Article published at 9:05 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- CME FedWatch tool rises to 62% likelihood of hike
- Crude prices on the rise as U.S. and Iran tensions escalate
- Apple expected to reveal foldable iPhone
Fears of rising interest rates coupled with escalating crude oil prices is never a great combination for the stock market and we’re seeing that in today’s early trading as investors move into defensive mode.
Crude oil prices are markedly higher with Brent, the global benchmark, topping $100 per barrel in early trading as tensions between the U.S. and Iran continue to escalate, choking shipments through the Strait of Hormuz. WTI crude, the U.S. benchmark, is 3.1% greater, flirting with the $96-a-barrel range.
Worries that the Federal Reserve could hike interest rates 25 basis points to a range of 3.75% to 4.0% a week from now climbed to 62.4%, as charted by the CME FedWatch tool. The 10-year yield is hovering above 4.8%, which could impact mortgage rates and the housing industry.
The three major indices are all sharply lower with the Dow Jones Industrial Average dropping 360 points, or 0.67%, while the S&P 500 Index is down 0.29% and the Nasdaq Composite is tumbling by 0.37%.
Tuesday’s session also was smacked by rising crude oil prices and intensifying clashes between the U.S. and Iran. The Dow got hit hardest, falling 1.13%, or nearly 630 points, while the S&P 500 lost 0.58% and the Nasdaq gave up 0.32%.
Investors also are waiting on how much the Treasury Department is going to spend to repurchase long-dated U.S. debt, expected out later today. Wall Street is anticipating a total of $4 billion to $5 billion. That’s a big number but in a trillion-dollar market, it’s akin to a small wake in a large ocean.
Keep an eye on Apple shares today as the technology titan is expected to unveil its foldable iPhone, the first major announcement under John Ternus, the chief executive who replaced Tim Cook after his retirement. Expectations are high for what’s widely expected to be a $2,000 iPhone 18 Pro as well new Apple watches in today’s product event. In early trading, shares are off 0.84%.
The funding of artificial intelligence (AI) efforts is a seemingly never-ending beast that’s impacting shares of Amazon. Shares are losing 1.8% as investors absorb news of a $4.15 billion sterling bond sale in Europe amid its heavy spending in AI.
Novartis shares dropped 14% Tuesday but are recovering by 1.1% in early trading. Tuesday’s fall reflected disappointment in the drug maker’s back-to-back trial failures on two of the three major treatments it has in the pipeline. On Tuesday, Novartis reported its treatment for a muscle-wasting disorder failed in late-stage trials after patients were unable to meaningfully improve their ability to open their hands. That came after Friday’s announcement that its cholesterol-fighting drug did reduce so-called bad cholesterol in late-stage trials but failed in reducing cardiovascular events, including heart attacks and strokes.
That cast uncertainty on broader experimental drug testing for bad cholesterol, hitting shares of Amgen by 10.1% and Eli Lilly by 2.2% Tuesday. In early trading, shares of the two were trading in opposite directions with Amgen shares off 0.35% and Eli Lilly shares gaining 0.85%.
Meta shares are seeing a 4.7% uptick after the technology giant introduced Muse, a personal artificial intelligence (AI) agent it said will help folks to better manage their lives. Muse connects to emails, calendars, payments and other everyday services to help you with a host of affairs ranging from buying a car or reserving a hotel to signing up for a marathon.
GameStop’s major source of revenue is not videogames, but collectibles, the company reported in an earnings report Tuesday. Investors rewarded the meme stock by pushing shares higher by 1.5%.
Happy Trading!
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