Stock futures rise slightly after second-straight negative session

Stock futures rise slightly after second-straight negative session

Stocks rose Tuesday as Wall Street sought stability after another down day for stocks.

The Dow Jones Industrial Average traded 88 points higher, or 0.3%. The S&P 500 advanced 0.3%, and the Nasdaq Composite added 0.6%.

The moves in futures comes as energy prices eased. West Texas Intermediate futures, the U.S. oil benchmark, fell more than 3.5%. Natural gas futures also dipped.

Wall Street is coming off a second-straight decline, with the Dow losing 184 points Monday. The S&P 500 fell 0.67% and the Nasdaq Composite sank 1.02%.

The market has given back some of its summer gains after recent comments by Federal Reserve officials made clear that the central bank aims to continue its rate hikes, even if they cause economic pain.

“Investors are coming to terms with the idea that the Fed is serious about curbing inflation, even as recent data suggests inflation is starting to decline,” said Rod von Lipsey, managing director at UBS Private Wealth Management.

“We believe the market’s summer rally was ephemeral and continue to recommend that investors remain selective and focus on defensive stock sectors like health care and dividend-paying stocks,” von Lipsey added.

On Tuesday, investors will get several updates on the state of the economy, including the Conference Board’s consumer confidence survey for August, and the Bureau of Labor Statistics’ job openings release for July.

Stocks open higher following two straight down days

Stocks opened higher on Tuesday as the major averages attempted to avoid a third straight day of losses. The Dow Jones Industrial Average traded 88 points higher, or 0.3%. The S&P 500 advanced 0.3%, and the Nasdaq Composite added 0.6%.

The stock indexes are still on pace for a down month.

— Tanaya Macheel

Citi expects semiconductors to fall another 25%

Citi believes semiconductors are entering their worst downturn in a decade. 

The firm cited “the recession and inventory build,” in a note Tuesday, pointing to the PC and handset slowdown and the expectation of more cancellations in the auto and industrial markets.

“We maintain our belief that every company/end market will correct and we expect the SOX index to hit new lows and fall another 25%,” analyst Christopher Danely said. 

Roughly 15% will be driven by multiple correction and another 10% by EPS cuts, he added. 

Buybacks accelerated last week, BofA says

Stock buybacks by corporate clients accelerated last week, hitting their highest weekly level since early January, Savita Subramanian of Bank of America wrote in a Tuesday note.

Some of this is likely due to the 1% tax on buybacks set to start next year due to the Inflation Reduction Act, signed into law in August.

So far this year, “corp. client buybacks as a % of S&P 500 market cap are tracking slightly above last year’s levels at this time (0.15% vs. 0.14%) though still below 2019 (pre-COVID) levels (0.23%),” Subramanian wrote.

Earlier in the month, Goldman Sachs’ David Kostin noted that the IRA tax on buybacks would likely create a headwind for share repurchases next year but could boost them for the remainder of 2022. This gives investors a chance to play the trend in the coming months by snapping up shares of companies likely to buy back their own stocks, sending prices higher.

Read more on CNBC PRO.

— Carmen Reinicke

Best Buy pops after earnings

Oil pulls back after jumping in prior session

Oil prices moved lower during morning trading on Wall Street as global growth concerns pressured prices.

West Texas Intermediate crude futures, the U.S. oil benchmark, shed 2.7% to trade at $94.38 per barrel. International benchmark Brent crude declined 3.4% to $101.47 per barrel.

WTI gained 4.24% during Monday’s trading, with Brent advancing 4.06%.

OPEC and its oil-producing allies will meet next week, with the Street not ruling out production cuts.

“As the masters of monetary policies turn from quantitative easing to quantitative tightening the central bank of the oil market goes the other way and plans to launch its own stimulus measures – tightening the production screw,” PVM’s Tamas Varga wrote in a note to clients.

— Pippa Stevens

Elon Musk files another notice to terminate Twitter acquisition

Elon Musk’s legal team has filed another notice to terminate the Tesla CEO’s $44 billion deal to buy Twitter, citing additional reasons to scrap the deal.

That follows allegations from earlier this month by Twitter’s former head of security about “extreme, egregious deficiencies” by the social media firm related to privacy, security and content moderation.

Twitter shares fell about 1% in early morning trading.

— Arjun Kharpal, Tanaya Macheel

Baidu shares rise on strong earnings

Baidu traded 2% higher in the premarket after the Chinese tech company reported quarterly results that beat analyst expectations.

The company earned RMB15.79 per share on revenue of RMB29.65 billion. Analysts expected a profit of RMB10.42 per share on revenue of RMB29.3 billion, according to Refinitiv.

“Despite a challenging macro environment caused by Covid-19, Baidu Core generated RMB23.2 billion in revenues in the second quarter, while Baidu AI Cloud revenues maintained rapid growth momentum of 31% year over year and 10% quarter over quarter,” CEO Robin Li said in a statement.

— Fred Imbert

Bed Bath & Beyond shares pop, adding to Monday’s rally

Shares of Bed Bath & Beyond popped more than 12% in the premarket as traders look ahead to the company’s strategic update later this week. The gain would build on a 24% rally seen Monday. The company’s stock has more than doubled in August, though it’s still down 53% over the past 12 months.

— Fred Imbert

The U.S. needs a ‘miracle’ if it is to avoid a recession: Stephen Roach

The U.S. will be going into a recession unless a “miracle” happens, said Stephen Roach, who was formerly chair of Morgan Stanley Asia.

“We’ll definitely have a recession as the lagged impacts of this major monetary tightening start to kick in,” he told CNBC’s “Fast Money” on Monday. “They haven’t kicked in at all right now.”

“The unemployment rate has got to go probably above 5%, hopefully not a whole lot higher than that. But it could go to 6%,” Roach added.

— Jihye Lee, Stephanie Landsman

CNBC Pro: Strategist reveals why this FAANG stock is a safe bet heading into September

A “seasonally weak” period for equities is just around the corner, and that could mean more volatility for stock markets.

But King Lip, chief strategist at BakerAvenue Wealth Management, believes one FAANG stock could be a safe bet.

Pro subscribers can read the story here.

— Zavier Ong

CNBC Pro: Analyst names the stocks ‘at risk of going to $0’ and 3 top picks, giving one over 80% upside

Stocks burning through cash are about to get hit, says David Trainer, CEO of investment research firm New Constructs.

That’s because interest rates are going to get even higher, which means liquidity will start to dry up, he explained

He tells investors to avoid “zombie” stocks and identifies stronger bets.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Market breadth improved on Monday

Even though Monday was another negative day for stocks, the moves under the surface showed a more orderly market than on Friday.

Declining stocks on the New York Stock Exchange outnumbered advancing names on a 2-to-1 basis.

That is not a great results for bulls looking for a rebound, but it is an improvement over the 6-to-1 ratio from Friday.

— Jesse Pound, Christopher Hayes

Oil prices rebounding in late August

After falling for much of July and August, the price of oil is starting to make a comeback.

Oil prices settled up more than 4% on Monday, and futures for U.S. benchmark West Texas Intermediate crude is now trading above $96 per barrel again.

The volatility in oil prices reflects uncertainty about supply, with the Russia invasion of Ukraine ongoing and OPEC considering output cuts, and demand, with growing concerns about a global recession.

Lower oil prices were also a major reason for cooler inflation readings for the U.S. in recent weeks.

— Jesse Pound

Summer gains slip away

Monday’s market decline deepened the major averages’ losses for August.

With just two sessions to go in August, here’s where the averages stand for the month and relative to key levels.

The Dow is:

  • down 2.27% for the month
  • 7.39% above its June low

The S&P 500 is:

  • down 2.41% for the month
  • 9.92% above its June low

The Nasdaq Composite is:

  • down 3.01% for the month
  • 12.88% above its June low

— Jesse Pound

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