17 Aug 2022

Last night, the three major U.S. stock indexes fluctuated higher. As of the close, the Dow rose 0.71%, the Nasdaq fell 0.19%, and the S&P rose 0.19%. The yield on the 10-year U.S. Treasury bond rose 0.57% to close at 2.806%, a difference of about -46 basis points compared with the yield on the two-year Treasury bond. The VIX, the fear gauge, closed down 1.3 percent. Brent crude closed down 0.7%. Spot gold closed down 1.25% at $1,775.83 an ounce. The dollar index remained high, closing at 106.47.

The total number of new housing starts in the United States in July was an annualized 1.446 million, the lowest since February 2021, and the total number of building permits in the United States in July was 1.674 million, the lowest since October 2021. High home prices and high mortgage rates continue to weigh on the housing market. Residential investment is expected to weigh negatively on economic growth in the current quarter, with consumption and capital spending likely to be the factors driving the return to quarterly GDP expansion.

U.S. manufacturing output rose 0.7% in July, the first increase in three months, after a revised 0.4% decline in June. While manufacturing strengthened last month, growth has slowed and is at risk of losing more momentum as companies grapple with a build-up of inventories and slowing demand for domestic goods. Recent factory surveys showed a pullback in orders, while a weaker export market against the backdrop of a stronger dollar was another headwind. The three major stock indexes opened slightly lower.

European gas prices are closing in on record as hot summer weather pushes up fuel demand and Russia curbs supply. Natural gas prices have risen by more than a fifth in the past week. Germany may deviate from its policy of completely phasing out nuclear power, planning to delay the closure of the country's last three nuclear power plants. Germany could face energy shortages this winter after Russia restricted gas supplies to Germany.

The European Union said it was negotiating with the United States on the Iran deal and believed that Iran's response to the draft nuclear deal was constructive. A U.S. State Department spokesman said the U.S. agreed with the EU's basic view that "everything that can be negotiated" in the Iran nuclear deal negotiations has been negotiated, but that Iran's request to lift sanctions against Iran "is not achievable." If Iran wants to lift the relevant sanctions, it needs to change its basic behavior.

U.S. retail gasoline prices have fallen for at least 63 straight days, surpassing the streak in early 2020 when coronavirus lockdowns limited economic activity. The last time it had a longer losing streak was in 2018. The national average retail gasoline price fell to $3.949 a gallon on Monday, weighed down by lower crude prices and lower seasonal demand than in previous years. This has helped ease the historic inflation that has weighed on household finances.

The Atlanta Fed’s GDPNow model shows that U.S. GDP growth in the third quarter is expected to be 1.81%, compared with 2.45% on August 10. According to a survey by freelance marketplace Fiverr International Ltd., 85 percent of U.S. companies plan to freeze hiring, and 78 percent plan to lay off workers. More than 80% of large and medium-sized business owners say they are currently hiring freelancers, and there is an increased demand for freelancers, especially among large enterprises. After the bell, U.S. President Biden officially signed the "2022 Inflation Reduction Act" with a total value of $750 billion.

Apple fell 0.09%. Apple and Chicago reached a settlement and will start paying "Netflix tax" on September 15.

Microsoft fell 0.26%, as Microsoft acknowledged the weakness of the Xbox One: less than half as many as the Sony PS4.

Google fell 0.3%, Saudi Arabia "buying the bottom" U.S. stocks: In the second quarter, it bought $7.5 billion, opened positions in Microsoft, Google, Amazon, and increased its holdings of Meta.

Amazon rose 1.12%, new chips will enhance Amazon AWS competitiveness.

Tesla fell 0.89%. The number of electric vehicle registrations in the United States in the first half of the year: Tesla won the championship again, and the total of other brands rose by 58%.

Meta fell 0.79% after the FTC held a hearing in December to prevent Meta from acquiring a VR company.

Sources from: Investing.com; Reuters.com

Louis Yap

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