Critical information for the U.S. trading day
It’s Nvidia earnings day, with stock futures, notably tech, and the AI leader’s shares rising ahead of Wednesday’s open. It’s fair to say a lot is riding on those results, while the Fed’s Jackson Hole end-week gathering is keeping others on edge.
Weighing in on the recent pullback, Goldman Sachs last week told clients that the market had shifted from buy the dip, to sell the rally, and flagged a change in “tone and sentiment.”
Considering the stock run-up seen so far in 2023, and after last year’s painful losses, it doesn’t seem unusual that investors may want to cash in on some gains.
There’s more dip advice in our call of the day from a team at HSBC led by chief multi-asset strategist Max Kettner, who advises against investors getting tempted by the broad-based sell-off across major asset classes over the past two weeks. That’s as they note the pullback has been “extremely tough ” to hedge against.
“We wouldn’t jump right back in just yet — after all this week’s US. Treasury and [inflation-protected bonds] supply and Jackson Hole’s focus on ‘Structural Shifts in the Global Economy’ could easily result in another broad-based sell-off, in our view,” the HSBC team told clients.
Now should that happen, they include an exception to that advice, suggesting investors use any further selling to scale up further in U.S. equities.
“Investment-grade, high-yield and even emerging market credit has held up much
better comparatively in this correction. So we’d see a bigger recovery potential
in U.S. equities, given our unchanged view on growth, inflation and fundamentals overall,” said the team.
The strategists note that “fundamentally, nothing’s changed in the last two weeks — rather the U.S. economy is going from strength to strength,” they say. That’s against the backdrop of a “dramatic” shift of near-term U.S. GDP growth expectations.
“What’s changed of course is the market’s reading on this. Stable growth, range-bound yields and continued disinflation have been the recipe for a goldilocks market environment so far. But with growth defying recessionary expectations and long-end yields pushing to new cycle-highs, this has now been severely disrupted,” said Kettner and co.
The team say they are closely watching both U.S. bond supply and Jackson Hole, alongside sentiment and positioning that has overall become more neutral in the past two weeks. “We still don’t think the correction since late-July will be a large-scale sell-off, though, given that positioning among discretionary investors is fairly low again,” they said.
The markets
Stocks are rising after a bounce for equities fizzled out on Tuesday. Treasury yields are dropping after data showed weak Europe economic activity. Asia stocks were mixed, with China’s CSI 300 lower.
The buzz
Foot Locker stock FL is down 26% after a profit warning and news the sportswear retailer will suspend its dividend. Shares of Adidas XE:ADS, Nike NKE and Puma XE:PUM are also taking hits.
Bath & Body Works’ BBWI stock is off 7% after cutting its earnings and sales outlook. That comes after weak results from department store chain Macy’s M, which says credit-card delinquencies are on the rise.
Peloton shares PTON are down 18% after a disappointing revenue outlook from the maker of connected fitness equipment and disclosure of higher costs from a recall.
Advance Auto Parts AAP shares are up 6% after the retailer launched a strategic review and named a new CEO.
Due after the close, Nvidia NVDA results will offer the first true look at AI profitability. On the eve of those earnings, fund manager Cathie Wood sold over $1 million in Nvidia stock. Data storage manager NetApp NTAP and software group Autodesk will also report later.
Read: How Nvidia’s Jensen Huang may be driving Fed rate-hike expectations
Fresh data showed demand for home purchasing and refinancing has dropped mortgages surge to the highest since 2000. The S&P flash U.S. manufacturing and services PMIs came in lower than expected and new home sales were in higher than expected.
The “highest vote” ever of UPS UPS approve a five-year contract that averted a strike of 340,000 workers.
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The chart
A very long stock-market correction? That’s what this tweet from Nick Maggiulli, chief operating officer for Ritholtz Wealth Management and creator of the Dollars and Data blog, is saying:
The tickers
These were the top tickers on MarketWatch as of 6 a.m.
| Ticker | Security name |
| AMC | AMC Entertainment |
| TSLA | Tesla |
| NVDA | Nvidia |
| APE | AMC Entertainment preferred shares |
| GME | GameStop |
| NIO | Nio |
| TTOO | T2 Biosystems |
| MULN | Mullen Automotive |
| MANU | Manchester United |
| AAPL | Apple |
https://www.marketwatch.com/story/if-markets-sell-off-again-get-ready-to-buy-u-s-stocks-says-hsbc-f8a3d70?&mod=home-page
