Moderating energy prices, soft landing hope spurred market this week, Hackett of Nationwide says
Though markets are on pace for a positive week, it’s been a bumpy ride.
“Markets have been pressured by the gradual realization that the Fed is resolved to focus on inflation at the expense of growth and employment, but this week saw optimism over moderating energy prices and hope for a soft landing,” said Mark Hackett, chief of investment research at Nationwide.
“The week had a notably “risk-on” tone, with the strength in aggressive growth, technology, and Bitcoin,” he added.
Going forward, all eyes will be on next week’s consumer price index report, he said.
“Markets bounced from oversold conditions, though next week will be critical to see if the “sell the rally” mindset of investors remains or if sentiment and momentum are poised to turn,” said Hackett.
Fed’s Waller backs ‘another significant increase’ in interest rates this month
Federal Reserve Governor Christopher Waller said he sees a “significant” interest rate hike likely when the central bank meets Sept. 20-21.
With markets widely expecting a 0.75 percentage point increase in the benchmark funds rate, Waller said in Vienna that the decision should be “straightforward” though he did not commit to a specific level. He also encouraged his colleagues to abandon “forward guidance” about the future of policy and instead to let data dictate the approach.
“Looking ahead to our next meeting, I support another significant increase in the policy rate,” he said. “But, looking further out, I can’t tell you about the appropriate path of policy. The peak range and how fast we will move there will depend on data we will receive about the economy.
The Fed has approved consecutive three-quarter point increases, the sharpest moves in policy since the central bank began using the funds rate as its primary policy tool more than 30 years ago.
Waller’s comments echo sentiments from his colleagues, who are determined to bring inflation down from its highest peak in more than 40 years.
Stocks higher at midday, on track to break 3-week slump
All three major averages were higher in midday trading Friday, on track to break a three-week losing streak.
The Dow Jones Industrial average rose nearly 300 points, or 0.94%. The S&P 500 and the Nasdaq gained 1.19% and 1.70%, respectively.
— Carmen Reinicke
S&P 500 on track to close above 50-day moving average
With Friday’s gains, the S&P 500 is on pace to close above its 50-day moving average level of 4,030.22 for the first time since Aug. 31, on an intraday basis.
In addition, the Nasdaq Composite is currently trading above its own 50-day level of 12,065.64 for the first time since Aug. 31 on an intraday basis. Russell 2000 small caps are on pace to close above their 50-day level for the first time since Aug. 30.
The Dow is currently lagging its moving average but moving towards it with today’s gains. The index hasn’t traded above its 50-day moving average level of 32,206.17 on an intraday basis. since Aug. 30
—Carmen Reinicke, Gina Francolla
All S&P 500 Sectors Positive
All sectors on the S&P 500 were positive Friday as the market looks to shake off three weeks of declines. Consumer services was up nearly 2%, boosted by Dish Network and Warner Brothers Discovery, up nearly 6% and 3.3%, respectively.
On the Dow Jones Industrial Average, all sectors were in the green as well, with producer manufacturing leading the index.
On the Nasdaq, all sectors except for communications were positive.
– Carmen Reinicke
CNBC’s Next Gen 50 up nearly 9% this week
CNBC’s Next Gen 50, a basket of stocks tied to next generation companies, is up 8.8% this week and on pace for its best weekly performance since Aug. 5.
Leaders of the group include Lyft and ChargePoint, which are both up more than 20% this week. Coinbase, 23andMe, DocuSign, Roblox and Upstart are all up more than 15% in the same timeframe.
— Carmen Reinicke, Gina Francolla
Stocks jump at market open as Wall Street aims to break 3-week slump
U.S. stocks rose Friday as Wall Street looks to notch its first positive week in four.
The Dow Jones Industrial Average rose by 175 points, or 0.55%. The S&P 500 and Nasdaq Composite climbed 0.7% and 0.91%, respectively.
– Carmen Reinicke
Former Fed Vice Chair Clarida expects funds rate to rise to 4%
Richard Clarida think his former colleagues at the Federal Reserve aren’t just spouting rhetoric about fighting inflation, and will back up the talk with more action.
“I think you’ve got to believe the Fed,” Clarida, the central bank’s vice chairman from 2018 until Jan. 10 of this year, told CNBC’s “Squawk Box” in a live interview Friday. “The message I get is very clear: Failure is not an option for [Chairman] Jay Powell.”
In terms of what that will mean for policy, he sees the fed funds rate benchmark climbing well above its current targeted range between 2.25%-2.5%. Clarida said he has been surprised at how unified policymakers are in their quest to use rate increases to bring down inflation.
“I think they’re going to 4% hell or high water, if I had to put it into two boxes,” he said. “Inflation is way too high.”
The rate-setting Federal Open Market Committee meets Sept. 20-21, with markets widely anticipating a third consecutive 0.75 percentage point rate increase. Futures traders, however, are expecting the committee to stop short of a 4% funds rate next year.
In an appearance Thursday, Powell said he is “strongly committed” to bringing down inflation and will keep going “until the job is done.”
Investor sentiment falls again
Investor sentiment dropped again this week, with just 18.1% of respondents telling AAII they are bullish in the latest survey, down from 21.9% last week. Meanwhile, 53.3% of investors said they were bearish, up from 50.4% in the previous week.
This continues an abnormally long streak of bearishness. The bull/bear spread has been negative for 23 straight weeks, which the second-longest streak on record, according to Bespoke Investment Group.
— Jesse Pound
Scott Minerd calls for the S&P 500 to drop 20% by mid-October
Don’t cheer this rebound as the bear market is still intact and a big sell-off is around the corner, said Scott Minerd, global chief investment officer at Guggenheim Partners.
“This is seasonally the worst time of the year,” Minerd said on Thursday’s “Closing Bell Overtime.” “Given the recent strength of the last few days, it appears that people are ignoring the macro backdrop, monetary policy backdrop, which would basically indicate that the bear market is intact. Given where seasonals are and how far out of line we are historically with where the P/E is, we should see a really sharp adjustment in prices really fast.”
The widely followed strategist called for the S&P 500 to decline 20% from here by mid-October, and he said it could be a buying opportunity for traders if and when the equity benchmark falls to the range of 3,000 to 3,400.
— Yun Li
Bernstein downgrades Virgin Galactic to sell
Bernstein downgraded shares of Virgin Galatic to underweight as the company delays its commercial space flights.
“Although we saw substantial risk for Virgin Galactic when we launched coverage, we believe the situation for the company has deteriorated over time,” wrote analyst Douglas Harned in a note to clients.
CNBC Pro subscribers can read more on the downgrade here.
A negative EPS revision cycle will drive the next leg down: Wolf Research
Wolf Research believes bear markets come in phases.
The first has been about investors “coming to grips with the amount of central bank tightening that’s likely to occur, which has driven down valuations,” analysts wrote in a note Friday.
They expect the second leg down to be driven by falling global growth expectations and a negative earnings-per-share revision cycle. Over the past three months, overall S&P 500 operating EPS estimates have come down quite modestly, they noted.
— Michelle Fox
Biggest market movers in the premarket
Check out some of Friday’s biggest moves before the bell:
DocuSign — Shares of the electronic signature company surged 16.4% after DocuSign’s shared strong guidance for the third quarter and reported a top and bottom line beat in the recent period.
Zscaler — Zscaler’s stock soared 14.1% after posting strong results for the recent quarter. The cloud security company reported adjusted earnings of 25 cents a share on $318 million in revenue.
Tesla — Tesla shares rose 1.3% in the premarket following news that the electric vehicle maker is considering building a lithium refinery for EV battery production in Texas this year, according to an application filed with the Texas Comptroller’s Office.
— Samantha Subin
Bitcoin rallies past key $20,000 level
Bitcoin jumped almost 9% early Friday to above $21,000, after it fell earlier in the week below $19,000, its lowest level since June. The surge coincided with a rally in stock futures. Bitcoin has become a macro-driven asset and its correlation with stocks is the highest it’s ever been.
At 7:30 a.m. ET bitcoin was higher by 8.8% at $20,996.06.
The move came after Securities and Exchange Commission chair Gary Gensler gave remarks Thursday saying he would give the Commodity Futures Trading Commission the authority to regulate non-security cryptocurrencies like bitcoin.
There’s also been an uptick in sentiment in the crypto market ahead of Ethereum’s scheduled “merge” next week, which is expected to bring bigger yields and draw new investors into the market. The price of ether rose about 4% early Friday to $1,705.74.
— Tanaya Macheel
Regeneron could rally another 20% from here, Morgan Stanley says
Morgan Stanley is betting shares of Regeneron have more upside, even after Thursday’s massive rally. Analyst Matthew Harrison upgraded the stock and said it could gain another 20% from current levels.
“Overall, we now see REGN as the preferred large cap growth name supported by a range of products delivering durable revenues and an advancing oncology pipeline with the potential to diversify the base business,” Harrison said.
Regeneron shares rallied about 19% on Thursday on the back of positive drug trial results.
— Fred Imbert, Sam Subin
Oil prices regain after slip from demand concerns
Oil prices rose on Friday as traders weighed Russia’s threat to halt energy exports, and central banks’ aggressive rate hikes.
Prices are also supported as the Biden administration is not considering new releases of reserves from the U.S. Strategic Petroleum Reserve (SPR).
— Lee Ying Shan
Japanese yen strengthens after comments from officials
The Japanese yen strengthened as much as 1% following commentary from officials, including Bank of Japan Governor Haruhiko Kuroda who called the currency’s rapid moves “undesirable.”
Kuroda’s comments come after his meeting with Prime Minister Fumio Kishida where the two discussed recent currency moves, Reuters reported.
Earlier, Finance Minister Shunichi Suzuki also said the government would not rule out any options on foreign exchange moves, which the minister has repeatedly described as “rapid and one-sided.”
CNBC Pro: Uranium is ‘on a tear’ right now. Here are two ETFs to play it
One niche area of the commodity market — uranium — has been a bright spot over the past month, with its performance outpacing even that of the broader energy sector.
Two ETFs have surged in recent weeks, as the West scrambles to reduce its reliance on Russian energy.
— Weizhen Tan
Major averages on pace to snap 3-week losing streak
After notching their second straight positive session on Thursday, all three major averages are on track to snap a 3-week losing streak.
Here are where markets stand week to date:
- The Dow Jones Industrial Average is up 1.45%
- The S&P 500 is up 2.09%
- The Nasdaq Composite is up 1.99%
— Sarah Min
DocuSign shares surge on earnings
Shares of DocuSign soared more than 18% after the electronic agreements company surpassed earnings expectations, and issued a better-than-expected third-quarter revenue forecast.
DocuSign reported earnings of 44 cents per share on revenue of $622 million. Analysts surveyed by Refinitiv forecasted earnings of 42 cents per share on revenue of $602 million.
— Sarah Min
Number of bullish newsletter editors slides below 30%, Investors Intelligence weekly survey says
The latest weekly reading from the Investors Intelligence survey of newsletter editors showed the number of bulls sliding to 29.7% from 38.4% last week and a recent 2022 high of 45.1%.
The percentage of bearish newsletters also stood at 29.7% in the latest survey vs 30.1% the week before and a mid-June high of 44.1%.
The number in the correction camp jumped to 40.6% from 31.5% last week and just 25.3% the prior week.
As a result, the “bull-bear spread” narrowed to 0, snapping a 6-week run when bulls outnumbered bears. A lower number means risk is falling and a rising number means risk is increasing, according to contrarians who keep close tabs on the II numbers in order to gauge investor sentiment.
— Scott Schnipper
U.S. stock futures open little changed
U.S. stock futures opened little changed following a choppy session in the major averages as Wall Street considered the pace of future interest rate hikes.
Dow Jones Industrial Average futures rose by 23 points, or 0.07%. S&P 500 and Nasdaq 100 futures climbed 0.08% and 0.13%, respectively.
— Sarah Min