Stocks Waver Near Record Highs, Crude Oil Advances: Markets Wrap
(Bloomberg) — Stocks paused near record highs with traders looking to the next big data print from the US as bets on Federal Reserve interest-rate hikes eased. Oil passed $84 a barrel as a deal to reopen the Strait of Hormuz remained elusive.
US futures pointed to small moves at the open after the S&P 500 Index closed at an all-time high on Friday following soft US jobs numbers. Contracts on the Nasdaq were up 0.2%. European tech stocks outperformed as the regional benchmark index held near last week’s peak.
JPMorgan Chase & Co. analysts lifted their S&P 500 year-end target to 8,000 from 7,800, saying a strong earnings season and faster AI monetization than expected for hyperscalers is boosting profit estimates. Focus now turns to US consumer price data due this week for clues on policy makers’ next moves as well as the outlook for a lasting deal between the US and Iran on the key waterway.
“With earnings largely in the rear-view mirror, geopolitics — and particularly Iran’s impact on oil prices and inflation expectations — should move back to the forefront,” said Fabio Caldato, portfolio manager at AcomeA Sgr. “We are focused on Wednesday’s US CPI print as a key test of the ongoing disinflationary process.”
Treasuries pared Friday’s advance, lifting the 10-year yield two basis points to 4.66%. The dollar edged higher against most of its Group-of-10 peers. Traders trimmed the likelihood of a rate hike at the Fed’s September meeting to a roughly 45% chance, down from 64% a week ago, according to swaps data compiled by Bloomberg.
Oil rose as much as 1.7% with Iran and Oman still short of a deal, while Houthi militants claimed an attack on a Saudi refinery near the Red Sea.
An agreement with Oman to establish a shipping route through Hormuz was “very close,” Iran’s Foreign Minister Abbas Araghchi said over the weekend. He ruled out direct talks with the US for now because of violations of an interim peace deal reached in June.
What Bloomberg Strategists Say…
“Oil is firmer on Monday after another weekend of stalled progress on reopening the Strait of Hormuz, yet traders are skeptical prices will rise for an extended period. Net long oil positioning showed only a tepid rebound in July, but that’s already being trimmed across crude contracts.”
— Mark Cranfield, MLIV. For full analysis, click here.
The increased S&P 500 target was the second in two months from JPMorgan.
The team led by Dubravko Lakos-Bujas cited stronger cloud growth and increased backlogs at Alphabet Inc., Amazon.com Inc. and Microsoft Corp. that should reduce worries over return on their invested capital.
“As elevated backlogs convert into recognized revenue, cloud growth should remain well supported, helping validate rising AI capex,” they said. “Across hyperscalers, demand indicators remain high and rising.”
Strategists at banks including Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc. are also among the most bullish voices on US stocks this year. On average, the S&P 500 is seen rising to 7,845 points by the year end, about 1% above current levels.
Corporate News:
Taiwan Semiconductor Manufacturing Co. reported a 45% rise in its monthly sales, a sign of sustained demand for AI hardware in the face of market volatility. Berkshire Hathaway Inc. spent about $4.5 billion to buy back its own shares in the second quarter and purchased nearly $20 billion of equities in the period, signs that Chief Executive Officer Greg Abel is putting more of the firm’s cash pile to work. Sony Group Corp. and TSMC are in talks to spend a combined ¥1 trillion ($6.4 billion) on their planned joint factory in Japan, according to a person familiar with the plans. SK Hynix Inc. is considering options for its Chongqing, China-based facility, including bringing in an investor to help accelerate growth, according to people with knowledge of the matter. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:29 a.m. New York time Nasdaq 100 futures rose 0.1% Futures on the Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 rose 0.2% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro was little changed at $1.1551 The British pound was little changed at $1.3499 The Japanese yen fell 0.7% to 158.79 per dollar Cryptocurrencies
Bitcoin fell 0.1% to $65,034.51 Ether fell 0.1% to $1,917.69 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.66% Germany’s 10-year yield was little changed at 3.14% Britain’s 10-year yield advanced one basis point to 4.93% Commodities
West Texas Intermediate crude rose 1.4% to $79.27 a barrel Spot gold fell 0.2% to $4,334.61 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Momoka Yokoyama, Anand Krishnamoorthy and Levin Stamm.
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