14.08.2023: Wall Street likely to trade lower (S&P500, USD, CAD, Bitcoin)

Even though the latest economic data aroused steady risk aversion, Wall Street is not going to give up, searching for new catalysts for optimism. The market will hardly find them on Monday but something may improve sentiment later this week.

The benchmark stock indices closed mixed on Friday. The S&P 500 and the Nasdaq closed with losses for two weeks in a row.
The Dow Jones climbed by 105 points or 0.3%. The Nasdaq showed the weakest performance and closed 0.56% down. The S&P 500 shed 4 points or 0.11% to close at 4,464.
The major stock indices traded on a pessimistic note in the pre-market on Monday, suggesting another gloomy session. Futures on the stock indices lost 0.10-0.15%. The S&P 500 is expected to trade in the intraday corridor between 4,420 and 4,480.
The top stock indices closed the week with mixed results. The Dow Jones grew by 0.6% last week. The Nasdaq and the S&P 500 lost 1.9% and 0.3% respectively.
The culprit of the fall on Friday was the report on US factory inflation released on Friday. The data propelled growth in us Treasuries and affected the high-tech stocks sensitive to interest rates.
The US PPI increased by 0.8% in July from a year ago following a 0.2% growth in the previous month. Producer prices rose amid growing service prices. The reading beat the consensus and assured analysts to revise inflationary pressure.
Traders expect the Federal Reserve to refrain from more monetary tightening by the year end. The chance of a rate hike in September fell to 88.5% from 90% before the PPI report.
Yields of two-year Treasuries which move in line with expectations of short-term interest rates rose to 4.88%.
This dynamic affected high-tech giants. The shares of Tesla, Meta, and Microsoft closed on Friday 0.6-1.3% down.
A 3.6% drop in Nvidia shares sent the semiconductor index down 2.3%, a 5% weekly decline in its worst performance since early April.
Healthcare and energy stocks rose among the S&P’s major sectors. Growth in the energy sector by 1.6% was supported by rising oil prices in light of forecasts by the International Energy Agency of limited supplies.
Occidental Petroleum was among the top gainers, climbing by 3.3% after one of its divisions received a grant from the US government to support its carbon capture ambitions.
US-listed Chinese stocks Alibaba and JD.com tumbled by 3.5% and 5.3%, respectively, as Beijing’s latest stimulus package disappointed investors and fresh data showed that China’s post-pandemic recovery is on the wane.
On Monday, futures for US stock indices tried to stabilize, but they again moved into the red zone before the opening bell. This dynamic was caused by another increase in the yield of Treasury bonds, which again hurt American high-tech giants.
Microsoft, Meta, and Apple lost 0.16-0.5% in premarket.
Tesla shares plunged even sharper by 3.2%. Their price dropped again after the news that the electric car maker cut prices in China on some versions of the Model Y.
The macroeconomic calendar is empty today, and investors prefer a wait-and-see approach in anticipation of more news.
In particular, in the corporate sector, we are talking about important quarterly reports of major US retailers: Walmart and Target. The results of these companies often trigger strong market reactions as they reflect broad consumer sentiment.
According to Refinitiv IBES, 91% of S&P 500 companies reported second-quarter results, and 78.7% reported earnings that surpassed analysts’ expectations. Overall, companies have reported earnings 7.7% above expectations, compared to a long-term average of 4.1%.