Ringside · Pre-Bell · September 2
- Kospi -4.0% and Nikkei -2.9%: Samsung, SK Hynix and SoftBank led the retreat
- Japan's ten-year government bond yield reached 3.02%, a level unseen since 1996
- ADP private payrolls at 8:15 a.m. Eastern, consensus 47,000 after July's 44,000
Indexes
Borrowing costs are climbing in every large economy at once, and Asia absorbed most of the damage overnight. Japan's ten-year government bond yield touched 3.02%, ground it has not occupied since 1996, and Tokyo shares fell 2.9% to 64,325.64. Seoul was worse, the Kospi dropping 4.0% to 6,562.72 as Samsung Electronics lost 4% and SK Hynix 4.7%. SoftBank Group, Japan's proxy for the whole artificial-intelligence trade through its OpenAI stake, fell 6.4%. American contracts are marked modestly lower against that backdrop, which counts as resilience given the eleven hours before them.
| Futures | Level | % Chg | Note |
|---|---|---|---|
| ES (S&P 500) | 7,629.00 | -0.18% | Cash index closed at 7,631.47 |
| NQ (Nasdaq 100) | 28,987.50 | -0.47% | Chips carrying the loss again |
| YM (Dow) | 52,798.00 | -0.06% | |
| RTY (Russell 2000) | 2,920.00 | -0.16% |
| Global | Level | % Chg | Note |
|---|---|---|---|
| Nikkei 225 | 64,325.64 | -2.85% | Under both its 20- and 50-day averages |
| Kospi | 6,562.72 | -3.99% | 50-day average sits at 7,066 |
| Hang Seng | 25,311.21 | -0.07% | |
| Shanghai (SSE) | 3,941.39 | -0.97% | |
| FTSE 100 | 10,717.76 | -0.67% | |
| DAX | 25,738.20 | -0.90% | Third straight decline |
| CAC 40 | 8,242.67 | -0.73% |
In the News
Rates, FX, Commodities
Yields rose across the whole curve overnight, and CNBC reports the ten-year at 4.81% has reached ground it last held in November 2023. The two-year has added six basis points since Monday and the thirty-year four, so the curve's level rose while its slope held at 41 basis points.
| Treasury | Yield | Note |
|---|---|---|
| 2-Year | 4.40% | 4.34% on Monday |
| 10-Year | 4.81% | Highest since November 2023 |
| 30-Year | 5.29% | Up four since Monday |
| 2s10s spread | 41 bp |
| Commodity | Price | % Chg | Note |
|---|---|---|---|
| WTI Crude | $89.91 | -0.34% | October contract |
| Brent Crude | $94.86 | +0.22% | November contract |
| Gold | $4,364.40 | — | Fell three straight sessions into Tuesday |
| Natural Gas | $2.94 | +1.34% |
| Currency / Vol | Level | % Chg |
|---|---|---|
| Dollar Index | 99.82 | +0.14% |
| EUR/USD | 1.1573 | -0.17% |
| USD/JPY | 159.90 | -0.17% |
| VIX | 16.74 | +2.45% |
Neither crude benchmark has moved half a percent since Tuesday's 5.2% surge, which is its own kind of statement: the market has decided a contested shipping lane is now the baseline rather than the emergency. Gold has declined for three consecutive sessions while missiles fly, and the explanation is unglamorous, since metal paying no coupon competes poorly against a Treasury note near 4.8%.
Technicals
At 7,631.47 the broad index sits below its 20-day average of 7,712.85 and 66 points above the 50-day at 7,565.89, leaving 167 points between it and the August 13 closing high. The Nasdaq 100 has already given up more ground, closing at 29,077.22 against a 50-day of 29,244.13. The Nasdaq Composite is the holdout among the three, still 150 points clear of its own 50-day. Small caps abandoned both tests last week and the Russell 2000 finished Tuesday at 2,920.13, some 70 points beneath a 50-day of 2,990.58.
Two-year notes at 4.40% and ten-year notes at 4.81% sit above everything August produced. What matters for equities is the speed: 60 basis points on the ten-year since January reprices the discount rate every long-duration valuation runs through.
Breakouts. Chevron (CVX) closed at $211.05, one dime below its best close in a year, and premarket trade at $211.70 clears it. ConocoPhillips at $136.19, Marathon Petroleum at $383.00 and the sector fund itself all finished Tuesday at 52-week highs, so the leadership extends past any single crowded position.
Breakdowns. Credo Technology (CRDO) has traded under its 50-day average, now $236.40, since Friday, and premarket trade at $189.00 puts it 37% below the June 22 closing high of $302.52. MongoDB (MDB) is heading the same way, with premarket trade at $378.28 surrendering a 20-day average of $422.92 and closing on the 50-day at $366.67. Advanced Micro Devices (AMD) at $459.61 remains more than $40 under its 50-day.
Top Movers
Gainers
Dell Technologies (DELL), +7.9% to $458.69. The overnight verdict on Tuesday evening's report is emphatic: adjusted earnings of $7.04 a share, more than two dollars above consensus, and a full-year revenue outlook lifted by $25 billion to $192 billion. Management's claim that artificial-intelligence server revenue will triple this fiscal year is the number the rest of the industry gets measured against. The shares closed Tuesday at $425.00 after holders cut exposure into the release, so this morning is a round trip and then some.
Hewlett Packard Enterprise (HPE), +4.2% to $53.01. The move belongs to Dell, not to HPE: investors are extending Tuesday's server numbers to the company reporting tonight. HPE guided third-quarter revenue to $11.5 billion to $12.1 billion, and the Zacks consensus sits at the top of that range, implying growth near 32%. NetApp (NTAP), also due after the close, is up 2.0% on the same logic.
Chevron (CVX), +0.3% to $211.70. Crude above $90 is doing the work, with producers again ahead of the service names.
Losers
MongoDB (MDB), -12.9% to $378.28. Second-quarter revenue rose 30% to $771.8 million, adjusted earnings were $1.90 a share against $1.61 expected, and full-year revenue guidance went up to $2.99 billion to $3.03 billion. The stock is being sold anyway, and the reason sits inside the Atlas line: the managed cloud service grew 29% year over year, exactly the rate it has produced for three quarters running, which turns a growth story into a plateau story. At roughly 59 times next year's expected earnings, after a 28% advance over the past month, a beat is the entry requirement and not the surprise.
Credo Technology (CRDO), -8.5% to $189.00. First-quarter revenue was a record $479 million, up 115% from a year earlier, and adjusted earnings of $1.20 a share edged the $1.17 consensus. Management reiterated more than 85% revenue growth for the fiscal year and more than $600 million of optical revenue, guiding the current quarter to $525 million to $535 million. The shares fell 8.6% on Tuesday before any of it was public, and they are falling again on it.
Snowflake (SNOW), -2.3% to $312.51. The company reports tonight, and the market is derisking software ahead of the event instead of after it.
Micron (MU), -1.0%, and Advanced Micro Devices (AMD), -0.8%. Both are trading off Seoul rather than off any American news. Samsung fell 4% and SK Hynix 4.7% overnight, and memory pricing has been this sector's best argument all year, so a session like that in the two companies that set it carries further than a footnote.
Macro Calendar
| Release | Time (ET) | Consensus | Prior |
|---|---|---|---|
| ADP private payrolls (Aug) | 8:15 a.m. | 47,000 | 44,000 |
| Factory orders (July) | 10:00 a.m. | — | — |
| EIA crude inventories | 10:30 a.m. | — | — |
| Beige Book | 2:00 p.m. | — | — |
A 47,000 consensus would have read as a recession signal a year ago and now reads as adequate, which is a measure of how far expectations have travelled. Tuesday's job openings report showed hiring in professional and business services down 188,000, and a second soft labour reading two days before Friday's payrolls would complicate the case for the rate rise traders have started to price.
Earnings Today
The morning slate is small. Ollie's Bargain Outlet (OLLI) closed at $72.34 after a 4.1% decline and is expected to earn $1.14 a share on revenue of $756.4 million; Brown-Forman reports by 8:00 a.m. Eastern with consensus at $0.38 a share.
The weight sits after the close, where Broadcom (AVGO) is the week's remaining test of artificial-intelligence demand. Consensus calls for revenue near $29.4 billion, and management guided artificial-intelligence semiconductor revenue to $16 billion for the quarter. Broadcom fell about 15% the day after its June report, when chief executive Hock Tan declined to raise the company's $100 billion full-year target for such chips. Snowflake, Hewlett Packard Enterprise and NetApp follow the same evening.
Drivers
- ADP's August count at 8:15 a.m. Eastern lands in a week when the argument has inverted. Two months ago the debate was over the size of a cut; with crude above $90 and prices-paid readings running hot, traders have moved to pricing a rate rise at the September meeting. Tuesday's job openings report already leaned the other way, and a second soft labour number would put the two positions in open conflict. Watch two-year notes for whether anyone trades on it before Friday's official report.
- Hock Tan's guidance arrives roughly fifteen minutes after the closing bell. Broadcom has lost 23% since its June 2 close of $481.57, an unusual drawdown for a company whose order book is supposed to be the sturdiest in the industry, and Dell's outlook overnight raises the bar. Snowflake, HPE and NetApp report into the same window, so the evening produces a verdict on enterprise spending rather than a single data point.
- Overseas yields set the ceiling for American ones. Japanese institutions have spent thirty years exporting savings into foreign bonds because domestic yields offered nothing, and a 3.02% ten-year at home changes that calculation. Watch the Treasury auction calendar against a ten-year at 4.81%.