Stocks Decline as Dollar’s Rise Pauses Before Key Economic Data

The S&P 500 sees a slight dip, while Germany experiences its most significant factory order decrease since the 2020 lockdowns.

Ahead of crucial economic figures that will guide the Federal Reserve’s policy, the market saw minimal movements in stocks, bonds, and the dollar. The S&P 500 showed a slight decline, while the Bloomberg Dollar Spot Index remained relatively stable, prompting defensive actions from Japan and China for their currencies. European stocks took a hit due to Germany’s steep drop in factory orders, reminiscent of 2020 lockdown levels.

Meanwhile, bonds, particularly the 10-year Treasuries, hovered around a 4.25% yield. With the Bank of Canada expected to maintain its interest rates, the loonie showed fluctuations.

Debt underwriters anticipate around nine potential issuers to present new US investment-grade bonds this Wednesday. Following the US Labor Day holiday, around 20 borrowers ventured into the primary market, with many more predicted to follow.

Susan Collins, President of the Fed Bank of Boston, emphasized a need for patience when interpreting economic data. Further action might be warranted depending on the emerging trends. Collins’ statements hint at a likely hold on rates in the upcoming Fed officials’ meeting on Sept. 19-20.

Traders’ focus this month will be on bond yields and the US dollar’s direction. Even though US stocks are entering a historically weaker period, the S&P 500 has made a notable recovery since the start of August.

KKR & Co.’s Henry McVey suggests that investors should pivot towards real assets, anticipating stronger US economic growth and consistent high inflation into 2024. He predicts the US real GDP growth to surpass expectations at 2.4% in 2023.

Corporate News Round-Up:

• United (UAL) and Southwest Airlines (LUV) anticipate higher jet fuel prices.
• Roku (ROKU) plans a 10% workforce cut and content portfolio review, sending its stocks up.
• General Mills remains optimistic about its annual projections.
• Thoma Bravo is set to buy health-records software company NextGen Healthcare (NXGN).
• UBS (UBS) predicts a potential profit growth deceleration for Block Inc. (SQ).
• EU regulators launch fresh probes into Microsoft (MSFT) and Apple’s (AAPL) business practices.
• Google Play (GOOG) reaches a tentative settlement over Android app control complaints.
• A US official calls for an investigation into China’s top chipmaker’s ties with Huawei.

Upcoming Key Events:

• A range of discussions and reports are set from China, the Eurozone, US, and other major markets, including trade, GDP, job claims, and more, mainly on Thursday and Friday.

Market Updates:

• Stocks: Slight declines across major indexes.
• Currencies: Minimal changes; British pound and Japanese yen show slight movements.
• Cryptos: Stable figures for both Bitcoin and Ether.
• Bonds: Minor shifts in 10-year Treasuries across major markets.
• Commodities: WTI crude and gold futures both drop slightly.