Overnight US Stocks | Three major indices mixed, Tesla up 4.6%, oil prices plummet, Brent crude falls below $70

According to CNBC, on Tuesday, the three major indexes showed mixed movements, with the S&P 500 index closing higher for the second consecutive trading day. The market is awaiting the heavyweight CPI data to be released on Wednesday. WTI crude oil fell by 4.3%, Brent crude fell by about 3.69%, closing at $69.19 per barrel, with Brent crude falling below the psychological barrier of $70 for the first time since December 2021.

[US Stocks] As of the time of writing, the Dow Jones fell by 92.63 points, or 0.23%, to 40,736.96 points; the Nasdaq rose by 141.28 points, or 0.84%, to 17,025.88 points; the S&P 500 index rose by 24.47 points, or 0.45%, to 5,495.52 points. Tesla (TSLA.US) rose by 4.6%, Nvidia (NVDA.US) rose by 1.5%, Apple (AAPL.US) fell by 0.3%, and Google (GOOG.US) slightly declined. The Nasdaq Golden Dragon Index rose slightly, with Alibaba (BABA.US) up nearly 3% and Li Auto (LI.US) up nearly 4%.

[European Stocks] The German DAX30 index fell by 174.97 points, or 0.95%, to 18,256.35 points; the UK FTSE 100 index fell by 64.27 points, or 0.78%, to 8,206.57 points; the French CAC40 index fell by 17.71 points, or 0.24%, to 7,407.55 points; the Euro Stoxx 50 index fell by 33.51 points, or 0.70%, to 4,745.15 points; the Spanish IBEX35 index fell by 73.36 points, or 0.65%, to 11,199.44 points; the Italian FTSE MIB index fell by 379.34 points, or 1.13%, to 33,211.00 points.

[Asia-Pacific Stock Markets] The Nikkei 225 index fell by 0.16%, the Indonesia Jakarta Composite Index rose by 0.76%, and the Vietnam VN30 index fell by 1%.

[Gold] COMEX gold futures rose by 0.52% to $2,545.90 per ounce; COMEX silver futures rose by 0.14% to $28.730 per ounce.

[Cryptocurrencies] Bitcoin rose by 0.82% to $57,531.07, while Ethereum rose by 0.71% to $2,377.29.

[Crude Oil] WTI October crude oil futures fell by $2.96, or nearly 4.31%, to $65.75 per barrel; Brent November crude oil futures fell by $2.65, or about 3.69%, to $69.19 per barrel.

[Metals] London metals prices declined, with nickel down by 0.93%, zinc down by 0.77%, aluminum down by 0.36%, and copper down by 0.79%.

[Macro News]

Reuters Survey: Most Economists Expect the Fed to Cut Rates by 25 Basis Points in September, with Two More Cuts Expected Later This Year. A Reuters survey shows that most economists believe the Fed will cut rates by 25 basis points at each of the remaining three policy meetings in 2024, with only nine out of 101 economists expecting a 50 basis point cut next week. Stephen Stanley, Chief US Economist at Santander Bank, stated: " Although the employment report is soft, it is not catastrophic. Last Friday, both Williams and Bullard did not provide clear guidance on whether to cut interest rates by 25 basis points or 50 basis points on September 18, but they both made relatively benign assessments of the economy, which in my opinion strongly points to a 25 basis point rate cut. "Of the 95 economists surveyed, 65 believe that after next week's meeting, the Fed will cut interest rates twice more in November and December this year, each time by 25 basis points. Last month, 55 of the 101 economists surveyed believed this.

Real U.S. household income increased for the first time in four years benefiting from cooling inflation. With the slowdown in price increases, inflation-adjusted household income in the United States grew by 4% last year, the first annual increase since 2019. According to the annual report on income, poverty, and health insurance coverage from the U.S. Census Bureau, the median real household income in 2023 was $80,610, up from $77,540 in 2022. This data highlights the impact of the cooling inflation in 2023, even though many Americans feel the economy is in recession as prices for groceries, housing, and car insurance are much higher than before the pandemic. Despite the growth last year, the median U.S. household income is still $600 lower than in 2019.

Bank of America customers bought a net $2.4 billion in stocks during last week's stock market plunge. Bank of America quantitative strategist Jill Carey Hall and others stated in a research report on Tuesday that the bank's customers bought a net $2.4 billion in U.S. stocks last week as the S&P 500 index had its worst week since March 2023. Retail and hedge fund clients became net buyers last week after selling stocks in the previous two and four weeks, while institutional clients were net sellers for the third consecutive week. Individual stocks recorded the largest inflow of funds in nine weeks, while ETFs recorded outflows for the second consecutive week.

Goldman Sachs: Global central bank rate cuts are favorable for the U.S. dollar. Analysts at Goldman Sachs stated that the imminent rate cuts by the Fed pose limited downside risks to the U.S. dollar as other central banks are also easing policies. The bank's foreign exchange analyst Isabella Rosenberg said that if most central banks ease monetary policy together, we can expect this to limit the impact of the Fed's monetary policy easing on the dollar. When the Fed is not in sync with other major central banks, it usually leads to a weaker or stable dollar. However, in the current situation, U.S. interest rates are still relatively high, and the depreciation of other countries' currencies has somewhat weakened the motivation to sell the dollar and buy assets elsewhere. Given the dollar's status as a safe-haven currency, this global coordinated rate cut may also signal concerns about economic growth, thereby boosting the dollar.

Fed's Quarles: Large bank capital requirements to be raised by half to 9%. Fed Vice Chair for Supervision Quarles stated that U.S. regulatory agencies will make significant changes to their bank capital rules, cutting the expected impact on the largest banks by about half and exempting most measures for smaller banks. Quarles previewed proposed changes to bank capital reforms in a speech on Tuesday, where regulatory agencies originally planned to raise capital for the eight largest U.S. banks by 19%, but this revision will reduce it by about half Including Citigroup, Bank of America, and JP Morgan, lending institutions are now facing a 9% increase in capital requirements to cushion financial shocks. The revised proposal may alleviate the major concerns of Wall Street banks. Following the Federal Reserve and two other financial regulatory agencies' first disclosure of capital plans in July 2023, Wall Street banks launched one of the most intense lobbying efforts. The complete revised proposal is expected to reach 450 pages and may be released as early as September 19.

[Stock News]

Involved up to 15 billion euros, Apple (AAPL.US) and Google (GOOG.US, GOOGL.US) fined simultaneously in Europe. The European Court ruled on the 10th that the American Apple Inc. must pay 13 billion euros in back taxes to Ireland. At the same time, it upheld the 2.4 billion euro fine imposed on American Google for abusing its dominant position to suppress competitors. The court's statement confirmed the maintenance of the European Commission's 2016 ruling that Apple must pay 13 billion euros in back tax benefits to Ireland. The European Court also rejected Google's appeal, upholding the European Commission's 2017 ruling that it abused its dominant position and favored its own shopping service "Google Shopping," imposing a 2.4 billion euro fine.

Nvidia (NVDA.US) CEO Jensen Huang's speech on Wednesday will be closely watched as investors eagerly await progress on the Blackwell chip. Nervous Nvidia investors are eager for the latest developments on the company's Blackwell chip development, hoping for a catalyst to stop the stock's decline. This next-generation processor was launched six months ago but delayed due to engineering issues. While CEO Jensen Huang attempted to reassure the market last month, stating that revenue from the chip would arrive soon, some investors still crave details. This factor, combined with anxiety about the overall macroeconomic situation, has led to a 13% decline in the stock since the financial report was released. Huang will speak at a Goldman Sachs conference in San Francisco on Wednesday, with issues related to Blackwell expected to be a focal point. He plans to speak with Goldman CEO David Solomon at 7:20 a.m. local time.

Bank of America (BAC.US) expects soft investment banking performance in the third quarter with moderate growth in trading revenue. Bank of America CEO Brian Moynihan stated that the bank's investment banking performance for the quarter will be below the expectations of some Wall Street analysts, while sales and trading are expected to achieve low single-digit growth. Moynihan said at the Barclays Global Financial Services Conference on Tuesday that third-quarter investment banking revenue is expected to be around $1.2 billion, flat compared to the same period last year. Some analysts had previously expected it to be close to $1.5 billion, with a growth of about 16.5%. In contrast, Moynihan said, sales and trading "will grow in the low single digits," remaining flat from the previous quarter. "This is a very strong performance, reflecting powerfully our investments in fixed income a few years ago and the recovery in our equity business," he said.

JP Morgan (JPM.US) leads Wall Street's preferred stock redemption wave, reallocating capital before the arrival of Basel rules. JP Morgan is leading a historic wave of preferred stock redemptions as Wall Street banks are repositioning their balance sheets before the imminent arrival of new regulations The bank plans to redeem $1.6 billion of preferred shares next month, reducing its preferred shares by more than a quarter for the year. Bank of America has redeemed billions of dollars of preferred shares, exceeding its fundraising size for the year, reducing such securities by about 13%. Preferred shares are subordinated securities, similar to Additional Tier 1 Capital Bonds (AT1) in Europe, included in regulatory capital. Banks have spent several years increasing Tier 1 capital based on expectations of rule adjustments after the financial crisis. Now, they are cutting back on securities used to supplement this type of capital, as the final version of the system - Basel III final version - will be far less burdensome than the original version. For banks, the fastest way to reduce the cost of capital raised by banks is to redeem preferred shares to reduce Tier 1 capital, which may also improve their performance.

Starbucks (SBUX.US) new CEO vows to focus on stores and coffee. Starbucks' new CEO, Brian Niccol, said he plans to double down on improving the company's physical stores as digital ordering has completely changed the way this coffee chain operates. In an open letter on Tuesday, Niccol said he wants to make coffee shops once again "a place where people linger," clearly distinguishing between dine-in and take-out services. Recent store visits have shown that "everyone feels we have deviated from our core." Niccol will initially focus on the U.S. business. His plans include investing in technology, enhancing the company's supply chain, and upgrading the mobile ordering platform. Niccol pledged to reposition the company as "a welcoming gathering place where we offer the best coffee, handcrafted by our skilled baristas," he said.

Southwest Airlines (LUV.US) announces board restructuring, chairman to retire next year. U.S. Southwest Airlines announced changes to its board of directors on Tuesday, including Chairman Gary Kelly's retirement, but reiterated support for CEO Bob Jordan amid calls for restructuring from activist investor Elliott Investment Management. The airline said the chairman will voluntarily retire after the annual meeting next year, and six directors will voluntarily resign after the November board meeting. Southwest Airlines plans to appoint four new independent directors in the near future, which may include up to three candidates proposed by Elliott. In a letter to shareholders, Kelly said the company shared a specific framework with Elliott on Monday to address its concerns about corporate governance and performance, and will continue to engage constructively with Elliott to achieve a cooperative solution in the short term.

[Major Bank Ratings]

Wells Fargo: Lowered target prices for Ford (F.US) and General Motors (GM.US) by $1 each, to $9 and $33, respectively