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On Tuesday, a key measure of inflation rose at a faster rate than anticipated. The Consumer Price Index, which excludes volatile food and energy prices, was up 3.1 percent in July.
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Reuters
27 minutes ago
- Reuters
TRADING DAY Tech it down a notch
ORLANDO, Florida, Aug 19 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Wall Street slumped on Tuesday, dragged down by weakness in some of the big tech companies that have led the charge to new highs this year, as investors hunker down ahead of a keynote speech by Fed Chair Jerome Powell later this week. More on that below. In my column today I look at the cagey dance between Donald Trump and Wall Street - the market knows it has the power to rein in some of the president's policy excesses, but isn't wielding it. Not yet, anyway. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Today's Talking Points: * Peace in our time? Investors digested the extraordinary summit between U.S. President Donald Trump, Ukraine President Volodymyr Zelenskiy, and a phalanx of European leaders in the White House on Monday. Did it move the dial much on the prospects of a Russia-Ukraine ceasefire, or a deal to end the war? Optimism around Trump's promise of security guarantees for Ukraine in the future buoyed European markets on Tuesday. But that evaporated as the U.S. session rolled on, as Trump told Fox News he thinks Russian President Vladimir Putin may not want to make a deal after all. There may be no immediate direct impact on major equity, bond, or currency markets from the conflict. But prolonged war on Europe's doorstep, fractured ties between the US and Europe, and a fickle relationship between Trump and Putin can't be good in the long term. * Retail therapy. Some of America's biggest retailers report second-quarter earnings this week, shining a light on the health of the U.S. consumer and, by extension, the economy at large. Home Depot reported on Tuesday; Lowe's, Target, and TJX release results on Wednesday; and Walmart is out on Thursday. There are conflicting signals coming from the U.S. consumer. By some measures, household consumption flat-lined in the first half of the year, but other indicators show consumer spending is the biggest contributor to GDP growth. The rich are spending, but the bottom 50% are struggling. The S&P 500's consumer discretionary sector is flat this year, and the consumer staples index is up 6%. Both are lagging the broader index, which is up 8%, and the IT and communications sectors, which are both up around 13%. * Interest rate decisions. The central banks of New Zealand, Indonesia, and China announce their latest policy decisions on Wednesday. Two of the three are expected to stand pat, and one is expected to cut borrowing costs. The People's Bank of China is expected to keep benchmark one- and five-year lending rates unchanged for the third straight month at 3.5% and 5.5%, respectively. Although the economy needs more support, the central bank may want to explore structural policies aimed at specific sectors rather than broad-based monetary easing. For now. This has helped propel a recovery in the yuan, which was plumbing 17-year lows at the depths of the "Liberation Day" tariff turmoil in April. Since then, the PBOC has only lowered borrowing costs once, by 10 basis points, and has fixed the yuan higher in 16 of the last 19 weeks. Markets, Trump in delicate policy dance U.S. President Donald Trump has faced little opposition in his drive to rip up the global economic rulebook, whether from his fellow Republicans, political opponents, or institutional guardrails. The only exception has been "the market." But now even investors are holding their fire, enabling more risk to build up in the financial system. Wall Street's reaction to Trump's "Liberation Day" tariffs on April 2 was so ferocious that the president did something he had rarely done: he backed down. Trillions of dollars were wiped off the value of U.S. stocks amid a 10% nosedive from April 3-4. The only two-day selloffs since the 1930s that were bigger occurred during the Second World War, "Black Monday" in 1987, the Global Financial Crisis in 2008, and the pandemic in 2020. The stock market bottomed out on April 7 after Trump paused most of his country-specific tariffs. Wall Street has not looked back since, with the S&P 500 rebounding 35% to an all-time high. This episode suggests that "the market" is one of the few true checks on Trump's apparent pursuit to reshape the U.S. – and indeed the world – economy. The only problem is that the president has continued to pursue unorthodox policies in recent months - including challenging the independence of the Federal Reserve, firing statisticians, and slapping tariffs on countries for non-economic reasons – and investors have failed to tap the brakes. The so-called "Trump put" -- the idea that the president won't let the markets fall too far -- is essentially a funhouse mirror version of the famous "Fed put," the long-held belief that, in the event of a crisis, the central bank will step in to restore stability. Trump seemingly did just that in April, but it was to clean up a mess of his own making. And one could argue that it was actually investors who came to the economy's rescue by putting pressure on the president to reconsider policies considered ill-advised by most economists. Trump and markets are therefore now in a curious dance. Investors appear to believe that markets can ultimately stop Trump from pushing the envelope too far on tariffs or other policies. But as a result, investors are not overreacting – or reacting at all – to the latest controversies around the Bureau of Labor Statistics firing, his attacks on Fed Chair Jerome Powell, his pressure on Intel's CEO to resign, or the outsized tariffs slapped on Brazil and India. This, in turn, has powered the markets to new record highs, emboldening Trump to push the envelope even further. So even though the market has the power to rein in the president's economic policy excesses, it's not using it. Why hasn't the market pushed back? As the cliche goes, equity investors are paid to be optimistic. It's in their interest to keep the train hurtling along, provided there aren't any immediate obstacles to derail it. There are, of course, a few pretty large hurdles on the horizon for the U.S. economy, including the highest tariffs since the 1930s and some of the biggest budget deficits since World War II outside of crisis periods. But until these or other issues present an immediate economic threat, markets can choose to ignore them. By under-reacting to Trump's unorthodox policies, markets may not only delay the day of reckoning but also amplify the potential impact. Why? Genuine economic and geopolitical paradigm shifts are under way, and investors are not pricing in the attendant risk. Nobody knows what the ultimate impact of these shifts will be, but we do know that with greater uncertainty comes greater downside risk. Yet equity volatility is the lowest it has been this year, and even in the bond market – not known for its optimism – volatility is the lowest in three and a half years, while U.S. corporate bond spreads are the tightest since 1998. Ultimately, the market is unlikely to call Trump's bluff until something truly unexpected or extreme hits. In the meantime, investors can justify this nonchalance by saying that corporate earnings growth is solid, AI enthusiasm is high, economic growth remains decent, unemployment is low, and consumers are still spending. Wall Street is choosing not to put on the brakes, meaning this train will continue rolling on. Whether it's heading for a collision is an open question. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Reuters
an hour ago
- Reuters
Nasdaq tumbles as Jackson Hole jitters hit tech stocks
Aug 19 (Reuters) - The Nasdaq and S&P 500 slid on Tuesday driven by tech stocks, as investors gear up for what Federal Reserve chair Jerome Powell will say about the path of interest rates at a key conference later in the week. The Nasdaq fell as megacaps lost, after having rallied for much of the year. Nvidia (NVDA.O), opens new tab fell 3.5%, the biggest drop in nearly four months. The key event this week is the Fed's annual symposium at Jackson Hole, Wyoming, from Aug. 21-23, where Powell's comments will be scrutinized for any clues on the central bank's outlook on the economy and monetary policy. "It seems like folks are hedging a little going into Jackson Hole, thinking Powell might be more hawkish than markets currently appreciate," said James Cox, managing partner at Harris Financial Group. Interest rate futures point to a total of two rate cuts this year worth 25 basis points each, with the first expected in September, according to data compiled by LSEG. Some market participants also expressed some concerns about AI-related stocks after OpenAI's CEO Sam Altman said they are in a bubble in an interview with "The Verge" late last week. The Dow Jones Industrial Average (.DJI), opens new tab rose 10.45 points, roughly flat, to 44,922.27, the S&P 500 (.SPX), opens new tab lost 37.78 points, or 0.59%, to 6,411.37 and the Nasdaq Composite (.IXIC), opens new tab lost 314.82 points, or 1.46%, to 21,314.95. Steve Sosnick, chief strategist at Interactive Brokers, said some investors are taking some profits from tech stocks and rotating into other sectors. "(This move) spills into the broader market because of those stocks' weight in major indices," he added. Still, six of the S&P 500 sectors rose. Real estate (.SPLRCR), opens new tab led the pack, up 1.8%, helped by better-than-expected housing data. On the other hand, technology (.SPLRCT), opens new tab and communications services (.SPLRCL), opens new tab lost over 1.9% and 1.2%, respectively. A Reuters poll showed on Tuesday that the S&P 500 will end 2025 just below current near-record levels, at 6,300 points, reflecting tempered optimism amid ongoing concerns over the economic impact of President Donald Trump's global tariffs and uncertainty surrounding Fed rate cuts. The blue-chip Dow briefly hit a record high on Tuesday, aided by a rise in Home Depot's shares after the retailer kept its annual forecasts intact. Home Depot (HD.N), opens new tab rose 3.17% despite missing quarterly results estimates, while rival home-improvement chain Lowe's (LOW.N), opens new tab also gained 2.18%. Earnings from Lowe's and big-box retailers Walmart (WMT.N), opens new tab and Target (TGT.N), opens new tab later this week are now in focus as investors await more insight on the health of the American consumer. "Consumers are still not really spending at full speed ahead, they're a little bit cautious," said Peter Cardillo, chief market economist at Spartan Capital Securities. "They're waiting to see the full results of the tariffs' impact on the upcoming holiday sales in a couple of months from now." Intel (INTC.O), opens new tab jumped roughly 7% after the chipmaker got a $2 billion capital injection from Japan's SoftBank Group (9984.T), opens new tab. Palo Alto Networks (PANW.O), opens new tab rose 3.06% after the cybersecurity company forecast fiscal 2026 revenue and profit above estimates. Medtronic (MDT.N), opens new tab lost 3.13%, after the company said it would add two new directors to its board after Elliott Investment Management took a large stake in the medical-device maker. Advancing issues outnumbered decliners by a 1.06-to-1 ratio on the NYSE. There were 205 new highs and 62 new lows on the NYSE. The S&P 500 posted 13 new 52-week highs and one new low while the Nasdaq Composite recorded 56 new highs and 88 new lows.
The Independent
an hour ago
- The Independent
Minnesota sues TikTok, alleging it preys on young people with addictive algorithms
Minnesota on Tuesday joined a wave of states suing TikTok, alleging the social media giant preys on young people with addictive algorithms that trap them into becoming compulsive consumers of its short videos. 'This isn't about free speech. I'm sure they're gonna holler that," Minnesota Attorney General Keith Ellison said at a news conference. "It's actually about deception, manipulation, misrepresentation. This is about a company knowing the dangers, and the dangerous effects of its product, but making and taking no steps to mitigate those harms or inform users of the risks.' The lawsuit, filed in state court, alleges that TikTok is violating Minnesota laws against deceptive trade practices and consumer fraud. It follows a flurry of lawsuits filed by more than a dozen states last year alleging the popular short-form video app is designed to be addictive to kids and harms their mental health. Minnesota's case brings the total to about 24 states, Ellison's office said. Many of the earlier lawsuits stemmed from a nationwide investigation into TikTok launched in 2022 by a bipartisan coalition of attorneys general from 14 states into the effects of TikTok on young users' mental health. Ellison, a Democrat, said Minnesota waited while it did its own investigation. Sean Padden, a middle-school health teacher in the Roseville Area school district, joined Ellison, saying he has witnessed a correlation between increased TikTok use and an 'irrefutable spike in student mental health issues,' including depression, anxiety, anger, lowered self-esteem and a decrease in attention spans as they seek out the quick gratification that its short videos offer. The lawsuit comes while President Donald Trump is still trying to broker a deal to bring the social media platform, which is owned by China's ByteDance, under American ownership over concerns about the data security of its 170 million American users. While Trump campaigned on banning TikTok, he also gained more than 15 million followers on the platform since he started sharing videos on it. No matter who ultimately owns TikTok, Ellison said, it must comply with the law. TikTok disputed Minnesota's allegations. 'This lawsuit is based on misleading and inaccurate claims that fail to recognize the robust safety measures TikTok has voluntarily implemented to support the well-being of our community," company spokesperson Nathaniel Brown said in a statement. "Teen accounts on TikTok come with 50+ features and settings designed to help young people safely express themselves, discover and learn. "Through our Family Pairing tool, parents can view or customize 20+ content and privacy settings, including screen time, content filters, and our time away feature to pause a teen's access to our app,' Brown added. Minnesota is seeking a declaration that TikTok's practices are deceptive, unfair or unconscionable under state law, a permanent injunction against those practices, and up to $25,000 for each instance in which a Minnesota child has accessed TikTok. Ellison wouldn't put a total on that but said, 'it's a lot.' He estimated that 'hundreds of thousands of Minnesota kids' have TikTok on their devices. 'We're not trying to shut them down, but we are insisting that they clean up their act,' Ellison said. 'There are legitimate uses of products like TikTok. But like all things, they have to be used properly and safely.' Minnesota is also among dozens of U.S. states that have sued Meta Platforms for allegedly building features into Instagram and Facebook that addict people. The messaging service Snapchat and the gaming platform Roblox are also facing lawsuits by some other states alleging harm to kids.
