Kashkari’s Hawk Talk, Durable Goods, XPeng – What’s Moving Markets
2022.08.24 15:25
By Geoffrey Smith
Investing.com — The dollar strengthens and bond yields rise as the Federal Reserve’s biggest dove fails to signal any intention to pivot away from tighter policy. Durable goods orders data are due. Bed Bath & Beyond gets a crucial lifeline. Electric vehicle makers come under the spotlight as one of China’s rising stars makes a bad miss. And oil roars back on talk of an OPEC+ supply cut. Here’s what you need to know in financial markets on Wednesday, August 24.
1. ‘Dove’ Kashkari stays hawkish
Those hoping that Tuesday’s raft of weak economic data could elicit some promise of moderation from the Federal Reserve at its Jackson Hole symposium on Friday, look set to be disappointed. Neel Kashkari, the Minneapolis Fed governor who was for years the biggest inflation ‘dove’, insisted late on Tuesday that the Fed’s priority has to stay on bringing inflation down.
Kashkari told a local business event that the Fed would have to resort to “Volckeresque” methods – referencing the acute high interest rates of the 1980s – if it allowed inflation expectations to become de-anchored.
Weak numbers from July’s new home sales and S&P Global’s purchasing manager survey for August had briefly revived talk of an imminent ‘dovish pivot’ from the central bank on Tuesday. It’s the turn of durable goods orders at 08:30 ET (12:30 GMT) and pending home sales data at 10:00 ET to reprise that role later.
2. BBBY gets a lifeline
The rollercoaster in Bed Bath & Beyond (NASDAQ:BBBY) stock looks set to continue after The Wall Street Journal reported that it has taken a big step to securing a liquidity lifeline, allowing it to pay down some of its huge debts and bolster its cash on hand.
The WSJ said BBBY had told interested parties that it has selected a lender to provide a loan following a marketing process conducted by JPMorgan. That came at the end of a day that started with a report saying that various suppliers had refused to ship products to it because of its inability to pay.
BBBY stock rose over 12% in premarket.
3. Stocks set to open flat; NVIDIA, Salesforce to report after the bell
The broader market is set to open as flat as the proverbial pancake, however, as those investors who aren’t still on vacation remain content to wait for Fed Chair Jerome Powell’s speech on Friday from Wyoming.
By 06:25 ET, Dow Jones futures were down 22 points, or less than 0.1%, while the S&P 500 futures and Nasdaq 100 futures contracts were both down in line.
Stocks likely to be in focus later include Nordstrom (NYSE:JWN), which became the latest retailer to warn of further inventory clearances and pressure on margins for the rest of the year. Nordstrom warned late on Tuesday that “customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack.” The stock was down over 13% in premarket.
Today’s earnings highlight is also after the bell, in the shape of chipmaker NVIDIA (NASDAQ:NVDA) and software giant Salesforce (NYSE:CRM).
Also in focus will be Farfetch (NYSE:FTCH), which finally nailed down an agreement to buy a big chunk of Richemont ‘s (SIX:CFR) online operation YNAP in a deal that confirms some hefty value destruction at the Swiss giant in an ill-judged foray into e-commerce.
4. XPeng plunge puts EV makers in the spotlight
Electric vehicle makers will also be in the spotlight after the Hong Kong-listed stock of China’s Xpeng (HK:9868) slid more than 12% in response to some weak guidance for the third quarter.
The company said it expects to deliver between 29,000 and 31,000 electric vehicles in the current quarter, which would be a year-on-year increase of between 13%-21%, but still well below market expectations, due largely to well-documented problems with COVID-19 in its home market.
Xpeng said it’s confident that the launch of the G9 SUV in September and two new models in 2023 will help it enter a new growth cycle.
5. Crude oil bounces after talk of supply cut; EIA inventories due
Crude oil prices bounced back above $100 a barrel as the market – after an initially relaxed response – finally took on board comments from Saudi Arabia’s oil minister warning of a potential need to cut output.
By 06:30 ET, U.S. crude futures were up 0.7% at $94.39 a barrel, while Brent crude was up 0.6% at $100.78 a barrel.
