Article published at 9:15 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:
- Moderna, Merck jump on positive results for melanoma cure
- Federal Open Market Committee (FOMC) notes become public this afternoon
- Treasury yields backtrack after Treasury’s debt-management move
The markets are pivoting to snap a three-day losing streak as investors await the Federal Reserve minutes and absorb bond yields. Pressures are lightening after the Treasury Department surprised investors by announcing it will double some liquidity support operations.
Treasury yields, which move opposite of prices, are reacting to the Treasury’s debt-management move to repurchase older, outstanding notes before they mature. The 30-year is backtracking to 5.205%, after hovering at levels not seen in two decades yesterday and touching an intraday high of 5.31% that it hasn’t tapped since 2007. The 10-year is at 4.645%. On Tuesday, it hit 4.747%, its highest level since January of last year.
Technology stocks are recovering moderately after getting smacked yesterday, with SanDisk, Micron, Western Digital and Seagate making notable moves to the upside. The Nasdaq Composite, however, is perched on the flat line in early trading. Yesterday, the index gave back 1.3% and the PHLX Semiconductor Index, a closely watched gauge of semiconductors, backtracked by 5%.
The S&P 500 Index is up 0.41%, recovering somewhat from Tuesday’s 0.69% pullback. The Dow Jones Industrial Average is also on the upside by 0.26%, totally regaining yesterday’s 0.22% decline at the close.
Investors are hoping they will get some insight into the Federal Reserve’s thinking when the minutes of the Federal Open Market Committee (FOMC) are released early this afternoon. Given Chairman Kevin Warsh’s close-to-the-vest stance on forward guidance, the minutes might tell us how hawkish the FOMC members were as a group. We may also learn if there were others who might have broken ranks with the three who voted to hike the rates above the 3.50% to 3.75% level they’re at now.
Warsh has insisted the Fed will fight inflation to meet its 2% target and reports released last week suggested inflation might be cooling. However, this week’s sinking market activity has had strong ties to inflation fears as oil prices and Treasury yields swell.
Positive results for a groundbreaking skin cancer treatment are propelling shares of Merck and Moderna in the early going. Moderna’s mRNA shot combined with Merck’s Keytruda immunotherapy drug after surgery were successful in a phase three trial of completely removing advanced melanoma. More tests are coming. Moderna shares are up more than 120% in the early going while Merck’s are climbing by 9.5%.
Target shares are higher after the big-box retailer posted earnings that solidly beat Wall Street’s estimates as well as better-than-expected revenues in a sign that its turnaround is beginning to materialize. Shares were up 3.8%.
Lowe’s earnings disappointed investors after the do-it-yourself and professional home-improvement giant fell short of expectations and lowered its forward outlook to the low end of previous guidance. Lowe’s blamed “pressure in discretionary DIY spending” for the muted results. Shares fell in pre-market trading, but moved about 1% higher after the open.
Reddit shares are off 0.75% after falling 3.8% in Tuesday’s debut on the S&P 500 Index, tearing at the 11% advance after the social-media company’s inclusion in the index was announced.
Klarna shares are falling again in early trading after declining 23% yesterday when it reported robust second-quarter results but provided guidance that missed the mark of Wall Street’s expectations. A drag from currency translations and slowdown in Germany’s consumer spending were the culprits. Shares today are down 3.3%.
Crude oil prices are moving to the upside after a hike yesterday as talks between the U.S. and Iran appear to be at a standstill, keeping oil from freely passing through the Strait of Hormuz at a time when the U.S. reserves are dwindling quickly. WTI Crude Oil prices are up in the low-$85 per barrel range in early trading.
Happy Trading!
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