Stocks Waver Near Record Highs, Crude Oil Advances: Markets Wrap
(Bloomberg) — Stocks hovered around record highs as traders looked to the next big data print from the US and the lack of a deal to reopen the Strait of Hormuz kept oil above $84 a barrel.
US futures pointed to small moves at the open after the S&P 500 Index closed at an all-time high on Friday. Ten-year Treasury yields rose two basis points to 4.66% and the dollar edged higher against most of its Group-of-10 peers.
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.”
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.
In currencies, the yen was in focus as the boost from recent interventions faded. Traders are on alert for further official action as the Japanese currency slipped 0.7% against the dollar to 158.84.
What Bloomberg Strategists Say…
“Markets were understandably unconvinced by July’s joint US-Japan intervention. The yen is the only G10 currency down against the dollar so far in August, unwinding its post-intervention rally. But as investors rebuild short yen positions, the risk of another intervention rises.”
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.
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:
Intel Corp. said it will be offering $15 billion in common stock, taking advantage of renewed interest in its business prospects during the artificial intelligence data center boom. GameStop Corp., led by Chief Executive Officer Ryan Cohen, is considering withdrawing its $56 billion bid for eBay Inc., according to people familiar with the matter. 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 8:23 a.m. New York time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average were little changed 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 $1.1550 The British pound was little changed at $1.3497 The Japanese yen fell 0.6% to 158.70 per dollar Cryptocurrencies
Bitcoin was little changed at $65,042.52 Ether fell 0.2% to $1,916.88 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 two basis points to 4.94% Commodities
West Texas Intermediate crude rose 1.8% to $79.59 a barrel Spot gold fell 0.3% to $4,328.10 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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