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In Preservation Mode

Briefing.com

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Chief Market Analyst

A record finish Friday for the S&P 500 and Nasdaq Composite is being preserved for the most part this morning by the futures market. There isn’t a lot of buying conviction at the moment, but notably, there isn’t any selling conviction either.

Currently, the S&P 500 futures are up five points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 21 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 19 points and are trading 0.2% above fair value.

Much of this morning’s attention is focused on the effect and after-effects of Hurricane Ida rolling over Louisiana yesterday. There are over one million people reportedly without power and reports note that nearly all of the Gulf Coast oil production was shut in with the storm’s approach and impact.

There are some significant refining operations in Louisiana. Worries about extended shutdowns and possible damage to pipelines have lifted unleaded gasoline futures. They are currently up $0.03, or 1.6%, to $2.16/gallon.

WTI crude futures are well behaved. They are currently flat at $68.74 per barrel, dealing with a separate Reuters report that Kuwait’s oil minister is suggesting OPEC+ may possibly need to reconsider its agreement to raise output by 400K bpd given the growth headwinds created by the Delta variant.

That variant and its effects have prompted lots of businesses to reconsider return to office plans and market participants to reconsider when the Fed might announce a plan to cut back on its asset purchases.

Fed Chair Powell on Friday left the door open to a possible tapering announcement before the end of the year, yet he also made it sound as if he is waiting to see the August jobs report this Friday before being persuaded to jump on board with a tapering timeline announcement at the Sept. 21-22 FOMC meeting.

The stock market responded well on Friday to Mr. Powell’s remarks, yet the bigger catalyst was likely his reminder that any future increase in the target range for the federal funds rate faces a substantially more stringent test and that “we have much ground to cover to reach maximum employment.” We addressed Mr. Powell’s speech and its implications for the stock market in The Big Picture column published on Friday.

There isn’t a lot of corporate news this morning making a market-moving impact.

Affirm Holdings (AFRM) is up a whopping 40% after announcing a “Buy Now, Pay Later” deal with Amazon.com (AMZN)Hill-Rom Holdings (HRC) is up 8% following a Wall Street Journal report that Baxter (BAX) is in advanced talks to acquire HRC for approximately $10 billion or $150 per share, and Moderna (MRNA) is down 2.4% on a Reuters report that Japan has temporarily suspended nearly one million Moderna vaccine shots on contamination concerns.

Some ratings actions of note include Stifel downgrading Brinker (EAT) and Dave & Buster’s (PLAY) to Hold from Buy, Robert W. Baird downgrading Capital One (COF) to Underperform from Neutral, Argus downgrading Pinterest (PINS) to Hold from Buy, and Seaport Global Securities starting American Express (AXP) with a Neutral rating.

The 10-yr note yield is down one basis point to 1.30%, sitting tight so to speak on Ida damage assessments, ongoing COVID concerns, and the stock market’s eventual course when the cash session begins.

Originally Posted on August 30, 2021 – In preservation mode

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