Overnight US Stocks | Three major indexes mixed, oil prices rise above $80

According to the financial news app Zhitong Finance, on Monday, the three major indices showed mixed movements. Investors will focus on the CPI inflation index on Wednesday and retail sales data on Thursday this week. Morgan Stanley's renowned strategist Michael Wilson stated that economic uncertainty and weak corporate profit expectations pose a double blow, which may limit the stock market's rise. The strategist mentioned that although the bond market has begun to digest the expectation that the Federal Reserve is "behind the curve," this risk is not reflected in current stock price-earnings ratios.

[US Stocks] At the close, the Dow Jones fell by 140.53 points, a decrease of 0.36%, to 39,357.01 points; the Nasdaq rose by 35.31 points, an increase of 0.21%, to 16,780.61 points; the S&P 500 index rose by 0.23 points to 5,344.39 points. NVIDIA (NVDA.US) rose by 4%, Intel (INTC.US) fell by nearly 2%, and Tesla (TSLA.US) dropped by over 1%. The Nasdaq Golden Dragon Index closed up by 0.6%, Dingdong Maicai (DDL.US) rose by 12%, and Alibaba (BABA.US) rose by 1%.

[European Stocks] The German DAX30 index rose by 21.47 points, an increase of 0.12%, to 17,723.50 points; the UK's FTSE 100 index rose by 40.61 points, an increase of 0.50%, to 8,208.71 points; the French CAC40 index fell by 19.04 points, a decrease of 0.26%, to 7,250.67 points; the Euro Stoxx 50 index fell by 4.63 points, a decrease of 0.10%, to 4,670.65 points; the Spanish IBEX35 index rose by 4.50 points, an increase of 0.04%, to 10,643.00 points; the Italian FTSE MIB index rose by 135.77 points, an increase of 0.43%, to 31,918.00 points.

[Asia-Pacific Stocks] The Indonesia Jakarta Composite Index rose by 0.22%, and the Vietnam VN30 Index rose by 0.52%.

[Gold] COMEX gold futures closed up by 1.62% at $2,513.4 per ounce; COMEX silver futures closed up by 1.67% at $28.05 per ounce.

[Cryptocurrency] Bitcoin rose by 0.45% to $58,988.5 per coin; Ethereum surged by over 5% to $2,683.72 per coin.

[Crude Oil] NYMEX WTI crude oil futures for September delivery rose by $3.22, an increase of 4.19%, to close at $80.06 per barrel. Brent crude oil futures for October delivery rose by $2.64, up over 3.31%, to $82.30 per barrel.

[Metals] London metals rose, with LME copper up by 1.8%, LME tin up by over 0.84%, and LME nickel up by approximately 1.27%.

[Macro News]

Morgan Stanley: US stock valuations do not yet reflect the risks of the Federal Reserve being behind the curve. Morgan Stanley's strategist stated that although the bond market has begun to digest the expectation that the Federal Reserve is "behind the curve," this risk is not reflected in current stock price-earnings ratios. Michael Wilson's team mentioned that investors are most concerned about economic growth issues rather than inflation and interest rates "Markets are expecting better economic growth, or more policy support to boost optimism again. In the short term, we do not see any conclusive evidence in any direction, which means that stock indices will temporarily fluctuate within a narrow range," they wrote in a report. They expect the S&P 500 index to fluctuate between 5000 and 5400 points. They also believe that profit revision levels will vary with the change of seasons, which is one of the most challenging reasons for the stock market in the third quarter.

The proportion of U.S. consumers expecting to default on debt has risen to the highest level since 2020. U.S. consumers are increasingly worried about being unable to pay bills on time, with expectations of defaulting on debt reaching the highest level since the outbreak of the pandemic. According to a survey released by the New York Fed on Monday, the average likelihood that consumers will be unable to pay the minimum repayment amount in the next three months is 13.3%, the highest level since April 2020. Those with an annual income of less than $50,000 and a high school education or below face the greatest repayment pressure. The survey shows that compared to a year ago, respondents' views on the ease of obtaining credit have deteriorated, and expectations for household expenditure growth have fallen to the lowest level in over three years. Workers' views on the labor market have become more complex. While Americans' concerns about losing their jobs and rising unemployment rates in the next year have eased, they expect it to be more difficult to find a job after becoming unemployed. The survey results are consistent with broader economic data, which show a weakening labor market and an increasing number of consumers defaulting on debt.

Goldman Sachs technology experts expect a buying opportunity for U.S. stocks at the end of the month. Goldman Sachs Group's technology strategist Scott Rubner pointed out that with the easing of selling pressure from systematic funds and an increase in stock buybacks by listed companies, investors will have a brief buying opportunity for U.S. stocks at the end of August. Rubner stated that this is the last time he will be bearish on the stock market in August, as the most severe supply-demand mismatch in August will end, and he will turn tactically bullish on the stock market on August 30. Previously, Rubner had advised reducing exposure to the U.S. stock market after July 4th. As expected, the index fell by about 6% since reaching a record high on July 16. Rubner also warned investors that after reaching a certain point in September, the outlook for the stock market will deteriorate, and there will be no clear upward trend in the market before the fourth quarter and the U.S. November election.

CBOE: It's not surprising for the VIX fear index to exceed 65. The CBOE Volatility Index recorded its largest single-day increase last Monday. Mandy Xu, Director of Derivatives Market Intelligence at the Chicago Board Options Exchange (CBOE), said that when S&P 500 index futures fell by 4.5%, equivalent to an annualized volatility of 70, the fear index VIX exceeded 65 at that peak. "Considering the significant pre-market fluctuations in S&P 500 index futures, the corresponding large fluctuations in the VIX index are not that surprising." However, derivatives experts believe that this surge may exaggerate bearish sentiment due to insufficient liquidity, short covering after volatility bets fail, and the inclusion of some illiquid options contracts in the index calculation. They point out that there is an unusual price difference between the volatility index and its futures contracts, proving that this fear index has deviated from market reality." Oil prices rise above $80, with the upward trend possibly further driven by Iran's attack. As traders believe Iran may take retaliatory action, WTI crude oil futures rose by $3.22 during the day, marking the largest single-day increase since October last year, closing above $80 per barrel. Dan Galley, a commodity strategist at JPMorgan, said, "Algorithm trend followers still hold 'dry powder' for Brent crude, indicating that an attack from Iran could trigger additional buying activity from this group." This also suggests a possible shift in fund managers' positions. Last week, dim macroeconomic prospects prompted hedge funds and algorithmic traders to reduce their net long positions in Brent crude on the Intercontinental Exchange to the lowest level since the data was first released in 2011. Bullish bets on U.S. gasoline and diesel are also at multi-year lows.

[Stock News]

Johnson & Johnson (JNJ.US) $6.5 billion baby powder compensation agreement supported by plaintiffs. According to sources, Johnson & Johnson has cleared a key hurdle in advancing a $6.5 billion baby powder compensation agreement. The agreement aims to resolve thousands of lawsuits related to its baby powder products causing cancer. In an anonymous vote ending in July, over 75% of the group agreed to Johnson & Johnson's proposal. This outcome will help the company's latest move to limit liability to a subsidiary set up to settle lawsuits. Johnson & Johnson spokesperson Clare Boyle declined to comment on the statistics. Litigation is still ongoing, and Johnson & Johnson's efforts to settle lawsuits still face significant obstacles.

Disney (DIS.US) announces launch of new theme parks, new cruise ships, and more. Disney announced plans to build four new cruise ships and detailed six new theme parks as the company seeks to expand its resort business to boost its struggling experiential business. The company made this announcement at the biennial D23 fan event. Disney's U.S. theme parks have been hit by rising costs and tepid demand, with sales and profits in the third quarter falling below Wall Street's expectations. Additionally, the company stated that summer visitors to Disneyland Paris decreased due to the Olympics. Revenue in the overall Parks, Experiences, and Products segment grew by 2% to $8.386 billion in Q3, but operating profit in the segment fell by 3% year-on-year to $2.222 billion. The company mentioned that the pressure of growing visitor numbers will continue "over the next few quarters," with a rebound expected in the last few months of the 2024 fiscal year. Disney currently expects a single-digit decline in profit for the fourth quarter. The company's response to this is to "actively monitor visitor numbers and guest spending, and actively manage our cost base."