Market News by OnEquity

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U.S. stocks fall after heated Harris-Trump debate; CPI data in focus
U.S. stocks fell on Wednesday as investors analyzed the outcome of a heated debate between U.S. presidential candidates Donald Trump and Kamala Harris and awaited the release of new U.S. inflation data, which could affect the Federal Reserve’s next monetary policy meeting decision.

The benchmarkS&P 500 index along with the tech-heavy NASDAQ Composite advanced last session, the first time the averages have posted two straight days of gains since mid-August.

However, the 30-stock Dow Jones Industrial Average retreated, and bank stocks fell just after JP Morgan Chase (JPM) indicated that analysts’ consensus estimates for its earnings next year were fairly optimistic. Earlier this week, Goldman Sachs CEO David Solomon also mentioned that the investment bank’s trading revenue would decline by 10% in the current quarter.

Trump-Harris debate yields few political details​

The Republican candidate for the U.S. presidency, Donald Trump, and his opponent, Democrat Kamala Harris, engaged in a heated debate on Tuesday, in which different topics such as immigration and the economy were discussed.

Ahead of the much-anticipated debate, which came at a time when Trump and Harris are tied in national polls, investors were left with few details on how each candidate would address such momentous issues as tariffs, taxes and regulation.

During his time on the campaign trail, Trump has made promises to drastically cut corporate taxes and take a stronger stance on tariffs. Harris, by contrast, has promised to increase corporate taxes. Analysts have predicted that while Trump’s plan could serve to tax corporate profits, it could also fuel inflation. But they have also indicated that Harris’ proposal could instead undercut corporate profits.

On the debate stage, Harris questioned Trump’s policy of imposing high tariffs on goods from abroad, arguing that it would effectively tax the middle class. Trump defended it, claiming it would not mean higher prices for Americans, and lambasted Harris for having managed a period of high inflation during Biden’s tenure.

However, analysts at TD Cowen argued that this was “not a debate about economics.”

“There were no substantive discussions on key economic issues, including whether the White House should play a role in setting interest rates or how tariffs might affect inflation and economic growth,” the analysts noted in a note to clients.

Betting favored Harris right after the debate ended, with the odds of the acting vice president winning the vote rising to 56% from 53% before the event, according to data from online forecasting marketplace PredictIt cited by Reuters.

Inflation in focus​

Markets are getting ready to analyze the latest U.S. consumer index, a key measure of inflation.

The figures come against a backdrop in which traders expect the Federal Reserve to cut borrowing costs from 5.25% to 5.5%, its highest level in almost 23 years, at its next two-day meeting on September 17-18. However, uncertainty surrounds the extent of the potential cut.

Pending inflation data, markets currently give a 67% chance of a quarter-point cut and a 33% chance of a half-point reduction, according to CME’s FedWatch tool.

Looking at month-on-month terms, overall U.S. consumer price growth in August is expected to be the same rate as July at 0.2%. On a year-on-year basis, the figure would decelerate to 2.5% from 2.9%.

So-called core consumer prices, which exclude the more volatile items such as food and gasoline, are at 0.2% m-o-m and 3.2% y-o-y, both in line with July.

Oil rises on supply concerns​

Oil prices rose in European trading on Wednesday as traders waited to assess the impact of Hurricane Francine on production in the Gulf of Mexico.

Prices were also supported by industry data, which revealed an unexpected weekly drawdown in U.S. oil inventories.

However, oil markets rebounded from Tuesday’s heavy losses, when disappointing Chinese import data and a cut in demand forecasts from the Organization of the Petroleum Exporting Countries painted a bearish picture for oil markets.

 

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SEC Raises $4.68 Billion from Cryptocurrencies Under 2024 Measures
The U.S. Securities and Exchange Commission has collected a significant $4.68 billion in fines from the cryptocurrency sector in 2024. This record marks an increase of approximately 3,018% compared to the fines collected in 2023.

The SEC states that through fines, it is ensuring transparency, protecting investors, and enforcing compliance across the cryptocurrency industry.

Terraform Labs Contributes to Crypto Fines​

The $4.47 billion fine was levied after the collapse of Terraform’s algorithmic stablecoin, TerraUSD, which caused substantial losses for investors.

In June 2024, Terraform reached a settlement with the SEC, addressing allegations that the company had misled investors regarding the stability and security of its digital assets.

Despite bringing fewer enforcement actions, 11 in 2024 compared to 30 last year, the SEC has secured fines totaling more than 30 times the amount collected in 2023. This considerable increase, from $150.3 million last year to $4.68 billion this year, is the result of a more focused strategy on high-profile cases.

The SEC has also targeted companies such as Telegram and Ripple for unregistered token sales and securities violations.

“This trend indicates a strategic shift by the SEC toward fewer but larger fines, with a focus on making high-impact enforcement actions precedent-setting for the entire industry,” Social Capital Markets said.

Analyzing the data from 2019 to 2024, there is a clear increase in fine amounts. The average fine in 2018 was $3.39 million, which rose to an average of $426 million in 2024, representing an increase of 12,466.37%.

Fines to Discourage the Cryptocurrency Market​

The fines imposed cover a wide range of financial penalties, including forfeiture, disgorgement, penalties, settlement amounts, and pre-judgment interest. These measures are part of the SEC’s comprehensive strategy to penalize and deter illegal activities in the market.

However, the SEC’s aggressive tactics have faced criticism. The crypto community has expressed concerns that such stringent regulations could stifle innovation by imposing measures that some see as overly punitive.

“The U.S. SEC/Gary Gensler is literally acting like ransomware thugs. They threaten so many crypto companies with bogus lawsuits and then settle for a big fine,” said one X user.

Additionally, the SEC’s handling of some cases has faced legal scrutiny. Notably, in a case against D.E.B.T. Box, a federal judge blasted the SEC for its “bad faith conduct” and ordered it to pay $1.8 million in legal fees. The judge also pointed to problems with the agency’s approach to compliance.

 

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Dollar slips before Fed meeting; euro and pound advance
The U.S. dollar fell on Monday, while both the euro and the pound rose on expectations that the Federal Reserve will begin a cycle of rate cuts later this week.

Is a big Fed rate cut coming?​

The U.S. Federal Reserve completes its latest policy meeting on Wednesday and is expected to begin cutting interest rates from very close to the 5.25%-5.5% range it has held for the past 14 months.

A rate cut has been widely indicated by Fed officials as the U.S. consumer price index declined last month to its lowest level not seen since February 2021. However, there is still some degree of uncertainty in the air regarding the size of the cut, and the U.S. currency fell sharply on Friday just after media reports served to once again fuel speculation related to the Fed potentially making a sharp interest rate cut by nearly 50 basis points.

According to CME FedWatch, Fed funds futures indicate a 59% chance of a 50 basis point cut during the September meeting.

U.S. Treasury yields have retreated again Monday during the anticipation of a cut, with benchmark 10-year yields down 30 basis points in about two weeks.

The Fed’s rate decision will be followed by a post-meeting press conference, where Fed Chairman Jerome Powell could give signals on future rate estimates and the economy at home.

Both the euro and the pound soar​

In Europe, EUR/USD rose 0.4% to 1.115, with the single currency in demand despite the European Central Bank cutting interest rates by about 25 points for the second time the previous week.

European Central Bank President Christine Lagarde downgraded estimates of a further cut in funding costs next week, citing that the rate path was not predetermined and that the ECB would decide rates on a meeting-by-meeting basis, without making prior commitments.

ECB Chief Economist Philip Lane and Vice President Luis de Guindos will speak at separate events on Monday.

GBP/USD rose 0.4% to 1.3173 ahead of the latest ECB policy meeting scheduled for Thursday.

The UK central bank is expected to keep its policy rate at 5%, after starting its easing with a 25 basis point reduction during the August meeting.

Yen soars ahead of Bank of Japan meeting​

The yen rose 0.8% against the dollar to 139.76, hitting more than eight-month highs, ahead of this week’s Bank of Japan meeting.

The BOJ’s interest rate decision next Friday is expected to hold its short-term target at 0.25%.

However, BOJ board members have signaled their desire to raise rates, possibly leading to the cancellation of more yen terminated carry trades.

USD/CNY traded flat at 7.0930, with regional trading volume moderated by public holidays in China, Japan and South Korea.

 

[OnEquity]

U.S. Stock Unchanged With Fed Meeting in Focus, Rate Cut Anticipated
U.S. stock index futures were little changed on Monday, as investors remained cautious ahead of this week’s Federal Reserve meeting, where there is a high likelihood that the Fed will begin a rate-cutting cycle.

Similarly, markets have been cautious after learning of a second assassination attempt against Republican presidential candidate Donald Trump; fortunately, the former president was unharmed.

Fed Meeting Approaching and Markets Appear to Be Divided on Rate Cut​

The Federal Reserve is set to meet later this week and is expected to begin cutting interest rates, although market traders are currently divided over the size of the potential cut.

According to CME FedWatch, traders are currently pricing in a 50% chance of a 50 basis point cut and another 50% chance of a 25 basis point cut.

Wednesday’s decision is likely to signal the tone of the Fed’s plans to begin easing monetary policy at a time when it faces concerns about the cooling economy and the labor market, although the latest economic data indicate that inflation is stable.

Likewise, lower rates are expected to support equities in the coming months.

Dow Jones and S&P Hit All-Time Highs​

Wall Street’s major indexes gained last week despite the inflation data, as technology stocks were supported by big-ticket buying and renewed interest in artificial intelligence.

Broader stocks likewise rose, with bets on interest rate cuts spurring buying in sectors that are economically sensitive.

The S&P 500 rose 4% the previous week, while the Dow Jones Industrial Average rose 2.6%, with both indexes near all-time highs.

The NASDAQ Composite index rose by almost 6%, although it remained below the highs reached at the beginning of the year.

Pfizer Gains After Trial Success​

In the corporate sector, Pfizer (PFE) shares rose 0.6% before the markets opened, after the pharmaceutical company reported that its experimental drug to combat a disease that causes cancer patients to lose appetite and weight showed positive results in a mid-stage trial.

Boeing (BA) shares rose 0.3% before the markets opened after falling more than 3% on Friday. The 30,000-worker strike extended into its fourth day on Monday, and company and union negotiators are expected to resume labor contract talks on Tuesday.

Crude Oil Prices Rise Ahead of Fed Meeting​

Crude oil prices rose on Monday ahead of this week’s expected Fed rate cut, although lingering demand concerns continued to limit any major hike. The U.S. central bank is likely to begin an easing cycle on Wednesday. Lower rates bode well for economic growth, which could help sustain U.S. fuel demand in the coming months.

However, Chinese economic data released over the weekend pointed to further economic weakness in the world’s largest oil importer. Meanwhile, Gulf of Mexico crude oil production resumed in the wake of Hurricane Francine, although nearly a fifth of crude production remained offline.

 

[OnEquity]

Market Highlights for the Week: Fed, Retailers, Earnings
This week will be critical for the markets, with the Federal Reserve’s interest rate decision, key data on retail sales and real estate, and earnings reports from companies such as FedEx and Lennar. The Bank of Japan will also unveil its monetary policy, adding an international component to the economic decisions that investors will be watching closely.

Fed Interest Rate Decision​

The most important event of the week will be the Federal Reserve’s (Fed) interest rate decision. Policymakers have indicated that they will cut rates at their September meeting, which concludes Wednesday afternoon.

It is not yet known whether the cut will consist of a quarter percentage point or a half-point. Officials will also lay out updated economic and rate projections for the next few years.

The current rate is at an all-time high of 5.25% to 5.50%, and the Fed is expected to begin a series of cuts between now and the end of the year.

Retail Sales Data​

This Tuesday, the Census Bureau will release August retail sales data. Sales are expected to be unchanged from the previous month.

In July, sales posted a healthy 1% growth. However, excluding autos, sales are expected to have increased 0.4%, in line with the growth seen in July.

Investors will be watching this data closely, as it provides insight into consumer behavior and the overall health of the economy.

Residential Construction Report​

On Wednesday, the Census Bureau will also release August residential construction statistics.

A seasonally adjusted rate of 1.32 million private housing starts is expected, up nearly 100,000 from July. This data is critical to gauge the state of the housing market, a sector that has come under pressure due to rising mortgage rates, which have affected both buyers and sellers.

FedEx and Lennar Business Results​

Corporate results will be another major theme of the week. On Thursday, results from FedEx and Lennar, two key companies in their respective industries, will be released.

FedEx (FDX) is a bellwether for the global trade and logistics sector, while Lennar (LEN) provides information on the housing market, which is vital in an environment of rising mortgage rates. These reports will provide further insight into how these industries are coping with the current economic circumstances.

Bank of Japan Monetary Policy​

Finally, on Friday, the Bank of Japan will release its monetary policy decision. It is expected to leave its benchmark interest rate unchanged at 0.25%.

This event is of great interest to global markets, as the Japanese yen has shown considerable appreciation against the U.S. dollar in recent months, partly due to the expectation that the Fed will cut rates.