Traders work on the floor of the New York Stock Exchange (NYSE) on July 26, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Dow shows strength again
U.S. stocks traded mixed Tuesday, with the Dow Jones Industrial Average, once again, outperforming other major indexes. The pan-European Stoxx 600 index lost 0.89%, with all major bourses and sectors closing lower, as investors digest news that euro zone factory activity in July fell at the fastest pace since May 2020.
Jolt of good news
Employment vacancies in June totaled 9.58 million, according to a Labor Department report. That figure dipped slightly from the 9.62 million in May and is the lowest since April. Layoffs also edged down from 1.55 million in May to 1.53 million in June. The slightly tighter labor market, in combination with companies holding on to workers, reinforce the possibility of cooling inflation without a recession.
Third indictment for Trump
Former U.S. Donald Trump was criminally charged Tuesday in connection with his efforts to reverse his loss to President Joe Biden in the 2020 presidential election. That’s the third criminal indictment against Trump. No other U.S. president, current or former, has ever faced criminal charges.
Securities, actually
Cryptocurrencies are considered securities regardless of how they are sold, U.S. District Judge Jed Rakoff said on Monday. This allows the Securities and Exchange Commission to pursue charges against Terraform Labs. Rakoff’s opinion contradicts an earlier ruling from the same district court that said Ripple may not always be categorized as a security, but will not affect it.
[PRO] JPMorgan’s idea for a short
JPMorgan Chase just revealed its stock picks for August. Surprisingly, market favorites like Nvidia and Microsoft aren’t on the list. Instead, the bank chose only one technology stock for its growth strategy, and another for its value segment. See the full list here — which includes a new short idea.
The bottom line
Despite the S&P 500‘s five-month rally, some market bears refuse to concede. And numbers yesterday might back them up.
JPMorgan strategist Marko Kolanovic thinks stocks are pricing in a scenario where the economy continues running hot while monetary policy loosens. (In Goldman Sachs‘ Scott Rubner’s words, “positioning and sentiment … is Euphoric.”) But Kolanovic is skeptical that hoped-for outcome will happen. Instead, the bank “anticipat[es] the inflation decline to prove incomplete, leaving restrictive policies in place that should increase private sector vulnerabilities and end the global expansion,” Kolanovic wrote.
It’s a warning echoed by Adam Phillips, managing director at EP Wealth Advisors. “We’ve seen progress, that’s all well and good, but let’s not celebrate just yet,” he said, pointing out that gas prices are at monthlong highs, which might cause prices to rise again.
Even Rubner, not a typical market bear, acknowledged the inescapable pull of gravity. “I am so bullish, that I am actually bearish now for August. I am looking for a small-ish equity market correction in August,” he said in a Monday note.
Movements of major indexes back those analysts’ comments. The S&P fell 0.27% and the Nasdaq Composite slid 0.43%. But the Dow Jones Industrial Average eked out a 0.2% gain and even touched its highest level since February 2022 during the session.
Separately, U.S. manufacturing activity in July contracted for a ninth straight month, according to the ISM manufacturing Purchasing Managers’ Index.
In another sign of waning confidence in the U.S. economy, Fitch downgraded the United States’ long-term foreign currency issuer default rating from AAA to AA+. “In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters,” said the ratings agency. Stock futures slid on the news.
Still, with more than half of S&P companies reporting earnings, 82% have exceeded earnings expectations, according to FactSet. Investors will hope corporate America can keep the metaphorical bull charging.