Latest news with #OpeningBid
Yahoo
11 hours ago
- Business
- Yahoo
Markets want rate cut, but Fed faces tough choice, chief investment officer says
Cracks are forming in an otherwise resilient economy, and the Federal Reserve could soon face a no-win choice. 'The market wants to see a rate cut in September,' Brent Schutte, chief investment officer at Northwestern Mutual, said on Yahoo Finance's Opening Bid. Although the Fed left rates unchanged as expected at its July 30 meeting, Schutte says the bigger question is whether policymakers will pivot toward easing it later this year. The market has currently assigned a rough 58% probability to a September rate cut, making it a near 'coin toss.' Despite the uncertainty, retail investors continue to pour money into equities, fueling market gains. Schutte points to an 'insatiable appetite' among this group, which could help cushion markets even if the Fed signals disappoint. If expectations for a cut keep building, markets will likely rally. But if the Fed leans away from easing, a modest pullback could follow. According to Schutte, the Fed, like markets, remains uncertain about the economic outlook and appears increasingly divided, Schutte said. Some members, like Governor Christopher Waller, have floated the idea of voting for a rate cut even sooner. While dissenting voices alone aren't decisive, they reflect broader indecision at the central bank. One key wild card is the new tariff deal announced by President Trump, which slapped a 25% tariff on imports from India. Schutte said the market has mostly shrugged off the latest tariff threats, assuming the White House might reverse course if necessary. But he warns that could be a risky bet, especially if businesses start passing tariff costs onto consumers. Read more: The latest news and updates on Trump's tariffs Underlying economic data already points to weakness. Companies like Procter & Gamble (PG) and Starbucks (SBUX) have flagged softening demand. Kraft Heinz (KHC) has emerged as a winner, posting robust quarterly earnings fueled by inflation-weary consumers opting to cook more at home. Even so, real private domestic purchases have slowed sharply, even before the full impact of tariffs. 'You are seeing a consumer that is beginning to weaken,' Schutte said. If companies hike prices, the Fed may soon face a tough choice between rising inflation and slowing growth. Meanwhile, Morgan Stanley maintained its baseline view that the Fed will not cut interest rates in 2025. However, in a new report, the firm outlined growing downside risks that could push policymakers to act sooner, even as early as September. Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments The report highlights five scenarios that could justify such a move, including a sharp drop in private payrolls, unemployment above 4.5%, continued disinflation in services, weak inflation alongside rising joblessness, or early signs of corporate stress like weak earnings and layoffs. 'It's a long way to September,' Morgan Stanley analyst Michael Gapen wrote. With several months of data to come, including the Jackson Hole Economic Policy Symposium in August, policymakers have time to wait. While cuts remain unlikely in Morgan Stanley's base case, the firm acknowledges a more divided Fed. Following June's meeting, a majority of FOMC participants favored at least one cut by year-end, making a September move plausible if the data breaks the right Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Wall Street's riding high on relief, not results: Strategist
Wall Street's recent rally could soon face a reckoning. "Stocks are up because we've priced out macro risks," Michael Kantrowitz, chief investment strategist at Piper Sandler, said on Yahoo Finance's Opening Bid. "If the earnings aren't good enough, there's a lot of downside risk." Kantrowitz said the absence of fear has powered the bull market instead of a surge in corporate results, and investors are already pricing in a soft landing before it's fully earned. The S&P 500 (^GSPC) has climbed over 8% in the past year, buoyed by falling inflation, rate-cut hopes, and fading recession fears. Kantrowitz, however, said there haven't necessarily been signals of stronger fundamentals. The disconnect may worsen if companies report middling results or offer guidance that names headwinds, such as tariffs. Tariffs appear to be gnawing at Procter & Gamble (PG) and Whirlpool (WHR). Both companies recently reported earnings that underscored the repercussions they face due to Trump's trade policy. Kantrowitz argued that companies experience international supply chain pressures differently. While some high-flying names have seen effortless growth, he advises against using the market as an indicator of whether risks like tariffs are being priced in. "The market may not be appearing to pay much respect to tariff risks," he said, even though negative surprises can arise from Trump's tariff deals. The path higher has been greased by unusually favorable financial conditions. Bond volatility is sitting at multiyear lows. Real energy prices remain tame. Credit spreads, a key gauge of corporate risk, have tightened to multidecade lows, Kantrowitz added. These factors may help explain why valuations are stretched and why they make the current moment more fragile, especially if interest rate expectations shift. "Valuations of the S&P 500 should be high relative to history," Kantrowitz said, noting that credit spread suggests that further P/E expansion is limited. "How much more PE expansion is possible? That's going to come down to the next several inflation reports and where interest rates go." The risks are that the market is currently pricing in too many rate cuts, and that sticky inflation or geopolitical shocks, like trade wars, force a repricing. If that happens, investors may "sell off" the most speculative names. In the near term, attention will remain on corporate guidance. Any sign of softening demand, margin pressure, or cost inflation could cause swift revaluations. But over the longer term, the market's fate may hinge on whether earnings actually catch up to the optimism or if Wall Street will be forced to reckon with results that don't support the hype. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
Cheap stock trading is rising this year: What does it mean?
There has been an uptick in cheap stocks trading, according to data from Jefferies. The firm said that stocks under $5 represent more than a quarter of all trades this year. The Opening Bid team and Crossmark Global Investments' chief market strategist Victoria Fernandez take a closer look at what the rise in cheap stock trading signals about the broader market. To watch more expert insights and analysis on the latest market action, check out more Opening Bid here. Jeffrey's noting that trading in stocks under $5 has risen to 26% of whole volume so far this year. That's a huge number. Uh my question to the round table is this, why is this activity in speculative stocks happening? Brook, let me set this up with you because you talked about the meme stock trade earlier on in the show. Uh what is it looking like today because I know a lot of the names that did well early last week sold off into the weekend. Yeah, if we take a look at the YF interactive over the past five days, if you take a look at the equal weight, we've seen crispy cream really coming to play over the past five days alone. That stock's up more than 20% uh 26% rather. Macy's is also getting a bit of a buzz here. That stock up more than 9%. And what we really know here is what I'm hearing from my sources is that as we reach these record highs, ultimately retail investors are looking for other ways to get in on the market here and that's contributed to the recent gains from American Eagle. Once they announced that Sydney Sweeney campaign, retail investors thinking that there's a potential growth story there, they're looking to get in on American Eagle. In addition to that, we've seen Kohls, the company that has really struggled over the past year, especially as they search for a new chief uh you know, CEO there. These companies that really have not been performing well. A Kohls, a crispy cream, uh um you know, Macy's has been underperforming and American Eagle, they're getting this recent buzz from retail investors who think potentially there could be an uh a growth story there. Open door and Carvana also getting attention there. Open door thinking that, you know, investors around there are thinking this could be another turnaround story like we saw with Carvana as well. Uh we had a great chat with uh Tasty Trades uh Tom Sos. Now take a listen to what he said on this meme stock menu. This is also the time of year where there's no real sports to bet on because it's really just baseball. So, you know, what better place to gamble than a zero commission, zero fees, you know, in and out of of all these little penny stocks for basically no money. Victoria is that we're looking at here. Uh there's really no sports to bet on and people want to try to pick a winner that's priced at $2 a share. Well, it's an interesting perspective. I mean, I do have to say go Strows since it's baseball season. But um it could be an element that people are looking for of ways to play this and you look at these stocks, they're mostly like these shorted stocks. So these are more day traders that are going in. These are not your long-term investors that are going and trying to build their portfolio. They are quick trades that are being done, they're small dollar amounts, they're highly shorted stocks, so there's a lot of volatility around them. So maybe it is a little bit of the the gambler's addiction if you want to put that that phrase there of people looking for ways to play the market on a on a quick basis, but this is definitely not a long-term investment strategy that we would want people to invest in. And as I'm of the mindset that this type of activity is a sign of froth in the broader stock market. It certainly is and Wall Street has been certainly talking about this. Goldman Sachs has talked about the fact that you are seeing speculative trading on the rise with their speculative trading index that they have. And call options have been surging, you have the volatility index that's sitting at around 15. So that means that there's really no fear in the market right now. You've got Bitcoin that's been surging, equities surging, these meme stocks that have been surging. So this indicates a strong risk on sentiment, but Wall Street warns time and again that when you see this type of scenario, this is ripe for some type of pullback. So we look overbought in a lot of categories and Wall Street's warning, hang on because this is when you may see a pullback.
Business Insider
19-07-2025
- Business
- Business Insider
‘Today's AI Frenzy Is Worse than 1999's Dot-Com Bubble,' Says Economist
A top economist from Wall Street is warning that AI stock prices may be becoming too high, much like during the dot-com bubble in the late 1990s. Torsten Sløk, chief economist at Apollo Global Management (APO), said on Yahoo Finance's Opening Bid that while AI will likely transform many industries, that doesn't mean investors should buy tech stocks at any price. In a recent note, Sløk shared data showing that the price-to-earnings ratios of the 10 largest companies in the S&P 500—many of which are AI leaders, such as Nvidia (NVDA) and Meta (META) —have now surpassed the extreme levels seen in 1999. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Sløk explained that this is creating a risky situation where a large part of the market depends on just a few tech giants. He noted that the 10 largest companies now make up almost 40% of the entire S&P 500 (SPY) index. This means that if someone buys the index, thinking they're investing in 500 companies, they're actually heavily exposed to just a few names, especially those tied to AI. Sløk added that the current stock prices of these mega-cap tech companies may not be sustainable since too much of the recent market rally is being driven by excitement and momentum rather than solid fundamentals. Interestingly, analysts at BTIG have similar worries, as they describe the market's sentiment as 'frothy.' Indeed, they pointed to the BUZZ NextGen AI Sentiment Index, which tracks popular AI stocks among retail investors. That index has jumped 45% over the past 16 weeks and is now 29% above its 200-day average. It is worth noting that these levels have not been seen since early 2021, right before speculative tech stocks began to fall. Because of this, BTIG suggested that investors think about shifting to safer areas like utilities or even Chinese tech stocks. Which AI Stock Is the Better Buy? Turning to Wall Street, out of the two stocks mentioned above, analysts think that NVDA stock has more room to run than META, but just barely. In fact, both stocks have almost 6% upside potential from current levels.
Yahoo
17-07-2025
- Business
- Yahoo
The loophole that makes a third term possible for Trump
Is it possible — or legal — for President Trump to serve a third term? And if so, how would markets (^GSPC, ^IXIC, ^DJI) react? Yahoo Finance Senior Reporters Ines Ferré and Allie Canal join Opening Bid to weigh in on Carlyle co-founder and co-chairman David Rubenstein's legal breakdown. To watch more expert insights and analysis on the latest market action, check out more Opening Bid here.
