US Open: Indices halt decline, as USD keeps appreciating

• Wall Street Opens Higher Mid-Week
• The recent sell-off has resulted in significant oversold conditions
• Costco (COST.US) Declines Despite Surpassing Earnings Estimates

Wall Street began slightly higher, pausing the global sell-off seen in recent days. However, the dollar continues its upward trend, with the USD emerging as one of the strongest currencies among major economies today. This points to an ongoing trend as investors now anticipate that higher rates will persist for an extended period. The US500 is up by 0.30%, rebounding from a key support level, while the US100 sees a similar daily change. Meanwhile, US Treasury yields have pulled back from their recent peak.

Investor concerns are intensifying around the possibility that the Federal Reserve may maintain elevated interest rates amidst economic slowing. This apprehension has led US stocks towards their steepest monthly decline since last December. A notable shift is also evident among bond investors, who now anticipate more aggressive policy rates.

US Durable Goods

The US durable goods orders report for August was published today. Given its preliminary nature, the report garnered significant attention from market players. While the consensus hinted at a modest figure, the data surprisingly indicated a surge in headline orders. When excluding transportation, core orders exceeded expectations. Non-defense capital goods orders, excluding aircraft, rose by 0.9%, beating the anticipated 0.0%. However, there was a downward adjustment in the previous month's data. When transportation and defense are both excluded, there was a 0.7% decrease in orders, but shipments experienced a 0.7% increase. Even with the prior month's downward revision, core orders stand impressively above the consensus, hinting that the manufacturing slump might be on the verge of ending.

US, durable goods orders for August:

• Headline: +0.2% MoM vs -0.5% MoM expected (-5.2% MoM previously)

• Ex-transport: +0.4% MoM vs +0.1% MoM expected (+0.4% MoM previously)

US 500

The US500 is currently trading at 4330 points, showing a 0.30% increase today, which comes after two weeks of substantial declines. The index experienced a drop from the resistance line around 4560 points, with the declines halting at a crucial support level near 4300 points. If this support zone is breached, and the index price falls below it, the next key level to monitor is around 4200 points, marking a significant area that could potentially come into play as the market seeks further direction.

Global news wrap

• DOJ intensifies probe into Credit Suisse and UBS regarding suspected compliance failures related to Russian sanctions evasion. The investigation is in its early stages, and UBS is looking to grow in the US. 

• Evergrande Chairman Hui Ka Yan placed under Chinese police control for unspecified reasons, indicating the Evergrande situation may now involve the criminal justice system.

• Futures and Treasuries rise, while a global equities measure drops below its 200-DMA, indicating potential oversold status. The Bloomberg dollar index remains near its 2023 peak, with oil prices rising and gold prices falling.

• Italy aims to elevate Monte Paschi to the country's third-largest bank by merging it with a similarly sized peer. No formal merger discussions have been initiated.

Company News:

• ChargePoint Holdings (CHPT.US) gains 4.3% after UBS starts coverage of the electric-vehicle charging company with a buy rating and $9 price target.

• Costco (COST.US) falls 1.8% despite beating earnings estimates. The firm held back from commenting on the timing of its membership-fee increase, something Morgan Stanley sees as a slight disappointment.

• Nutanix (NTNX.US) shares are up 2.2% with analysts positive on the infrastructure software company in the wake of an investor day event where it updated its financial targets.

• Ginkgo Bioworks Holdings (DNA.US) jumps 16% after the health-care firm said it is collaborating with Pfizer to develop new RNA drugs. Endpoints News reported the news earlier.

Source: xStation 5