This week ahead || Aug 14th - Aug 18th 2023
Here's some news for the week ahead.
Dow Jones Futures: Market Rally Not Broken, But Nvidia, Tesla Flash Sell Signals
Dow Jones futures, S&P 500 futures, and Nasdaq futures are set to open for trading on Sunday evening. The stock market experienced a mixed week, with resurgent Treasury yields and mixed earnings impacting growth. The Nasdaq fell below the 50-day and 10-week moving averages, and key stocks like Tesla and Nvidia are below their 10-week lines. Despite the mixed performance, the market is not yet in a full-fledged correction. While some sectors like technology are experiencing a correction, other areas like industrials, infrastructure, housing, and energy are holding up well. The S&P 500 edged lower but found support around its 10-week line, while the Dow Jones slightly rose for the week. While the risk of a recession has diminished, the market's uptrend is diverging, with some sectors performing better than others.
Read about it here.
Yes, inflation is down. No, the Inflation Reduction Act doesn't deserve the credit
As the Inflation Reduction Act (IRA) reaches its first anniversary, it's clear that the law did not have an immediate impact on curbing inflation, despite its name. The inflation rate dropped from 9% to 3.2% over the past year, but economists largely attribute this decline to other factors, not the IRA. The law's impact on inflation was projected to be negligible when it was proposed, and it seems that its effects on inflation have indeed been limited. The IRA's name might have been chosen to address the political and public concerns about rising prices at the time of its proposal. However, the law's provisions related to climate change, job creation, and healthcare are now at the forefront of President Biden's messaging, with the focus on inflation having somewhat diminished. The law could still play a role in reducing inflation in the future as it begins to be implemented and contributes to changes in various sectors of the economy.
U.S. Steel to explore strategic alternatives for the company
United States Steel (X) Corporation has announced that it is undertaking a formal review to assess strategic alternatives for the company. This decision comes in response to multiple unsolicited proposals that the company has received, which could range from acquiring specific production assets to considering a complete acquisition of the company. CEO David Burritt did not provide further details about the nature of these proposals. U.S. Steel has been navigating challenges related to higher costs of raw materials and energy, but its strong demand for steel products allowed it to surpass profit expectations for the second quarter. This move to explore strategic alternatives reflects the company's efforts to maximize value for its shareholders and adapt to changing market conditions.
Read about it here.
Sluggish US earnings may need pick-me-up to support 2023 stock rally
The US stock market's mixed reaction to Q2 earnings results, with companies beating profit expectations but revenue beats dropping to their lowest since 2020, has been met with temporary market contentment, evidenced by the S&P 500's modest rise and a 16% gain in 2023. However, this trend might be short-lived, as investors' satisfaction could wane if corporate profits don't notably improve, given the market's expanded valuation. As markets anticipate robust earnings growth, companies will need to deliver to sustain these valuations. Economic uncertainties, delayed interest rate impacts, and potential recessions further complicate the situation, requiring companies to meet high market expectations.
Read about it here.