US stock futures dip as investors eye Big Tech earnings, while Asian equities slide on escalating Chinese clampdowns

wall street new york stock exchange
  • Global stock markets traded lower on Tuesday as investors moved into wait-and-see mode.
  • Alibaba and Meituan shares slide in Hong Kong, on worries about China’s regulatory crackdowns.
  • The US rise in COVID-19 cases could prompt the Fed to stick to its pace of asset purchases, a strategist said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks looked poised to open slightly lower on Tuesday as investors focus on earnings reports from major technology companies, while Asian equities slid on concerns about China’s clampdowns on key industry sectors.

Futures on the Dow Jones, S&P 500, and Nasdaq fell as much as 0.4%, suggesting the indexes will trade lower when markets open later in the day.

Tesla reported earnings well above analyst estimates on Monday afternoon, with quarterly revenue at $11.95 billion, compared with an expected $11.36 billion. Its stock was changing hands almost 3% higher in Tuesday’s premarket session.

The Big Tech companies scheduled to report results on Tuesday are Apple, Microsoft, and Alphabet, expected to post after the market close. Also on the docket are Visa, UPS, Starbucks, and General Electric. More than one-third of the S&P 500 companies are expected to post earnings this week, with Facebook due on Wednesday.

Wall Street has moved into a wait-and-see mode ahead of US Big Tech earnings and the Federal Open Markets Committee policy meeting, which starts today, Jeffrey Halley, a senior market analyst at OANDA, said in a note.

The US recently reported an average of nearly 50,000 COVID-19 cases in all 50 states. This could give the doves on the FOMC an extra bit of leeway in sticking to the Federal Reserve’s current pace of quantitative easing, even though the economy exited recession 15 months ago, according to Danielle DiMartino Booth, chief strategist at Quill Intelligence.

“We expect Jay Powell to reiterate that the tapering discussion is underway, but that it’s too soon to reveal a specific date on when the initial curtailment of asset purchases will begin,” Quill CEO Booth said, referring to the Fed chair.

“Because home prices have risen at a blistering double-digit pace for 13 straight months, there is a risk of a dissent on the FOMC in this week’s meeting,” she added.

Markets in Asia remained under pressure as investors worried about the escalating regulatory crackdowns in China. The technology sector was the first to bear the brunt of stepped-up rules, followed by the after-school education and property-development sectors.

The Hang Seng, Hong Kong’s benchmark index, fell 4.4% to log its third day of declines, and the Shanghai Composite lost 2.4%, as investors brace for more companies to be affected by new regulations. Meanwhile, Tokyo’s Nikkei rose 0.4%.

Shopping platform provider Meituan and e-commerce giant Alibaba were the biggest decliners in Hong Kong, dropping 16.1% and 5.5% respectively, as Chinese regulators called for steps to ensure food-delivery workers make at least the local minimum wage. Food-delivery platforms in the region have drawn criticism over their treatment of delivery workers, most of which aren’t covered by basic social and medical plans.

“The repricing of China regulatory risk is likely to continue for some time yet,” Halley said.

European sentiment was largely hit by weakened Asian markets, although the UK reported its fastest weekly reduction in COVID-19 cases since April 12. London’s FTSE 100, Euro Stoxx 50, and Frankfurt’s DAX each declined 0.4%.

Bitcoin reversed gains in the previous session, falling 4% to around $37,000 after Amazon denied speculation about its specific plans for cryptocurrencies. That brings bitcoin’s year-to-date gains to 28%, though the coin is still about 42% below its high of nearly $65,000 in mid-April.

Read More: We asked 10 crypto traders to show us the apps they use on their phone to trade, track prices, and read news

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US stock futures slip ahead of Tesla earnings in the wake of Asia’s rout, while bitcoin surges past $38,000

Traders work on the floor of the New York Stock Exchange (NYSE)

US stocks looked set to open in the red on Monday ahead of Tesla’s second-quarter earnings, as Asian equities plunged to a yearly low over tighter government regulations.

Futures on the Dow Jones, S&P 500, and Nasdaq fell 0.3%, suggesting a lower start to trading later in the day.

Over one third of the S&P 500 companies are set to report earnings results this week, including the biggest tech firms. Elon Musk’s electric-vehicle maker kicks off on Monday, followed by Alphabet, Apple, Microsoft on Tuesday, and Facebook on Wednesday.

Asian markets returned from the weekend on a weaker footing given the series of regulatory crackdowns in China. The tech sector has already been under pressure in recent weeks. But the government has now turned its eye to the education and property sectors. The Communist Party said it would notably improve irregularities in the property market within three years.

New rules could also bring reform to the education tech sector, banning companies that teach school subjects from making profits, raising capital, or going public. This has been implemented to reduce financial pressure on families, and incentivize them to have more children.

“Given that the China tech crackdown has already frayed investors nerves along with credit concerns, particularly in the property development sector, the last moves by the central government in the education sector, which threaten to wipe out billions of dollars by overseas investors, is another ratchet higher in the regulatory risk landscape in China,” Jeffrey Halley, a senior market analyst at OANDA, said.

Hong Kong’s Hang Seng fell 3.8%, the Shanghai Composite fell 2.3%, while Tokyo’s Nikkei rose 1%.

Separately, shares in Chinese tech firm Tencent fell 3% after the government ordered it to give up exclusive music-streaming rights with record labels around the world after finding it violated anti-trust laws.

European stocks also retreated as investors awaited the Federal Reserve’s meeting on Wednesday for clues on the outlook for US monetary policy, including the timing of when the central bank might begin tapering its asset purchases.

German business sentiment fell unexpectedly in July over concerns over the supply chain and rising coronavirus infections in the region.

London’s FTSE 100 fell 0.2%, the Euro Stoxx 50 fell 0.4%, and Frankfurt’s DAX fell 0.4%, reflecting a degree of underperformance in German equities relative to the rest of the region.

Bitcoin surged to top $38,000 after a string of bullish developments, including talk of Amazon getting involved with digital currencies.

“Given the might of Amazon Web Services, it isn’t surprising that the tech giant wants to be at the cutting edge of new payments technology and establishing a new digital currency is likely to be on the agenda,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said. “But the expectation that payment may also be accepted from the current crypto kids on the block has also led to a spike in their value.”

Ethereum rose 7% to $2,343, and dogecoin jumped 11% to 22 cents.

Read More: UBS lays out the 7 space stocks set to lift off in a sector it says will double in size to $900 billion by 2030 – including 1 that could soar by 40%

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US stocks could tumble 15% in a rough fall – and the bitcoin bubble could deflate further this year, Guggenheim’s Scott Minerd says

Scott Minerd
Guggenheim Investments Global Chief Investment Officer Scott Minerd.

US equities could drop 15% by the end of October, driven lower by concern over the delta variant of COVID-19 and its impact on global growth, while cryptocurrencies could continue to face pressure, according to Guggenheim’s Scott Minerd.

The chief investment officer told Bloomberg on Wednesday that September and October are likely to be “very rough” months for stocks.

“Maybe a pullback of 15% or slightly more,” he said, adding that investors could get back into buying by the end of autumn.

Stock prices and bond yields recently fell sharply as growth fears sparked by the fast-spreading delta variant dented some of the market optimism. The Dow Jones slumped 2.1% at the start of the week in its biggest one-day drop since October, but stocks have slowly been clawing back gains.

That said, the benchmark US stock indices have all hit record highs this month and are not trading far below those levels. The S&P 500 hit a record 4,393.68 on July 14 and closed about 1% below that level on Tuesday.

Wall Street can expect a rise in volatility over the next few months, as the Federal Reserve could taper its asset purchases sooner than expected if pressure grows for the central bank to start to normalize interest rates, according to Minerd. He expects Treasury yields to decline by as much as 60 basis points if markets believe the economy will weaken. A drop of that size would take the 10-year Treasury note yield to its lowest since October.

For cryptocurrencies, July was the third consecutive month of negative returns. Minerd expects them to stay challenged in the near-term.

Minerd reiterated a $15,000 price prediction for bitcoin, a 53% decline from Thursday’s price of $32,190, and said “a lot of this stuff is just junk.” Still, he called ether a more viable currency than bitcoin.

“I think there’s still more air to come out,” he said. “The standard bear market for bitcoin has been an 80% retracement, and given all the uncertainty and the new competition from new coins, I think there’s more downside to go.”

Buying bitcoin anytime soon isn’t a good idea, according to him. He has previously compared cryptocurrencies to the 17th century tulip bubble. After pulling back significantly, Minerd has said he expects bitcoin to eventually rise to as much as $600,000 per coin.

Read More: The head economist at a blockchain fintech firm names 2 of the most promising crypto SPAC deals on his radar – and explains why blank-check companies can be better alternatives to buying cryptocurrencies

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Global stocks edge higher as investors focus on post-pandemic era growth, while bitcoin continues to slide

NYSE Trader smile happy

Global stocks rose slightly on Tuesday even after a number of key Federal Reserve speakers reminded market participants the central bank would continue to support the economy, leaving investors to focus on the prospects for post-pandemic growth.

Futures on the Dow Jones and S&P 500 dipped slightly, while those on the Nasdaq fell 0.3%, suggesting a lower start to trading later in the day.

After a more hawkish Fed outlook last week, New York Fed President John Williams offered a more relaxed view on Monday by saying he expects the recent spike in inflation to be temporary.

St. Louis Fed President Bullard said the Fed ought to set up its taper so it could be adjusted if necessary, raising the prospect that the pace could change depending on the strength of the economic recovery and inflation outcomes, Deutsche Bank analysts said.

But Williams, who expects inflation to return to the Fed’s target of 2% next year, said he still sees tapering as “quite a ways off,” suggesting it was too soon to change current central bank policy. According to Deutsche Bank, a dispersion of views from the Fed committee is more healthy compared to a year of its coordinated messaging.

UBS said the time for investors to look ahead and position their portfolios for key trends that will shape the second half of 2021 and beyond is now, not at a later date.

“If we look around today, we see economies reopening, inflation spiking, and equity volatility at its lowest level since before the pandemic,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “But if we look forward, we see something different.”

Fed Chair Jerome Powell said late Monday the Fed would do everything it can to support the economy “for as long as it takes to complete the recovery.” He remained optimistic, saying the job market should pick up in coming months as vaccinations rise.

“Given that financial markets were panicking over the end of the global reflation trade in the days before, it is impossible to guess whether the Powell comments are merely a temporary pause to the global reflation trade unwind or mark the end to the correction,” Jeffrey Halley, a senior market analyst at OANDA, said.

The broad cryptocurrency sell-off continued on Tuesday after China summoned leaders of the country’s largest banks to reiterate a ban on crypto services. Bitcoin fell 2% to $32,355, ether fell 4% to $1,920, and dogecoin fell 23% to 19 cents.

Elsewhere in Europe, Prime Minister Boris Johnson said it is “looking good” for July 19 to mark the lifting of coronavirus restrictions. But he didn’t rule out the chance of further lockdowns in the winter.

London’s FTSE 100 rose 0.2%, while the Euro Stoxx 50 and Frankfurt’s DAX fell 0.2%.

Asian markets mostly rose on the prospect of global recovery trade, following their retreat a day earlier, after Powell’s dovish comments.

China’s Shanghai Composite rose 0.8%, Tokyo’s Nikkei rose 3%, and Hong Kong’s Hang Seng fell 0.7%.

Read More: 26-year-old Ricky Gutierrez is one of YouTube’s biggest investing influencers, with nearly 1 million subscribers. He told us his top 3 strategies for trading blue-chip stocks like Twitter and Tesla.

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Global stocks wobble as investors focus on post-pandemic era growth, while bitcoin continues to slide

NYSE Trader smile happy

Global stocks wavered on Tuesday even after a number of key Federal Reserve speakers reminded market participants the central bank would continue to support the economy, leaving investors to focus on the prospects for post-pandemic growth.

Futures on the Dow Jones and S&P 500 dipped slightly, while those on the Nasdaq fell 0.3%, suggesting a lower start to trading later in the day.

After a more hawkish Fed outlook last week, New York Fed President John Williams offered a more relaxed view on Monday by saying he expects the recent spike in inflation to be temporary.

St. Louis Fed President Bullard said the Fed ought to set up its taper so it could be adjusted if necessary, raising the prospect that the pace could change depending on the strength of the economic recovery and inflation outcomes, Deutsche Bank analysts said.

But Williams, who expects inflation to return to the Fed’s target of 2% next year, said he still sees tapering as “quite a ways off,” suggesting it was too soon to change current central bank policy. According to Deutsche Bank, a dispersion of views from the Fed committee is more healthy compared to a year of its coordinated messaging.

UBS said the time for investors to look ahead and position their portfolios for key trends that will shape the second half of 2021 and beyond is now, not at a later date.

“If we look around today, we see economies reopening, inflation spiking, and equity volatility at its lowest level since before the pandemic,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “But if we look forward, we see something different.”

Fed Chair Jerome Powell said late Monday the Fed would do everything it can to support the economy “for as long as it takes to complete the recovery.” He remained optimistic, saying the job market should pick up in coming months as vaccinations rise.

“Given that financial markets were panicking over the end of the global reflation trade in the days before, it is impossible to guess whether the Powell comments are merely a temporary pause to the global reflation trade unwind or mark the end to the correction,” Jeffrey Halley, a senior market analyst at OANDA, said.

The broad cryptocurrency sell-off continued on Tuesday after China summoned leaders of the country’s largest banks to reiterate a ban on crypto services. Bitcoin fell 2% to $32,355, ether fell 4% to $1,920, and dogecoin fell 23% to 19 cents.

Elsewhere in Europe, Prime Minister Boris Johnson said it is “looking good” for July 19 to mark the lifting of coronavirus restrictions. But he didn’t rule out the chance of further lockdowns in the winter.

London’s FTSE 100 rose 0.2%, while the Euro Stoxx 50 and Frankfurt’s DAX fell 0.2%.

Asian markets mostly rose on the prospect of global recovery trade, following their retreat a day earlier, after Powell’s dovish comments.

China’s Shanghai Composite rose 0.8%, Tokyo’s Nikkei rose 3%, and Hong Kong’s Hang Seng fell 0.7%.

Read More: 26-year-old Ricky Gutierrez is one of YouTube’s biggest investing influencers, with nearly 1 million subscribers. He told us his top 3 strategies for trading blue-chip stocks like Twitter and Tesla.

Read the original article on Business Insider

Coursera soars 23% in trading debut following $4.3 billion IPO

trader nyse celebrate happy fist bump

Investors warmed up to the future prospects of Coursera and bid the stock higher in its first day of trading on Wednesday.

Shares of the online education company surged as much as 23%, hitting a high of $40.53. Coursera had priced its IPO at $33 per share, which was at the high end of its target range, giving it a valuation of $4.3 billion.

The share sale raised $519 million in proceeds for the company. Coursera’s previous funding round in July was at a $2.6 billion valuation.

Coursera saw a surge in business in 2020 as the COVID-19 pandemic forced students out of physical schools and into remote learning mode. The company recorded revenue of $294 million in 2020, representing a year-over-year increase of 59%.

But the company is not yet profitable, as it saw losses of $67 million last year. And it remains to be seen whether the jump in business it saw amid the pandemic is sustainable as schools begin to hold more in-person classes as the COVID-19 vaccine rolls out.

Coursera was founded in 2012 by Daphne Koller and Andrew Ng and currently counts more than 3,700 colleges and universities as customers.

Shares of Coursera trade on the New York Stock Exchange under the ticker symbol “COUR.”

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US stocks fall after a $30 billion wave of selling tied to hedge-fund Archegos rattles traders

NYSE trader worried
  • US stocks fell on Monday as traders braced for the after-effects of a selling-spree tied to hedge fund Archegos.
  • Archegos is the family office of former Tiger Management trader Bill Hwang.
  • Nomura and Credit Suisse shares tumbled after the banks warned of large losses linked to the fire-sale.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US futures edged lower on Monday after an extraordinary $30 billion selling-spree by the hedge fund of Tiger Management trader Bill Hwang rattled investors around the world, while the refloating of a giant container ship stuck in the Suez Canal weighed on oil.

Futures on the Dow Jones, S&P 500, and Nasdaq fell between 0.4% and 0.6%, suggesting a lower open for US indices at the start of trading later in the day.

The sell-off appears to have been caused by Archegos Capital, run by the South Korean billionaire Hwang, which uses a long-short equity strategy that reduces exposure to movements in the overall market.

Typically under such a strategy, if long positions decline in value by more than the shorts, this puts them in a risky situation because they won’t have enough money to cover their shorts. The fund’s brokers, including Goldman Sachs and Morgan Stanley, realized this was about to happen, and so initiated margin calls. When Archegos couldn’t make them, the banks then forcibly sold off large holdings in the fund to stop the bleed.

Archegos had large long positions in Chinese and US stocks, including media firm ViacomCBS and Discovery. Both stocks saw their largest-ever daily declines on Friday, with each falling by more than 27%. Traders are now scrambling to figure out whether these fire-sales are over and seeing how much more the hedge fund has to offload.

A number of banking stocks tumbled after Nomura and Credit Suisse warned of large losses following Archegos’ extraordinary fire-sale. Nomura fell 16%, Credit Suisse fell 9.5%, Deutsche Bank fell 5%, and UBS fell 4%.

Wall Street’s VIX Index – popularly known as the ‘fear gauge’ – rose 10% to 20.78 on Monday, signalling a rise in the market’s expectations of volatility in the coming 30 days. The higher the index, the more nervousness is in the market.

Separately in the US, President Joe Biden is due to deliver a speech on Wednesday unveiling his new $3 trillion infrastructure plan that is part of his “Build Back Better” agenda.

Investors are still worried over concerns of rising number of COVID-19 cases in multiple regions in Europe, raising the prospect of further restrictions and curbs on economic activity. The continent is faced with a potential third wave driven by new variants. German Chancellor Angela Merkel said in a Sunday interview she would use federal law to take control of the pandemic response.

Lockdown restrictions in the UK have now eased slightly as groups of up to six people are allowed to meet outdoors. But markets displayed a lack of enthusiasm. “This early reticence may be tied to the Archegos Capital situation,” Connor Campbell, a financial analyst at SpreadEx, said. It remains to be seen which companies might be the next to announce they too have been stung, he said.

The UK’s FTSE 100 fell 0.4%, the Euro Stoxx 50 rose 0.1%, and Germany’s DAX rose 0.2%. The VDAX-New, the German equivalent of the VIX, was last up nearly 6% on the day.

Oil prices fell after the Ever Given container ship blocking the Suez Canal was successfully refloated, according to Inchcape Shipping Services. The ship, which has been stuck for almost a week, is currently being secured. Brent crude futures fell 0.6% to $63.99, while West Texas Intermediate dropped 1.2% to $60.27. The vessel, which is said to be longer than the Eiffel Tower, had obstructed the canal – one of the world’s most important shipping passages – since Tuesday.

Asian equity markets rose despite Chinese geopolitical worries and the forced liquidations on Wall Street, perhaps from the boost that the container ship has been refloated. Roughly 12% of total global trade passes through the canal, a large portion of that is from Asia’s big exporters to their customers in Europe. China’s Shanghai Composite rose 0.5%, Japan’s Nikkei rose 0.7%, and Hong Kong’s Hang Seng was about flat.

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Stocks are vulnerable to a near-term pullback as the market overestimates a 2021 recovery, CFRA says

NYSE Trader worried red
A trader works on the floor at the New York Stock Exchange (NYSE) in New York, U.S., February 28, 2020.

  • Investors should brace for a near-term pullback in the first quarter of 2021, according to CFRA’s Sam Stovall. 
  • Domestic equity markets appear to us to have over-discounted a second-half 2021 economic and EPS recovery…and as a result may be vulnerable to a Q1 pullback,” the chief investment strategist said in a note to clients on Wednesday.
  • Stovall also sees the S&P 500 reaching 4080 by the end of 2021, a 9.5% upside from current levels.
  • Visit Business Insider’s homepage for more stories.

Investors should brace for a near-term pullback in the first quarter of 2021, according to CFRA’s Sam Stovall. 

Positive vaccine news has left many investors hopeful that the economy will reopen and recover during the summer of 2021. Stovall explained that the market now is showing signs that investors are overestimating a recovery in the economy and earnings in the second half of 2021. 

“Domestic equity markets appear to us to have over-discounted a second-half 2021 economic and EPS recovery…and as a result may be vulnerable to a Q1 pullback,” the chief investment strategist said in a note to clients on Wednesday. 

Read more: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

Stovall noted that the Russell 2000 is currently more than 30% above its 200-day moving average, and the 12-month return differential for the S&P 500 growth-value indices remains at a level not seen since December 1999, shortly before the “Dotcom” bubble burst. 

However, the chief strategist sees the S&P 500 gaining 9.5% in 2021. He reiterated his 12-month price target for the benchmark index of 4080, a sign that 2021 will be a positive year for stocks.

Stovall recommends investors stay overweight consumer discretionary stocks, health care, industrials, and materials. He recommends investors are underweight utilities, real estate, and consumer staples.

Read more: Wall Street’s biggest firms are warning that these 7 things could crash the stock market’s party in 2021

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