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With the month of September's reputation for losses preceding it, there was some reason to think the stock market would experience some selling pressure coming off the Labor Day weekend after the Dow Jones Industrial Average and equal-weighted S&P 500 logged record closing highs on Friday. There was no reason to think, however, that the semiconductor stocks would get clobbered like they did on Tuesday.
The Philadelphia Semiconductor Index plummeted 7.8%, led by NVIDIA (NVDA) which sank 9.5% on no news -- or no news known to the general public. After the close, Bloomberg reported that NVIDIA, and other companies, received a subpoena from the DOJ related to an antitrust investigation.
The contention this morning is that this news was known to some intraday yesterday; hence, the stark decline in NVDA and other semiconductor stocks on "no news."
That was one problem for the stock market to begin September. The other problem was the manufacturing PMI data out of China and the U.S., which showed manufacturing sector activity continuing in a state of contraction. That triggered growth concerns, which undercut oil and coper prices, as well as the cyclical stocks.
A third problem, albeit one that was more vague, was the strengthening in the yen versus the dollar. That dynamic fostered some thinking that an unwinding of yen-based carry trades was also behind yesterday's selling interest.
And that brings us to today. September's reputation remains intact.
Currently, the S&P 500 futures are down 15 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 94 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are down 15 points and are trading 0.1% below fair value.
These indications point to lower openings for the major indices. NVIDIA is down another 1.3% as the subpoena news hits the mainstream; Dollar Tree (DLTR) is down 11.4% following disappointing earnings results and guidance; Dick's Sporting Goods (DKS) is down 1.0% following good earnings results and a tempered sales outlook for FY25; and the yen is a bit stronger versus the dollar (USD/JPY -0.3% to 145.07).
These happenings are being digested alongside the July Trade Balance Report, which showed a widening in the deficit to $78.8 billion (Briefing.com consensus -$78.5 billion) from an upwardly revised $73.0 billion (from -$73.1 billion) in June. The widening was the result of imports being $7.1 billion more than June imports and exports being only $1.3 billion more than June exports.
The key takeaway from the report is the uptick in imports. While that will act as a drag on Q3 GDP forecasts, the increase in imports will nonetheless be construed as a reassuring demand signal for the U.S. economy.
The 2-yr note yield is down three basis points to 3.86% and the 10-yr note yield is unchanged at 3.84%.
July Factory Orders (Briefing.com consensus 4.5%; prior -3.3%) will be released at 10:00 a.m. ET along with the July JOLTS - Job Openings Report (prior 8.184 million). The Fed's Beige Book will be released at 2:00 p.m. ET to complete today's economic reporting.
The stock market's trading day, however, won't be complete until 4:00 p.m. ET, and it will be just that: a trading day. Price action will be the focal point after yesterday's losses. Will participants eventually step in to buy the weakness or will today -- apologies to Taylor Swift -- be another reputation tour?
