3 reasons why the stock market could enter risk-on mode in August after a couple choppy months, according to Fundstrat’s Tom Lee

Tom Lee
  • The stock market is primed to enter risk-on mode in August following a sideways summer chop, Fundstrat’s Tom Lee said in a note on Friday.
  • Lee pointed to an imminent peak in Delta-variant cases and surging bitcoin prices as reasons to expect upside in stocks next month.
  • These are the 3 reasons stocks are primed to move higher in August, according to Fundstrat.
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After weeks of a sideways “chop” in certain stock sectors, August could be the month risk-on mode returns for the market, Fundstrat’s Tom Lee said in a note on Friday.

Lee highlighted that since early June, epicenter stocks collapsed while a handful of names in the technology sector moved higher and propped up broad market indices. The steep drop in financial, energy, and hotel/cruise stocks came amid a surge in COVID-19 cases caused by the delta variant.

Historically, not much money has been made in stocks in the month of August, especially when markets delivered strong gains in the first half of the year.

“August is not generally a great month for stocks. The win-ratio is low at 54% overall,” Lee said, citing an analysis of data going back to 1928. And when the S&P 500 is up more than 13% in the first half of the year, August returns average -0.50%, according to the analysis.

But these 3 reasons suggest to Lee that the stock market can buck its historical trend and enter risk-on mode.

1. “Seasonal analysis suggests USA Delta spike could end in next 10-12 days, or sooner.”

Lee highlighted that low vaccinated areas are seeing far worse seasonality in COVID-19 spread than higher vaccinated areas. An analysis of COVID-19 in the 5 largest counties in Florida suggest that a peak could be right around the corner, within the next week or two, according to Fundstrat.

“Florida has been among the worst USA Delta outbreaks. Thus, this is a positive inflection, if the cases turn down next week,” Lee said.

2. “Pfizer just released data showing 3rd shot significantly boosts delta antibody response by 5x.”

Data from Pfizer suggests that a third dose of its COVID-19 vaccine leads to a 100-fold increase in Delta neutralizing antibodies relative to a non-vaccinated person,, and a 5-fold increase relative to the second dose, Lee highlighted.

“The case for boosters is very high and is a sound policy strategy,” Lee said, while acknowledging the main challenge is convincing about a third of the US that has yet to be vaccinated to get their shots.

“But this should not change the fact that the Delta risk to the US is strongly diminished. And thus, we are seeing positive tilt on the Delta variant risk,” Lee explained.

3. “Bitcoin, the global non-US ‘risk-on’ proxy is pushing above $40,000 = risk on!”

Bitcoin is set to post its first positive monthly gain in four months, and its best week since February, as the cryptocurrency rallied more than 30% from $30,000 to $40,000. And Lee still expects bitcoin to close above $100,000 in 2021, representing potential upside of 163% from current levels.

“Bitcoin is the risk-on asset for emerging market investors, more than equities. Risk appetite seems to be returning in the past week,” Lee said, adding that the rally is occurring as a lot of bad news is priced in following China’s crackdown.

“So for now, we are upgrading our baseline expectations for August. Instead of ‘chop’, it’s ‘upside bias,” Lee concluded.

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Global shares pull back as concern over US growth, Asia tech rout weigh on investor confidence

Traders work on the floor of the New York Stock Exchange
Traders work on the floor of the New York Stock Exchange

  • Global shares fell on Friday after US GDP and unemployment data came in weaker than expected.
  • Investor concern about Chinese regulatory crackdowns, especially in the tech sector, continued.
  • Higher-than-expected inflation readings undermined European markets, despite strong EU growth.
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Global shares fell on Friday after US GDP and unemployment data the previous day reflected slower economic growth than expected, while a looming threat of a Chinese regulatory crackdown on tech stocks continued to weigh on investor confidence.

US futures fell, with Dow Jones futures 0.34% down, S&P 500 futures down 0.7% and Nasdaq futures down by 1.16% at 5:43 am E.T.. The benchmark indices neared record highs on Thursday, leaving the S&P 500 less than 0.1% off an all-time peak.

Weaker-than-expected US economic growth in the second quarter and a slower fall in unemployment that many economist had forecast soured investor optimism over the outlook for recovery, analysts said.

Meanwhile, Amazon’s quarterly earnings fell short of expectations, as the e-commerce giant missed quarterly sales estimates for the first time since 2018, while sales and profit forecasts were below expectations, further worrying investors about the economic outlook. The company shares fell as much as 7% in pre-market trading.

Yields on 10-year Treasury notes were last at 1.251%, down by 1.8 basis points ahead of inflation and personal spending data.

Rising Covid-19 cases and Chinese regulatory pressure on tech stocks also weighed on markets. Earlier in the week, Chinese officials had said they would be more considerate of volatility when making regulatory decisions, but the calming words had little lasting impact.

“The fact the tech-heavy Nasdaq futures have led US index futures lower suggests that they, and China, Japan, and South Korean markets are suffering a dose of pre-weekend China regulatory risk jitters,” Jeffrey Halley, senior market analyst at OANDA, said.

Asian markets closed lower on Friday, with Tokyo’s Nikkei 225 falling 1.8%, the Shanghai Composite declining by 0.42% and Hong Kong’s Hang Seng index dropping by 1.28% as a surge in delta variant cases and regulatory concerns dominated sentiment throughout the region.

In Europe, London’s FTSE 100 was last down 0.93%, the EuroStoxx 50 had declined by 0.69% and Frankfurt’s DAX was last down 0.99%. A measure of eurozone inflation rose more than anticipated in July, coming in at 2.2% compared to an expected 2%. This was its highest since October 2018.

The impact of this could not be set off by a strong read of eurozone GDP, which rose 2% quarter-on-quarter in the the three months to June, breaking two straight quarters of contraction, despite initial difficulties with the vaccination rollout, rising delta variant cases and continuing supply-chain issues.

“Looking ahead at 3Q, we would note that the delta variant is causing some delays in the easing of restrictions and that supply chain problems continue to weigh on manufacturing production. Still, we expect growth to come in very strong – currently pencilled in at 2% quarter-on-quarter – as domestic and foreign demand remain very robust.” ING analysts said.

Oil prices fell on Friday, reversing some of the previous day’s losses. Slower economic growth and recovery could indicate lower demand for a longer than expected time. Brent crude was last down 0.31% at $74.87 per barrel, while WTI crude was last at $73.36, down 0.35%.

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3 Republican congressmen face ethics complaints for allegedly violating a federal stock disclosure law

Rep. Blake Moore, Sen. Tommy Tuberville, and Rep. Pat Fallon.
Rep. Blake Moore, Sen. Tommy Tuberville, and Rep. Pat Fallon.

  • Sen. Tommy Tuberville, and Reps. Pat Fallon and Blake Moore, are targeted by the complaints.
  • The Campaign Legal Center says the members broke transparency rules.
  • The complaints are in part based on reporting by Insider.
  • See more stories on Insider’s business page.

A watchdog organization is accusing three Republicans serving in Congress of violating a federal transparency law by failing to properly disclose millions of dollars worth of stock trades.

The separate complaints by the nonpartisan Campaign Legal Center were filed Thursday afternoon with the Office of Congressional Ethics and US Senate Select Committee on Ethics. They allege Sen. Tommy Tuberville of Alabama, as well as Reps. Pat Fallon of Texas and Blake Moore of Utah, illegally delayed by weeks or months their numerous stock trades.

“When members of Congress trade individual stocks and fail to disclose those trades, they break the law and diminish the public’s trust in government,” the three complaints each state. “The recent prevalence of STOCK Act violations in the House shows that merely the threat of a fine is not deterring members of Congress from breaking the law; real accountability is necessary.”

The Campaign Legal Center’s complaints are based in part on reporting by Insider, which in June and July revealed that Tuberville, Fallon, and Moore had violated the STOCK Act.

Read more: Republican Sen. Tommy Tuberville violated federal transparency law by failing to properly disclose stock transactions worth up to $3.56 million

The law, which Congress passed in 2012, is designed to defend against corruption and conflicts of interest, particularly for lawmakers who have personal financial interests in companies that vie for lucrative government contracts and spend millions of dollars each year lobbying the federal government. Among its provisions, the STOCK Act requires members of Congress to formally and publicly disclose any individual stock trade they make within 45 days of making it.

Members of Congress who violate the STOCK Act often must only pay a $200 late filing fine, regardless of the overall value of the trades they were tardy in disclosing. Congressional ethics committees may refer “knowing and willful” violations of the STOCK Act to the Department of Justice for criminal investigation, although this is rare.

Insider has reported that a growing number of federal lawmakers – Republicans and Democrats – have this year violated the law’s disclosure mandates.

Read more: Republican Rep. Blake Moore violated federal transparency law by failing to properly disclose stock transactions worth up to $1.1 million

“This is all triggered by a clear trend of members of Congress defeating the purpose of the STOCK Act,” said Kedric Payne, the Campaign Legal Center’s general counsel and senior director for ethics. “My hope is that the members will comply with the law that they created. But if complying with that law is too difficult for them, that supports the idea that’s been suggested that there should be restrictions on how they trade stocks.”

Reached Thursday afternoon, Tuberville spokeswoman Ryann DuRant said that “Sen. Tuberville has filed all required paperwork with the Ethics Committee. He was assessed a late filing penalty, and it has been paid.”

Representatives for Fallon and Moore could not immediately be reached for comment.

Previously, spokespeople for each lawmaker told Insider that their respective member of Congress will work to comply with the law in the future and that they do not personally make their own stock trades. Instead, they employ financial advisors to buy and sell stock on their behalf.

Read more: Republican Rep. Pat Fallon failed to properly disclose more than 90 stock transactions worth as much as $17.53 million in apparent violation of federal law

Payne said that each member of Congress is personally responsible for following the law.

Earlier this year, the Campaign Legal Center filed an ethics complaint against Rep. Tom Malinowski, a New Jersey Democrat, who Insider revealed has failed to disclose dozens of stock trades during 2020.

The Foundation of Accountability and Civic Trust, a conservative watchdog organization, also filed a complaint against Malinowski and also filed an unrelated STOCK Act ethics complaint against Rep. Sean Patrick Maloney, a Democrat from New York.

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Robinhood drops 12% in volatile public-trading debut after IPO valuing it at $32 billion

Vlad Tenev, CEO and Co-Founder, Robinhood in his office on July 15, 2021 in Menlo Park, California.
Vlad Tenev, CEO and co-founder, Robinhood.

  • Robinhood whipsawed in its trading debut on Thursday, with shares initially jumping 6% before falling as much as 12%.
  • The online trading app was valued at $32 billion when it priced its IPO at $38 per share on Wednesday.
  • Robinhood raised $2.1 billion from its IPO and allocated a portion of shares to its user base.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Online trading app Robinhood whipsawed in its post-IPO debut on Thursday, with shares climbing 6% before falling as much as 12%. Shares hit a high of $40.22 before falling to a low of $33.60.

The company priced its IPO late Wednesday night at $38 per share, representing the bottom end of its targeted range of $38 to $42 per share. The IPO raised $2.1 billion for the company and gave it a valuation of $32 billion.

Robinhood last raised $3.4 billion earlier this year, with shares trading on private secondary markets at a valuation around $40 billion. The company raised the money amid a surge in retail trading in meme-stocks like GameStop and AMC Entertainment.

The company has seen explosive growth amid the COVID-19 pandemic and government stimulus checks, with millions of Americans becoming first time investors in the stock market. Robinhood has more than 18 million accounts and 17.7 million active monthly users.

While the brokerage firm is not yet profitable, the company saw revenue grow 245% to nearly $1 billion in 2020. That revenue growth accelerated in the first quarter of 2021, surging 309% to $522 million, according to its S-1 filed with the SEC last month.

Much of that growth is coming from options and crypto trading, two highly speculative areas of markets than often lead to either big losses or massive fortunes.

Unique to Robinhood’s IPO is the company’s decision to allocate up to 35% of its IPO shares to users of its app. Retail investors are often restricted from investing in IPOs at the pricing afforded to institutional investors.

While Robinhood’s IPO represents a big milestone for the company, there is still a long way to go before co-founders Vlad Tenev and Baiju Bhatt can cash in on their hefty compensation awards. Both founders will be awarded $1.4 billion if Robinhood’s stock price reaches $101.50 by 2025.

Robinhood trades on the Nasdaq under the symbol “HOOD.”

Read more: Top 16 meme stocks this week on Reddit: Tesla tops the charts after record earnings while Chinese stocks get smacked amid brutal regulatory crackdown

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Robinhood is going public. Warren Buffett, Michael Burry, and other top investors have blasted the trading app and warned day traders to be careful.

Michael Burry against a gray promotional backdrop for the movie "The Big Short."
Michael Burry.

  • Robinhood is poised to go public on Thursday at a $32 billion valuation.
  • Warren Buffett, Michael Burry, and other top investors have blasted the trading app as reckless.
  • Market veterans have also warned day traders against rampant speculation and taking on debt.
  • See more stories on Insider’s business page.

Robinhood is set to go public on Thursday at a potential $32 billion valuation, capitalizing on booming demand from retail investors seeking to trade stocks, cryptocurrencies, and other assets during the pandemic.

The trading app is popular among amateur investors and day traders because it doesn’t charge commissions, allows fractional investing, and trusts its users to trade on margin and buy and sell risky, complex financial products such as options.

However, Warren Buffett, Michael Burry, and other leading investors have accused Robinhood and its peers of encouraging speculation and excessive risk-taking. They have also warned market newbies not to borrow too much, trade things they don’t understand, or treat investing like a game they’re guaranteed to win.

Robinhood didn’t immediately respond to a request for comment from Insider.

Here’s what 10 top investors have said about Robinhood and the day-trading boom. Their quotes have been lightly edited and condensed for clarity:

Warren Buffett

Warren Buffett
Warren Buffett, the chairman and CEO of Berkshire Hathaway.

“There’s nothing illegal about it, there’s nothing immoral. But I don’t think you build a society around people doing it. I hope we don’t have more of it.” — accusing Robinhood of encouraging users to trade options rather than invest for the long term. (May 2021)

Michael Burry

Michael Burry against a promotional backdrop for the movie "The Big Short."
Michael Burry, the star of “The Big Short” and head of Scion Asset Management.

“If you do not use #robinhood, you have to see it to understand what #gamification of #stonks/options means. So here it is. If this looks like a serious investing app to you, and NOT a dangerous casino ‘fun for all ages,’ you’ve been #gamified.” (February 2021)

 

Mark Cuban

Mark Cuban speaking at Business Insider's IGNITION conference on December 3, 2018.
Mark Cuban, the “Shark Tank” star and Dallas Mavericks owner.

“It’s not investing, and it’s almost not even trading, it’s more like revenge. It is the revenge of the nerd. It’s the revenge of the little guy.” — commenting on the horde of retail investors who sparked the meme-stock boom (February 2021)

“If you’re a day trader and you can walk and chew gum, you are making money right now. You’re doing the same thing they did in the late ’90s. You’re rolling it. You think everybody is a genius in a bull market.” (June 2020)

Chris Sacca

chris sacca
Chris Sacca, the founder of Lowercase Capital and an early investor in Uber, Twitter, and Instagram.

“I have axes to grind against a lot of the guys you’re wrecking, and I love to hear about real people stacking chips. But, please, from someone who has been there … don’t trade what you can’t afford to lose.” — advising the retail investors who executed short squeezes and hammered hedge funds to be careful (January 2021)

“To the angry Robinhood bros who got into trading stocks this year: I was wrong. You’re amazing. This has nothing to do with the market. It’s all you and your mad skillz. Don’t take profits off the table. Double down, on margin. Borrow everything you can. Stonks never go down!” — sarcastically responding to the backlash from day traders after he tweeted they got lucky and should cash out some of their profits (January 2021)

Charlie Munger

charlie munger
Charlie Munger, Warren Buffett’s business partner and Berkshire Hathaway’s vice-chairman.

“Robinhood is beneath contempt. It’s a gambling parlor masquerading as a respectable business. It’s basically a sleazy, disreputable operation.” (May 2021)

Leon Cooperman

Leon Cooperman holding his glasses up to his right temple.
Leon Cooperman, the former CEO of Omega Advisors, runs a family office now.

“They are just doing stupid things. This will end in tears.” — commenting on retail traders buying shares in bankrupt companies and making other high-risk trades (June 2020)

Jim Chanos

Jim Chanos
Jim Chanos, the president and founder of Kynikos Associates.

“They are going to trade themselves into oblivion. We are at prices now where the crowd that is betting on margin and betting through options had better be right. Anything that corrects and reverts to the mean, or to real valuation metrics, is going to destroy a whole generation of investors.” (November 2020)

Jeffrey Gundlach

Jeffrey Gundlach
“Bond King” Jeffrey Gundlach, the CEO of DoubleLine Capital.

“There’s been an incredible increase in tiny retail investor activity in terms of the accounts on Robinhood and other platforms that have just exploded in term of size. I think that’s pretty dangerous. These people that are buying slices of the stock market don’t even know what they’re doing, and have probably lost money already.” (June 2020)

“We’ll have a tremendous unwind of a lot of the money that thinks the stock market is a one-way thing.” (March 2021)

Howard Marks

Howard Marks
Howard Marks, the cofounder and co-chairman of Oaktree Capital Management.

“Some people think it’s a gambling game, like betting on football. It’s not healthy to have people who are buying stocks for fun. It reminds me of the people who were day trading in 1999 and declaring day trading a ‘can’t miss’ strategy. The tech stocks crapped out in 2000.” (June 2020)

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Robinhood prices IPO at $38 per share, valuing the online brokerage app at $32 billion

Robinhood on cellphone
  • Robinhood priced its IPO at $38 per share on Wednesday, valuing the company at about $32 billion.
  • The online brokerage app revealed surging growth in its S-1 filing amid the COVID-19 pandemic and government stimulus checks.
  • Robinhood is set to trade on the Nasdaq under the symbol “HOOD” on Thursday.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Robinhood priced its IPO at $38 on Wednesday, valuing the online brokerage app popular with retail investors at roughly $32 billion. The Wall Street Journal first reported the pricing.

Robinhood’s IPO pricing came it at the bottom end of the price range it had initially been targeting during its roadshow of $38 to $42 per share. Robinhood last raised $3.4 billion earlier this year, with shares trading on private secondary markets at a valuation around $40 billion.

The company has seen explosive growth amid the COVID-19 pandemic and government stimulus checks, with millions of Americans becoming first time investors in the stock market. Robinhood has more than 18 million accounts and 17.7 million active monthly users.

While the brokerage firm is not yet profitable, the company saw revenue grow 245% to nearly $1 billion in 2020. That revenue growth accelerated in the first quarter of 2021, surging 309% to $522 million, according to its S-1 filed with the SEC last month.

Much of that growth is coming from options and crypto trading, two highly speculative areas of markets than often lead to either big losses or massive fortunes.

Unique to Robinhood’s IPO is the company’s decision to allocate up to 35% of its IPO shares to users of its app. Retail investors are often restricted from investing in IPOs at the pricing afforded to institutional investors.

While Robinhood’s IPO represents a big milestone for the company, there is still a long way to go before co-founders Vlad Tenev and Baiju Bhatt can cash in on their hefty compensation awards. Both founders will be awarded $1.4 billion if Robinhood’s stock price reaches $101.50 by 2025.

Robinhood is set to trade on the Nasdaq under the symbol “HOOD” beginning on Thursday.

Read more: Top 16 meme stocks this week on Reddit: Tesla tops the charts after record earnings while Chinese stocks get smacked amid brutal regulatory crackdown

Read the original article on Business Insider

Stocks are due for a pullback of up to 8% in the next 3 months, says LPL Financial

traders
Traders on the floor of the New York Stock Exchange.

  • The S&P 500 looks due to pullback by 5%-8% in upcoming months after a strong performance year-to-date.
  • LPL Financial outlined its view as the benchmark index has nearly doubled since last year’s low amid the pandemic.
  • The S&P 500 hasn’t had as much as a 5% pullback since October 2020.
  • See more stories on Insider’s business page.

The US stock market roared back swiftly from its pandemic-induced crash last year and the S&P 500 has notched a double-digit gain so far in 2021 – but its performance puts the benchmark in line for a pullback by up to 8% before the year ends, says LPL Financial.

The gauge of the largest listed companies in the US has advanced by nearly 18% this year, with record highs supported in part by expectations of robust growth in corporate earnings as companies work to regain their footing as the pandemic eases.

The S&P 500 finished 2020 up 16% by clawing out of the bear market it slid into in March 2020 as the coronavirus pandemic unfolded. The index also finished strongly in 2019, springing up by 29%.

“After more than a 90% rally off the March 2020 bear market bottom (and near double on a total return basis) we do think the odds are much higher of a standard 5-8% pullback during the historically troublesome August/September/October period,” said Ryan Detrick, chief market strategist, and Jeff Buchbinder, equity strategist, at LPL Financial, in a Monday note.

“This isn’t a bad thing though, as some type of break could be necessary before another move higher,” the strategists said in outlining what they consider six surprises in markets so far this year.

The S&P 500 through Tuesday’s session had risen by 98% since its crash and bottom on March 23, 2020. Its climb started after the index slid 34% from its peak set in mid-February 2020, with investors rattled by the prospect of an economic recession from the COVID-19 outbreak. The index staged a fast recovery in reaching an all-time high in August 2020.

“Historically, year two of a bull market can be choppy and quite frustrating. After the huge gains we saw the last nine months of 2020, we entered 2021 expecting there to be more give and take than we’ve seen this year,” said the strategists. “In fact, the S&P 500 hasn’t even had as much as a 5% pullback since October 2020, one of the longest streaks ever. That is very surprising indeed.”

The S&P 500 has been fueled by anticipation of improved earnings. Ahead of this week’s busy docket for financial results, S&P 500 companies were on track for their best profit growth since 2009, with Refinitiv estimating a rise of 78.1% year-on-year in the second quarter.

The strategists also said they’ve been surprised by the lack of volatility so far in 2021. The stock market’s fear gauge, the Cboe VIX Volatility index, has dropped by 22%, hovering around 17.

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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 stocks log record highs as investors look to Big Tech to sustain earnings growth

NYSE Traders
  • Dow industrials push further beyond 35,000 in Monday’s record-setting highs for stocks.
  • Tesla and Facebook earnings are among those on deck for this week’s earnings wave.
  • The Federal Reserve will start its two-day meeting on Tuesday.
  • See more stories on Insider’s business page.

Stocks finished at record highs Monday as investors set their sights on earnings reports from major technology companies and appeared to set aside concerns about economic recovery in the face of rising coronavirus cases.

The Dow Jones Industrial Average pushed further above 35,000 after crossing that threshold for the first time on Friday. Stocks overcame losses earlier in Monday’s session to build on record highs notched Friday, capping a rebound from a rout last week. Stocks have seen points of weakness in recent sessions on worries about increasing COVID-19 cases around the world as the highly transmissible Delta variant spreads.

Investors will start to plow through this week’s earnings reports, with more than one-third of S&P 500 companies set to release results. Tesla’s report is due after the bell Monday, followed by Alphabet, Apple, Microsoft on Tuesday, and Facebook on Wednesday.

Here’s where US indexes stood at 4:00 p.m. on Monday:

S&P 500 companies are on track for their best earnings growth since 2009, with profit expected to increase 78.1% year-on-year in the second quarter.

“What we’re looking for is what are companies doing with these strong earnings, what are they doing with their cash flow,” Tom Hainlin, national investment strategist at U.S. Bank Wealth Management, told Insider on Monday.

“If they’re optimistic about the future, we’re looking for them to invest that cash flow … new businesses, new initiatives, new factories,” he said. “We’re looking for what are companies doing with these proceeds to give us some insight from the corporate side into where we think the economy is going in the second half and into 2022,” he said.

The Fed’s two-day meeting that begins Tuesday and ends on Wednesday will likely produce commentary about its outlook on domestic and global economic recovery and investors will gauge when the Fed may begin tapering asset purchases or start raising interest rates.

Around the markets, billionaire investor Jeremy Grantham’s firm GMO says stocks are overvalued by every metric.

Warren Buffett’s Berkshire Hathaway is facing a legal battle with Volkswagen after rejecting a settlement deal with the German auto giant related to its emissions scandal.

Gold fell 1.3%, to $1,798.06 per ounce. Long-dated US Treasury yields slipped, with the 10-year yield at 1.27%.

Oil prices turned slightly higher. West Texas Intermediate crude was fractionally higher at $72.09 per barrel.

Bitcoin jumped 13%, to $38,955.23. The digital currency rose above $38,000 for the first time in about six weeks, partially on a report that Amazon is considering accepting bitcoin payments.

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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.

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