E-mini S&P 500 (September): Settled at 4288.50, up 6.50
E-mini Nasdaq-100 (September): Settled at 14,549, down 14.00
U.S. benchmarks again retreated at 3:00 a.m. CT. This time, it was on the heels of aggressive comments from China’s President Xi, who called for foreign countries to end their “bullying” of the communist nation. "Anyone who dares to try, will find their heads bashed bloody against a great wall of steel forged by over 1.4 billion Chinese people.” Excuse me?
The speech was delivered at a celebration for the nation’s centenary. China has been criticized heavily for many of their tactics, including the ongoing Uyghur genocide in the Xinjiang region.
The minor reversal came after fresh record highs for both the S&P and Nasdaq. However, it was Value stocks leading yesterday, and the Dow achieved an outside bullish technical pattern led by Energy +1.3% and Industrials +0.84%. Such momentum carried overnight before the reversal back to unchanged. We have pointed to the Dow through much of this week, saying that Monday’s divergence where Tech gained and the Dow lost would unwind. The Dow is now on the cusp of a breakout, but make no mistake, we’re not bearish Tech.
Treasuries finished weak last Friday, but reversed higher upon Monday’s Delta variant headlines. They traded higher into yesterday but failed to hold; rates have begun to firm ever-so-slightly this morning upon favorable Manufacturing data out of Europe.
Weekly Jobless Claims came out at 7:30 a.m. CT, final IHS Manufacturing PMI follows at 8:45 a.m. CT, and the more closely-watched ISM Manufacturing PMI is due at 9:00 a.m. CT. A critical Nonfarm Payroll read is released tomorrow. The Treasury landscape will play a pivotal role. Barring any news that derails the stock market broadly, if rates continue to edge higher, we should see Value and the Dow continue to outperform.
This thesis is already getting a boost from OPEC news that’s lifted Crude Oil by more than 2%. The group plans to bring back less production than anticipated between August and December, at a pace of less than 500,000 bpd each month. Their goal is to tally 2 million bpd of added production through year-end. Some analysts had expected as much as 1 million bpd to return each month.
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