JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Investors react to cooler than expected PCE report
- Crude oil prices on the rise
- Cboe Global Markets and Robinhood ink pact tied to KPI
Investors moved off the sidelines after the release of the Federal Reserve’s preferred inflation gauge with all three major indices marching to the upside.
The personal consumer expenditures (PCE) came in cooler than Wall Street’s expectations with the index rising 0.3% in August and up 3.4% year-over-year. Economists were looking for a 0.4% gain in August and 3.7% over last year. Core PCE, which excludes food and energy prices, rose 0.2% on the month and 3% over the year.
The Fed closely considers these inflation reports to help determine the direction of interest rates. While cooler-than-expected results are typically a good sign, the results are still above the Fed’s preferred 2% range.
As we’ve noted, the markets tend to see a little bit of pop at the end of a quarter, which is today for the third quarter. The Nasdaq Composite is advancing by 0.48%. and the S&P 500 Index is higher by 0.33%. The Dow Jones Industrial Average is hugging the flat line and looks like it may snap its five-month streak of advances. The week started out rough, stumbling again Tuesday as the Dow and the Nasdaq marked their fifth straight trading day to the downside.
Crude oil prices are on the rise again, despite analyst reports that oil tankers are beginning to flow through the Strait of Hormuz near pre-war levels. However, risks still remain, they contend. WTI Crude Oil is up 2% and trading above the $91-per-barrel range early on, after finishing below $90 yesterday.
As I mentioned yesterday, this week I’m at Robinhood’s third annual summit, where the retail brokerage firm has rolled out a handful of new products and updates. Among them is Cboe’s partnership to launch a new category of binary contracts tied to company-specific key performance indicators (KPI), which is expected to launch next month, pending regulatory approval.
These KPI contracts fulfill investor demand for products that are intuitive, event-driven and directly based on the companies they follow. Stay tuned for the official rollout — I will have plenty more to share. Robinhood also introduced what it calls Robinhood Agents, an artificial intelligence (AI) tool embedded in its app.
Boeing shares, which got knocked earlier this week, are heading higher by nearly 1% after the aerospace giant won a U.S. Navy contract worth more than $20 billion to manufacture its next-generation fighter jet. Boeing shares have been on a rocky road, down 17% year-to-date.
Nvidia shares are higher by 1.5% with trading 1.5 times its normal put volume. There are a number of buyers of the 225 and 220 puts that expire today. Tesla put buyers are surrounding the 352.5 and 350 puts that expire today too, but shares are falling 1.65%.
Moderna shares are giving up 6.3% after an analysts downgraded the stock, noting that the valuation is “unjustifiable.” Moderna shares are up 156% year-to-date.
Micron is slated to open its books after the bell today and Wall Street analysts say they will be looking for the vaccine maker’s quarterly revenue outlook. Bloomberg reported that one analyst called the results a “key driver” for the sector.There’s a 6.5% implied move in either direction on the shares with call buying focused on the 1100 line.
Happy Trading!
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