monday, reflecting concerns over declining business activity in Germany and France, the region’s two largest economies. In France, the Purchasing Managers’ Index (PMI) for manufacturing and services fell sharply to 47.4, an eight-month low, significantly missing the Reuters forecast of 50.6 and dropping from 53.1 in August. Similarly, Germany’s business activity contracted, with the PMI decreasing from 48.4 in August to 47.2 in September, marking a seven-month low.

Recent economic data highlights several key trends across Asia-Pacific. China’s youth unemployment rate has surged for the second consecutive month, reaching its highest level this year, as reported by the National Bureau of Statistics. This rise reflects a cooling labor market amid broader economic weakening. Meanwhile, the Reserve Bank of Australia is commencing a two-day policy meeting to determine the country’s future monetary direction. In Singapore, both headline and core inflation rates exceeded expectations in August, with year-on-year increases of 2.2% and 2.7%, respectively.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell there are no notable reports. After the bell includes AIR.

News & Technicals’

Global semiconductor leaders Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics are reportedly in discussions with the United Arab Emirates (UAE) to explore the possibility of establishing Mega factories in the Middle East. According to a report by the Wall Street Journal, these facilities would be primarily funded by the UAE, with Abu Dhabi’s sovereign wealth fund, Mubadala, playing a crucial role in financing the expansion of the country’s domestic semiconductor manufacturing capabilities.

Europe appears to be on the brink of an economic downturn as its largest economies, Germany and France, grapple with political and economic challenges. Recent data released on Monday indicates that business activity in both countries continued to decline in September. In Germany, the HCOB flash composite Purchasing Managers’ Index (PMI) dropped to a seven-month low, while in France, the composite PMI fell to an eight-month low.

Republican House Speaker Mike Johnson has introduced a revised temporary government funding proposal, incorporating significant amendments from the original bill presented earlier this month. The new proposal aims to fund the government through December 20 and notably excludes any provisions of the SAVE Act, a Trump-backed election security measure that would mandate proof of citizenship for voter registration. This adjustment reflects ongoing negotiations and compromises within the legislative process to ensure continued government operations.

RH CEO Gary Friedman explained to CNBC’s Jim Cramer why the upscale home furnishing retailer avoids official social media accounts, emphasizing the importance of authenticity. Friedman criticized paid promotions by online influencers, stating that such tactics lack genuineness. He highlighted that enduring brands earn their reputation by being truthful, rather than relying on “fake fans” or paid endorsements on platforms like Instagram or TikTok. According to Friedman, true brand value comes from honesty and integrity, not from artificial online popularity.

The premarket futures continue push higher hoping to continue the bullish rate cut momentum however, with most stocks in their black out period we should we watchful for a pullback or a resting consolidation as we wait for the next round of earnings.  Slowing economic conditions in Asian and European markets will add some weight to today’s economic reports and could effect today’s sentament.

Trade Wisely,

Doug

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