What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -1.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -2.11%.
U.S. stock indexes are lower on renewed concern about Chinese lockdowns, today’s -0.91% sell-off in the Euro-Stoxx 50 index, and caution ahead of the Q2 earnings season that starts later this week with reports from major Wall Street banks and other companies such as PepsicCo, Fastenal, Delta, Cintas, and Conagra. There is also a risk-off attitude in the markets today with today’s sell-off in crypto and many high-profile tech stocks.
The markets are also nervous ahead of Wednesday’s U.S. June CPI report, which is expected to rise to +8.8% y/y from May’s 40-year high of +8.6%, although the core CPI is expected to ease to +5.7% y/y from May’s 6.0%. Also, the recent decline in commodity prices and a weaker U.S. economy could mean that inflation is in the process of peaking.
China’s Shanghai Composite Index today fell -1.27% on the Covid resurgence in China and on new fines for tech giants. Regulatory fines for past alleged transgressions were levied on Alibaba (BABA) and Tencent Holdings (TCEHY). Also, China Evergrande Group’s bondholders rejected a proposal to extend a debt payment for the troubled property developer.
Japan’s Nikkei Stock Index closed up +1.11% today after the ruling LDP party in Sunday’s election extended its upper house majority. That will allow Prime Minister Kishida to continue supporting the BOJ’s highly accommodative monetary policy and its attempt to avoid the interest rate hikes being seen in most of the rest of the world. Japan was shocked late last week when former Japanese Prime Minister Abe was assassinated in the city of Nara while giving a campaign speech.
Today’s stock movers…
A slew of Nasdaq 100 stocks are sharply lower today with the risk-off trading environment. Zoom (ZM) is down -7.85%, NVIDIA (NVDA) is down -4.63%, Netflix (NFLX) is down -4.63%, Paypal (PYPL) is down -4.16%, Amazon (AMZN) is down -3.64%, and Alphabet (GOOGL) is down -2.98%.
Twitter (TWTR) today is down -6.65% after Elon Musk on Saturday announced his intent to terminate his takeover bid for the company. Mr. Musk blamed Twitter for not providing sufficient information to proceed with the takeover, but Mr. Musk’s troubles are well-known in getting financing for the deal and justifying the high price he agreed to pay. Twitter will reportedly sue Musk to force him to complete the $44 billion deal, or at least pay a large breakup fee. Tesla (TSLA) is down -3.25% on general weakness in high-profile tech stocks, but is seeing some underlying support from hopes that Mr. Musk will no longer lean on his Tesla holdings to help finance his ill-fated Twitter offer.
Cryptocurrency stocks are trading lower today, with Bitcoin down -2.67%, adding to last Friday’s -3.23% sell-off. In a bearish factor, a MLIV Pulse survey of Wall Street investors said Bitcoin is more likely to fall by half to $10,000 than recover to $30,000. Coinbase (COIN) and Marathon Digital (MARA) are down by about -5%, and Riot Blockchain (RIOT) is down by -8.83%.
Chinese gambling and tourism stocks are trading lower today after Chinese authorities shut down much of Macau due to a Covid outbreak in the area. Las Vegas Sands (LVS) is down -8.93%, Wynn Resorts (WYNN) is down -7.03%, and MGM Resorts (MGM) is down -2.79%.
Lululemon (LULU) is down -3.71% and Under Armour (UAA) is down -4.76% after Jefferies downgraded the stocks. Nike (NKE) is down -1.55% even though Jefferies reaffirmed its buy rating in Nike and called it “still best-in-class.”
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are up +28 ticks, and the 10-year T-note yield is down -9.3 bp at 2.987%. T-note prices are higher today on safe-haven demand with the weakness in stocks and with the continued constraint on world economic growth from China’s zero-Covid policy. T-note prices are also seeing support with today’s -3 bp decline to 2.35% in the 10-year breakeven inflation expectations rate, which is mildly above last week’s 10-month low of 2.28%.
The dollar index (DXY00) this morning is sharply higher by +0.99% at a new 20-year high. The dollar is shaking off today’s decline in U.S. T-note yields and is moving higher on carry-over support from last Friday’s stronger-than-expected U.S. payroll report of +372,000, which indicated continued strength in the U.S. economy despite the Fed’s interest rate hikes seen thus far.
EUR/USD (^EURUSD) is sharply lower by -1.10% today and posted a new 20-year low. The euro continues to suffer from the ECB’s dovish monetary policy relative to the Fed. The euro also continues to suffer from Europe’s energy crisis as it seeks to disengage from Russian oil and gas.
USD/JPY (^USDJPY) today is up +1.07% at a 1-week high on dollar strength and yen weakness as the LDP’s strong performance in Sunday’s election means that the BOJ’s easy monetary policy is likely to continue.
August gold (GCQ22) this morning is down -5.3 (-0.30%), and September silver (SIU22) is down -0.086 (-0.35%.) Gold is consolidating mildly above last Friday’s 9-1/2 month low. Precious metals are lower on today’s sharp rally in the dollar index to a new 20-year high.
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