U.S. Stocks Continue To See Significant Weakness After Early Sell-Off

Posted on September 7, 2024 by RTT Staff Writer

After moving sharply lower early in the session, stocks continue to see substantial weakness in afternoon trading on Friday. The major averages have all shown significant moves to the downside after turning in mixed performances in the two previous sessions.

The major averages have climbed off their worst levels in recent trading but continue to post steep losses. The Nasdaq is down 381.91 points or 2.2 percent at 16,745.75, the S&P 500 is down 81.84 points or 1.5 percent at 5,421.57 and the Dow is down 316.53 points or 0.8 percent at 40,439.22.

The sell-off on Wall Street comes amid concerns about the outlook for the U.S. economy after the Labor Department released a closely watched report showing employment rose by less than expected in the month of August.

The Labor Department said non-farm payroll employment climbed by 142,000 jobs in August compared to economist estimates for an increase of 160,000 jobs.

The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs.

Meanwhile, the Labor Department said the unemployment rate edged down to 4.2 percent in August from 4.3 percent in July.

The modest decrease, which was in line with estimates, came after the unemployment rate reached its highest level since October 2021.

While the data is seen as increasing the chances of a 50 basis point interest rate cut by the Federal Reserve later this month, traders seem worried the central bank may have waited too long to prevent the economy from slipping into a recession.

“The large downward revision to payroll gains in the prior two months and the continued narrow concentration in payroll advances underscore that the labor market is losing steam rather quickly,” said Nationwide Chief Economist Kathy Bostjancic.

Sector News

Semiconductor stocks continue to turn in some of the market’s worst performances on the day, with the Philadelphia Semiconductor Index plunging by 4.1 percent to its lowest intraday level in almost a month.

Broadcom (AVGO) has helped lead the sector lower, plummeting by 8.6 percent after reporting better than expected fiscal third quarter results but providing disappointing revenue guidance for the current quarter.

Considerable weakness also remains visible among computer hardware stocks, as reflected by the 2.2 percent slump by the NYSE Arca Computer Hardware Index.

The index has also fallen to a nearly one-month intraday low, as Super Micro Computer (SMCI) is posting a steep loss after JPMorgan downgraded its rating on the server producer to Neutral from Overweight.

Gold, financial and retail stocks seeing notable weakness, while housing stocks are among the few groups bucking the downtrend amid optimism about lower interest rates.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index declined 0.7 percent, while China’s Shanghai Composite Index fell by 0.8 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index tumbled by 1.5 percent, the French CAC 40 Index slumped by 1.1 percent and the U.K.’s FTSE 100 Index slid by 0.7 percent.

In the bond market, treasuries have pulled back off their highs of the session but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 3.719 percent.

Disappointing Jobs Data Leads To Sell-Off On Wall Street

Posted on September 7, 2024 by RTT Staff Writer

With traders reacting negatively the monthly jobs report, stocks moved sharply lower during trading on Friday. The major averages all showed significant moves to the downside on the day, with the tech-heavy Nasdaq tumbling to its lowest closing level in almost a month.

The major averages finished the day near their lows of the session. The Nasdaq plummeted 436.83 points or 2.6 percent to 16,690.83, the S&P 500 plunged 94.99 points or 1.7 percent to 5,408.42 and the Dow slumped 410.34 points or 1.0 percent to 40,345.41.

For the holiday-shortened week, the Nasdaq saw a 5.8 percent nosedive, the S&P 500 plummeted by 4.3 percent and the Dow tumbled by 2.9 percent.

The sell-off on Wall Street came amid concerns about the outlook for the U.S. economy after the Labor Department released a closely watched report showing employment rose by less than expected in the month of August.

The Labor Department said non-farm payroll employment climbed by 142,000 jobs in August compared to economist estimates for an increase of 160,000 jobs.

The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs.

Meanwhile, the Labor Department said the unemployment rate edged down to 4.2 percent in August from 4.3 percent in July.

The modest decrease, which was in line with estimates, came after the unemployment rate reached its highest level since October 2021.

While the data is seen as increasing the chances of a 50 basis point interest rate cut by the Federal Reserve later this month, traders seemed worried the central bank may have waited too long to prevent the economy from slipping into a recession.

Sector News

Semiconductor stocks turned in some of the market’s worst performances on the day, with the Philadelphia Semiconductor Index plunging by 4.5 percent to its lowest closing level in a month.

Broadcom (AVGO) helped lead the sector lower, plummeting by 10.4 percent after reporting better than expected fiscal third quarter results but providing disappointing revenue guidance for the current quarter.

Significant weakness was also visible among gold stocks, which moved lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.7 percent.

Banking stocks also saw considerable weakness on the day, resulting in a 2.6 percent slump by the KBW Bank Index.

Oil service, computer hardware and networking stocks also showed notable moves to the downside, moving lower along with most of the other major sectors.

Other Markets

In the bond market, treasuries fluctuated over the course of the session before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.1 basis points to 3.710 percent, its lowest closing level in over a year.

Looking Ahead

Next week’s trading is likely to be driven by reaction to closely watched reports on consumer and producer price inflation in the month of August.

7-Eleven Owner Rejects $38 Bln Takeover Bid From Alimentation Couche-Tard Citing Undervaluation

Posted on September 7, 2024 by RTT Staff Writer

Seven & i Holdings Co., Ltd, the Japanese owner of convenience store chain 7-Eleven, has rejected a $38 billion takeover bid from Canadian rival Alimentation Couche-Tard.

In a letter addressed to the prospective buyer, Seven & i Holdings said the offer “grossly” undervalued the company and will raise regulatory concerns.

The 7-Eleven owner added, however, that it remains open to negotiations and is ready to consider a better proposal.

“I want to emphasize that the 7&i Board is single-mindedly focused on delivering value for 7&i shareholders and other stakeholders. We are open to sincerely consider any proposal that is in the best interests of 7&i shareholders and other stakeholders; however, we will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns,” Stephen Dacus, the chair of the Seven & i board wrote in a letter addressed to Alain Bouchard, Chairperson of Alimentation Couche-Tard.

“We are open to engaging in sincere discussions should you put forth a proposal that fully recognizes our standalone intrinsic value and addresses our concerns regarding certainty of closing in the current regulatory environment. However, we do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction,” he added.

Alimentation Couche-Tard, which is based in Quebec, runs around 17,000 shops across North America, Europe and Asia under the Circle K and Couche-Tard brands.

The initial offer by the prospective buyer valued Seven & i at $14.86 per share, which represents a premium of more than 20% above its share price before the offer was announced.

7-Eleven is the world’s biggest convenience store chain, with 85,000 outlets across 20 countries and territories.

DOT Investigating Airlines' Rewards Programs

Posted on September 7, 2024 by RTT Staff Writer

The U.S. Department of Transportation had launched an investigation into rewards programs at the four largest airlines over “potential unfair, deceptive, or anticompetitive practices.”

As part of the investigation, U.S. Secretary of Transportation Pete Buttigieg has sent letters to American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines ordering them to provide records and submit reports with detailed information about their rewards programs, practices, and policies.

DOT’s probe is focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.

“Points systems like frequent flyer miles and credit card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings,” said U.S. Transportation Secretary Pete Buttigieg.

“These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones. But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value. Our goal is to ensure consumers are getting the value that was promised to them, which means validating that these programs are transparent and fair,” Buttigieg added.

Airline rewards points are typically earned by making purchases with the airline’s co-branded credit card, by flying on the airline or its partners, or by other activities specified by the airline or its credit card partner.

Rewards points can be redeemed for flights, upgrades, ancillary services, or third-party products and services. In many rewards programs, customers can also earn status by reaching certain benchmarks by accruing rewards points, taking qualifying flights, and/or hitting spending targets. Rewards customers receive complimentary perks like bonus miles, service upgrades, or lounge access that increase in number and value with each status level.

Asian Markets Mostly Higher Ahead Of Jobs Report

Posted on September 6, 2024 by RTT Staff Writer

Asian stock markets are trading mostly higher on Friday, following the mixed cues from Wall Street overnight, as traders cautiously await the closely watched monthly US jobs report later in the day for further cues on the outlook for interest rates. Lingering concerns about the outlook for growth in the world’s largest economy is weighing on market sentiment. Asian markets ended mixed on Thursday.

The Australian stock market is notably higher on Friday, adding to the gains in the previous session, following the mixed cues from Wall Street overnight. The benchmark S&P/ASX 200 is moving above the 8,000 mark, with gains in gold miners and financial stocks partially offset losses in energy stocks.

The benchmark S&P/ASX 200 Index is gaining 41.90 points or 0.53 percent to 8,024.30, after touching a high of 8,027.50 earlier. The broader All Ordinaries Index is up 38.60 points or 0.47 percent to 8,226.30. Australian markets ended modestly higher on Thursday.

Among major miners, BHP Group and Rio Tinto are edging down 0.1 percent each, while Mineral Resources and Fortescue Metals are edging up 0.1 to 0.5 percent each.

Oil stocks are mostly lower. Woodside Energy is down more than 1 percent, Santos is edging down 0.3 percent and Beach energy is losing almost 2 percent, while Origin Energy is gaining more than 1 percent.

Among tech stocks, Afterpay owner Block is edging up 0.3 percent and Zip is gaining almost 1 percent, while WiseTech Global is edging down 0.1 percent, Xero is losing almost 1 percent and Appen is declining almost 2 percent.

Among the big four banks, Commonwealth Bank, ANZ Banking and Westpac are gaining almost 1 percent each, while National Australia Bank is edging up 0.4 percent.

Gold miners are mostly higher. Evolution Mining and Northern Star Resources are gaining almost 1 percent each, while Newmont and Gold Road Resources are edging up 0.3 percent each. Resolute Mining is adding more than 1 percent.

In the currency market, the Aussie dollar is trading at $0.673 on Friday.

Extending the losses in the previous three sessions, the Japanese stock market is modestly lower in choppy trading on Friday after opening in the green, following the mixed cues from Wall Street overnight. The benchmark Nikkei 225 is falling below the 36,600 level, with gains in some index heavyweights partially offset by weakness in exporters, financial and technology stocks.

The benchmark Nikkei 225 Index closed the morning session at 36,568.05, down 89.04 points or 0.24 percent, after hitting a low of 36,480.64 and a high of 36,898.28 earlier. Japanese stocks closed significantly lower on Thursday.

Market heavyweight SoftBank Group is losing almost 1 percent, while Uniqlo operator Fast Retailing is gaining almost 2 percent. Among automakers, Honda is edging down 0.3 percent and Toyota is losing more than 2 percent.

In the tech space, Advantest and Screen Holdings are losing more than 2 percent, while Tokyo Electron is declining 2.5 percent.

In the banking sector, Mitsubishi UFJ Financial and Sumitomo Mitsui Financial are edging down 0.3 percent each, while Mizuho Financial is losing almost 2 percent.

Among major exporters, Mitsubishi Electric is losing almost 2 percent, Sony is declining almost 3 percent, Canon is down almost 1 percent and Panasonic is slipping more than 1 percent.

Among other major gainers, M3 is surging almost 7 percent, Shiseido is gaining more than 5 percent, Aeon is adding more than 4 percent and Konami Group is advancing more than 3 percent, while Meiji Holdings and Sekisui House are up almost 3 percent each.

Conversely, Rakuten Group and Daikin Industries are declining more than 4 percent each, while SMC and Keyence are losing almost 4 percent each. Kawasaki Heavy Industries, Hitachi Zosen, Hitachi, Mercari and Mitsubishi Heavy Industries are declining more than 3 percent each, while Disco, Mazda Motor, JFE Holdings, Nippon Steel and Furukawa Electric are down almost 3 percent each.

In economic news, the average of household spending in Japan slipped a seasonally adjusted 1.7 percent on month in July, the Ministry of Internal Affairs and Communications said on Friday – coming in at 290,931 yen. That missed forecasts for a decline of 0.2 percent following the 0.1 percent increase in June.

On a yearly basis, household spending added 0.1 percent – again shy of expectations for an increase of 1.2 percent following the 1.4 percent contraction in the previous month. The average of monthly income per household stood at 694,483 yen, up 5.5 percent on year.

In the currency market, the U.S. dollar is trading in the lower 143 yen-range on Friday.

Elsewhere in Asia, Taiwan is up 1.3 percent, while China, Hong Kong, Singapore and Indonesia are higher by between 0.2 and 0.7 percent each, while New Zealand, South Korea and Malaysia are lower by between 0.3 and 0.7 percent each.

On Wall Street, stocks turned in another mixed performance during trading on Thursday after ending yesterday’s lackluster session narrowly mixed. While the S&P 500 closed lower for the third straight session, the tech-heavy Nasdaq ended the day in positive territory.

The Nasdaq bounced back and forth across the unchanged line before eventually closing up 43.37 points or 0.3 percent at 17,127.66. Meanwhile, the S&P 500 fell 16.66 points or 0.3 percent to 5,503.41 and the Dow slid 219.22 points or 0.5 percent to 40,755.75.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index slid by 0.9 percent, the U.K.’s FTSE 100 Index fell by 0.3 percent and the German DAX Index edged down by 0.1 percent.

Crude oil prices settled lower on Thursday due to concerns about the outlook for demand, although the downside was limited by reports that OPEC has postponed plans to boost production next month. West Texas Intermediate Crude oil futures for October ended down by $0.05 at $69.15 a barrel, the lowest settlement in about nine months.

European Economic News Preview: Germany Industrial Output, Foreign Trade Data Due

Posted on September 6, 2024 by RTT Staff Writer

Industrial production and foreign trade from Germany and house prices from the UK are the top economic news due on Friday.

At 2.00 am ET, Destatis is scheduled to issue Germany’s industrial production and foreign trade figures for July. Economists forecast production to fall 0.4 percent on month, following a 1.4 percent increase in June. The trade surplus is seen at EUR 21 billion compared to EUR 20.4 billion in June.

At 2.45 am ET, France statistical office INSEE publishes external trade and current account figures. Economists expect industrial production to fall 0.3 percent on month, in contrast to the 0.8 percent increase in June.

At 4.00 am ET, Italy’s ISTAT is set to issue retail sales data. Sales are expected to gain 0.1 percent on month, reversing a 0.2 percent fall in June.

At 5.00 am ET, Eurostat is set to issue euro area revised GDP data. The initial estimate showed that the economy grew 0.3 percent sequentially in the second quarter.

Track market moving Economic Events that impact Commodities, Stock, and Forex by using realtime RTTNews Economic Calendar this week.

Delta Cycle Recalls Ceiling Hoists With Straps

Posted on September 6, 2024 by RTT Staff Writer

Randolph, Massachusetts-based Delta Cycle Corp. is recalling about 25,140 units of Ceiling Hoists with Straps citing risk of injury, according to the U.S. Consumer Product Safety Commission. In addition, about 3,390 units were sold in Canada.

The recall involves Ceiling Hoists with Straps with model number RS2300 and various serial numbers. The product can lift bicycles, kayaks, ladders, boxes and other large objects off the floor using a pulley system.

The impacted units were manufactured in China and sold at REI and various other independent stores, and online at Amazon.com and designbydelta.com from February 2017 through July 2024 for about $40.

The agency noted that plastic buckles on the straps being used to hold a kayak, canoe or other large objects with the ceiling hoist can break, posing an injury hazard to consumers.

The recall was initiated after the firm received four reports of incidents, including one minor injury. No recall action is required if the ceiling hoists are used without the use of straps.

Consumers are urged to stop using the Ceiling Hoist with Straps and contact Delta Cycle Corp to receive free replacement straps.

In similar recalls, Marlborough, Massachusetts-based BJ’s Wholesale Club in mid August called back about 32,500 units of Berkley Jensen Gazebos citing injury risk.

Shawshank LEDz in mid-August called back about 9,600 units of Squeeze Plush Ball Monsters Toys and Easter Squeezable Toys due to risk of injury.

German Industrial Production Drops More Than Forecast; Trade Surplus Falls

Posted on September 6, 2024 by RTT Staff Writer

Raising fears of a recession, Germany’s industrial production declined more than expected in July on weaker automotive output and the trade surplus contracted in July as the growth in imports exceeded the rise in exports.

Industrial production decreased 2.4 percent month-on-month in July, in contrast to the increase of 1.7 percent in June, Destatis reported Friday. Output was forecast to fall 0.4 percent.

In three months to July, industrial production was 2.7 percent lower than in the same period last year.

Data showed a significant 8.1 percent fall in the automotive industry. The manufacture of electrical equipment and the manufacture of fabricated metal products also fell 7.0 percent and 3.8 percent, respectively.

Excluding energy and construction, industrial output was down 3.2 percent on month and declined 6.1 percent annually.

Output of capital goods slid 4.2 percent and that of intermediate goods dropped 2.8 percent. Consumer goods output was down 1.2 percent.

There was a decrease of 1.9 percent in energy production, while production in construction gained 0.3 percent.

Year-on-year, the decline in industrial output deepened to 5.3 percent from 3.7 percent in the previous month.

ING economist Carsten Brzeski said a fall in German industrial production in July not only brings a weak start to the third quarter but is another illustration of how difficult it will be to bring the economy back to strong growth.

Capital Economics’ economist Franziska Palmas said the big drop in German industrial production in July adds to the sense that the sector is facing a deep crisis.
As the economy contracted in the second quarter, it may fall back into a technical recession in the third quarter, the economist noted.

Another data from Destatis showed that exports rebounded 1.7 percent on a monthly basis, reversing a 3.4 percent fall in June. This was also faster than economists’ forecast of 1.2 percent gain.

However, imports grew at a much faster pace of 5.4 percent after a 0.2 percent rise in June. Economists had forecast a 0.3 percent increase.

As a result, the trade surplus declined to EUR 16.8 billion in July from EUR 20.4 billion in the previous month. The expected surplus was EUR 21.0 billion.

On a yearly basis, exports advanced 5.4 percent, reversing June’s 8.2 percent decrease. Likewise, imports moved up 4.8 percent, following a 9.2 percent drop in the previous month.

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UK House Price Growth Strongest Since Late 2022

Posted on September 6, 2024 by RTT Staff Writer

UK house prices grew the most since late 2022 as easing borrowing costs boost confidence among prospective homebuyers, data published by the mortgage lender Halifax showed Friday.

House prices logged an annual growth of 4.3 percent in August, following a 2.4 percent rise in the preceding period. This was the fastest growth since November 2022 and also exceeded economists’ forecast of 4.2 percent.

On a monthly basis, house price growth more than halved to 0.3 percent from 0.9 percent in July. However, this was slightly bigger than the forecast of 0.2 percent and also marked the second consecutive rise.

Halifax Head of Mortgages Amanda Bryden said the annual growth was largely due to the comparison with weaker growth this time last year.

Bryden said, “Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates.”

Homebuyers’ optimism is reflected in the latest mortgage approval figures, which is at their highest level in almost two years.

With market activity picking up and the possibility of further interest rate reductions to come, house prices are expected to continue their moderate growth through the remainder of this year, added Bryden.

At the August meeting, the BoE had lowered its benchmark rate for the first time since the onset of the coronavirus pandemic. The bank rate was reduced by 25 basis points to 5.00 percent from 5.25 percent, which was the highest since early 2008.

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Yen Rises As European Shares Traded Lower Ahead Of Key U.S. Jobs Data

Posted on September 6, 2024 by RTT Staff Writer

The Japanese yen strengthened against other major currencies in the European session on Friday, as European stock markets traded lower amid growth worries persisting ahead of the crucial U.S. jobs report due later in the day.

The labor market report could steer the Federal Reserve’s interest-rate decision in the remaining months of 2024.

Across the Atlantic, traders eagerly await the monthly jobs report, which includes both public and private sector jobs, for additional clues on the outlook for interest rates and the economy.

Economists currently expect employment to climb by 160,000 jobs in August after an increase of 114,000 jobs in July.

The unemployment rate is expected to edge down to 4.2 percent after rising to 4.3 percent in July, reaching its highest level since October 2021.

The U.S. payrolls report coupled with comments from Federal Reserve officials including John Williams and Christopher Waller might provide clearer insight into the potential scale of an anticipated rate cut this month.

The safe-haven currency or the yen traded lower against its major rivals in the Asian trading today.

In the European trading today, the yen rose to a 1-month high of 157.92 against the euro, nearly a 4-week high of 187.26 against the pound and nearly a 3-week high of 169.01 against the Swiss franc, from early lows of 159.41, 189.09 and 170.00, respectively. If the yen extends its uptrend, it is likely to find resistance around 154.00 against the euro, 180.00 against the pound and 167.00 against the franc.

Against the U.S. and the New Zealand dollars, the yen advanced to nearly a 5-week high of 142.05 and more than a 2-week high of 88.39 from early lows of 143.80 and 89.29, respectively. On the upside, 139.00 against the greenback and 87.00 against the kiwi are seen as the next resistance levels for the yen.

Against the Australia and the Canadian dollars, the yen jumped to more than 4-week highs of 95.59 and 105.24 from early lows of 96.73 and 106.27, respectively. The yen is likely to find resistance around 90.00 against the aussie and 103.00 against the loonie.

Looking ahead, Canada Ivey’s PMI for August, Canada and U.S. jobs data for August and U.S. weekly Baker Hughes oil rig count data are slated for release in the New York session.