Bill Ackman calls for further rate hikes
Hedge fund manager Bill Ackman said on “Squawk Box” that the Federal Reserve needs to hike rates to around 4% or higher in order to fight off inflation.
“I think rates are going to need to stay 4%-plus for the foreseeable future — 12 to 18 months, or so — in order to kill this inflation. And they may need to take rates higher,” Ackman said. “The biggest risk to the markets is that people are not pricing that in.”
Ackman’s Pershing Square has interest rate hedges in place that would benefit from short-term rates and the 30-year Treasury yield moving higher, he said.
Check out the full interview here.
— Jesse Pound
Job openings plunge in June
The June Job Openings and Labor Turnover Survey, released Tuesday morning by the Bureau of Labor Statistics, showed that job openings fell to 10.7 million. That was much lower than economist expectations of an 11.14 million print.
The largest decreases in job openings were in retail trade, wholesale trade and state and local government education.
— Carmen Reinicke
Stocks open lower, led by Dow’s 266 point drop
Stocks opened lower Tuesday as traders digested tensions with China over House Speaker Nancy Pelosi’s Taiwan visit, a new round of earnings reports and economic data coming later in the day.
The Dow slipped more than 260 points and was weighed down by Caterpillar, which slumped more than 4% on weaker-than-anticipated earnings. The S&P 500 slipped 0.53% and the Nasdaq Composite was down 0.30%.
— Carmen Reinicke
CNBC’s Jim Cramer says inflation has peaked, citing drop in oil prices
The economy has reached peak inflation, as shown by the recent drop in oil prices, according to a Tuesday tweet from CNBC’s Jim Cramer.
“The speed of the decline in oil i think puts the lie to the notion, again, that we have not had peak inflation,” Cramer wrote. “The inflationistas simply refuse to believe it could have peaked regardless of the evidence.”
Data pointing to a global manufacturing downturn caused oil prices to slip further from their highs this week, though they recovered somewhat since.
Stocks may move higher after Pelosi lands in Taiwan, JPMorgan says
Stock markets may shrug off House Speaker Nancy Pelosi’s visit to Taiwan Tuesday, especially if there is no immediate reaction from China, JPMorgan wrote in a Tuesday note.
“Senators from both sides of the aisle have visited Taiwan this year, including Democrats Duckworth and Menendez and Republicans Graham and Scott,” analysts wrote. “Some of the Chinese response to those visits were military drills in the Taiwan Strait and military plane flyovers of Taiwan.”
Thus, parallels to Russia/ Ukraine and the potential for shutting off parts of the global supply chain may be off base, according to the note.
“Today, Pelosi’s plane is scheduled to land about an hour after the US opens; it there is no immediate reaction you may see markets move higher,” JPMorgan analysts wrote.
— Carmen Reinicke
Don’t lose sight of JOLTS data, El-Erian says
Investors focused on House Speaker Nancy Pelosi’s trip to Taiwan should make sure not to overlook key economic data coming today that could influence the Federal Reserve’s path forward, according to Mohamed El-Erian, Allianz chief economic advisor.
“There’s so much attention on the US China issue, don’t lose sight of the JOLTS data,” El-Erian said Tuesday on CNBC’s “Squawk Box,” referring to the Job Openings and Labor Turnover survey due later in the morning.
That data is important for the Fed, he added, as they chart their path of potential interest rate hikes.
— Carmen Reinicke
Bank of America says clients have bought stocks for five straight weeks
Bank of America clients were net buyers of U.S. stocks last week, the fifth straight week of positive inflows, according to a note from strategist Jill Carey Hall. Total inflows were $4 billion, according to the note.
“All client groups were buyers this week. Buying was led by institutional clients after selling the week before, while hedge funds and private clients were net buyers for the second and fifth consecutive week, respectively,” Hall wrote.
There was positive net buying in nine of 11 sectors, with Bank of America clients tilting toward cyclical sectors, according to the note.
— Jesse Pound
Pinterest shares still elevated after Elliott Management announces stake
Shares of Pinterest were up more than 18% in premarket trading, holding onto a surge from Monday night following activist investor Elliott Management announcing it had taken a stake in the company and was its largest investor.
The image-sharing company also reported earnings Monday that disappointed on both earnings and revenue but showed better-than-expected user numbers.
Uber surges on earnings revenue beat
Shares of Uber popped more than 10% in premarket trading after the company reported quarterly earnings that beat Wall Street’s expectations for revenue.
The company also reported a net loss of $2.6 billion for the quarter, some of which was attributed to investments in Aurora, Grab and Zomato.
Impact of Pelosi trip on markets
Mona Mahajan, Edward Jones senior investment strategist, addressed the impact of Pelosi’s possible Taiwan visit on markets in a CNBC “Squawk Box” appearance Tuesday:
“Geopolitical tension has been a theme we’ve really been seeing all year that has been weighing on markets. … The risk and the concern is that we have a Russia-Ukraine 2.0, something that’s even more severe coming out of China. I think for now it’s a tail risk. I do think the trip will not lead to any real economic disruption, but of course the rhetoric and the headlines start to intensify and it’s something we need to watch going forward.”
Caterpillar drops after reporting earnings
Caterpillar shares slid more than 1% after the industrial giant posted mixed quarterly results. The company earned $3.18 per share, beating a Refinitiv consensus forecast of $3.01 per share. However, Caterpillar’s revenue of $14.25 billion was just below an estimate of $14.35 billion.
Treasury yields fall in early trading
U.S. Treasury yields fell in early trading Tuesday ahead of House Speaker Nancy Pelosi’s expected trip to Taiwan. The benchmark 10-year rate dropped more than 5 basis points to 2.548%, while the 2-year yield slid to 2.856%.
Oil major BP boosts dividend as quarterly profits jump on high commodity prices
U.K. oil giant BP boosted its dividend on Tuesday as it posted bumper second-quarter profits, benefitting from a surge in commodity prices.
Second-quarter underlying replacement cost profit, used as a proxy for net profit, came in at $8.5 billion. The soaring profits gave BP room for a 10% increase in its quarterly dividend payout to shareholders, raising it to 6.006 cents per ordinary share.
European stocks retreat, tracking global risk-off sentiment
European markets pulled back slightly on Tuesday, tracking risk-off sentiment globally as investors assess whether last month’s rally has further to run.
The pan-European Stoxx 600 dropped 0.6% by mid-morning in London, with tech stocks shedding 2.1% to lead losses as almost all sectors and major bourses slid into the red. Telecoms gained 0.6%.
Earnings remain a key driver of individual share price movement. BP, Ferrari, Maersk and Uniper were among the major European companies reporting before the bell on Tuesday.
Chinese stocks drop as tensions rise over Pelosi visit
Stock futures open flat
Stock futures opened flat in overnight trading on Monday.
Futures tied to the Dow Jones Industrial Average inched 0.06% lower, or 21 points. S&P 500 futures and Nasdaq 100 futures dipped 0.06% and 0.01%, respectively.
— Samantha Subin
The upside from here is limited over the next few months, says Truist’s Lerner
Investors overallocated toward stocks should consider using the current market conditions to trim back their positions as the upside for equities is limited going forward, says Keith Lerner, co-chief investment officer at Truist.
According to Lerner, the upside for the market over the next few months is likely capped in the 3% to 5% range, but the downside could exceed that amount.
“The market’s been very resilient, no doubt, and maybe it stays that way for a little bit, but we don’t see the risk-reward as that compelling here,” he said.
This by no means is an indication of the top of the market and equities could squeeze higher, but it is an opportunity to reallocate exposure after last month’s strong market rally, Lerner added.
Pinterest shares pop 21% as Elliott Management reveals position as largest investor
Pinterest shares popped more than 21% after the company posted stronger-than-expected user numbers and Elliott Management revealed it’s the largest shareholder in the image-sharing company.
Activist investor Elliott said in a statement that it has “conviction in the value-creation opportunity” at Pinterest, calling the social media company a “highly strategic business with significant potential for growth.”
“As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems, and CEO Bill Ready is the right leader to oversee Pinterest’s next phase of growth,” Elliott wrote.
Despite the stock move, Pinterest missed estimates for the second quarter on the top and bottom lines. Monthly active users for the period came in 2 million above estimates.
— Samantha Subin