Coffee With Greta: End of Summer Slide Continues
DJIA Futures: -157 (-0.5%)
SPX Futures: -23 (-0.6%)
NASDAQ Futures: -103 (-0.8%)
Good morning friends!
Futures are sliding on the first day of September as the market remains focused on rising rates.
Let’s get right to it!
End of Summer Slide Continues
The end of summer is looking bleak on Wall Street.
The major indexes are all falling this morning after logging monthly losses for August and dropping for the past 4 sessions in a row.
The Dow lost 4.1% in August, while the S&P 500 lost 4.2%, and the Nasdaq fell 4.6%.
The drop comes amid hawkish comments from several Fed officials in recent days.
CME Group’s FedWatch Tool shows 74% of traders now expecting another 0.75% rate hike later this month.
Treasury Yields Extend Rally
Treasury yields are still marching higher as traders dump bonds.
The 2-year yield is up 4 basis points to 3.5% while the 10-year yield is up 15 basis points to 3.26%.
The 2-year yield hit a high of 3.51% earlier today, its highest level since November 2007.
The spread between those two yields remains inverted.
The market is closely eyeing Friday’s August jobs report for signs of an economic slowdown after Fed Chair Jerome Powell said it may be necessary to cause some economic hardship in order to tackle inflation.
Weekly Jobless Claims Drop
Weekly jobless claims fell unexpectedly last week as the labor market continues to show strength.
The Labor Department reported 232,000 Americans filed initial unemployment claims last week.
That was down 5,000 from the previous week and better than expectations for an increase to 245,000.
It was the lowest level of weekly claims since June.
Continuing claims rose by 30,000 to 1.44 million in the week ending August 20.
Nvidia Drops as U.S. Restricts Chip Sales to China
Nvidia (NVDA) shares are down 4.4% ahead of the open after announcing Wednesday it had been instructed by the U.S. government to stop selling chips in China and Russia.
In an SEC filing, the chipmaker said it was told on August 26 about a new license requirement for future exports to China.
The restrictions will affect its A100 and H100 graphics chips.
Nvidia now expects to lose $400 million in potential sales in China this quarter.
The company said it is applying for a license to continue some Chinese exports but doesn’t know if it will be granted an exemption.
Oil Prices Drop on Demand Fears Amid China Lockdowns
Oil prices are falling today on fresh demand worries prompted by new Covid lockdowns in China.
West Texas Intermediate crude futures are down 1.2% to $88.50 bbl while Brent crude futures are down 1.5% to $94 bbl.
Shenzhen tightened Covid restrictions as cases continue to rise, suspending large events and indoor entertainment for three days.
The city of Chengdu also announced a lockdown of its 21.2 million residents as it launches four days of citywide testing.
Meantime, U.S. oil and gas inventories are continuing to fall.
The Energy Information Administration reported a 3.3 million barrel drop in crude stockpiles last week and a 1.2 million barrel declines in gasoline inventories.
In Case You Missed It
- Snap (SNAP) shares rallied 8.7% on Wednesday after announcing a restructuring plan. The company confirmed earlier reports it plans to lay off 20% of its employees and said it will scrap some projects. The cost-cutting efforts are expected to save Snap $500 million annually.
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