What we covered here:
- US stocks finished sharply higher, posting their 6th straight day of gains.
- Trump says he wants zero interest rates.
- Mortgage rates hit a 3-year low.
- Oil dips to 2.5% after on a report that Trump weighed easing Iran sanctions.
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What’s moving markets today: September 11, 2019
16 Posts
Dow posts 6th straight gain to close above 27,000
US stocks closed up on Wednesday. Sentiment was helped by China waiving import tariffs on more than a dozen US goods starting September 17.
The Dow marked its sixth day of gains in a row, its first such winning streak since early June. The index also climbed above 27,000 points for the first time in six weeks.
The Dow finished 0.8%, or 227 points, higher.
The S&P 500 closed up 0.7%.
The Nasdaq Composite closed 1.1% higher.
Boeing (BA), Apple (AAPL) and Caterpillar (CAT) were the best performing Dow stocks of the day.
Baker Hughes (BHGE) was the biggest decliner in the S&P following the news that majority investor GE is looking to sell its stake for up to $3 billion. The stock fell 7.6%.
US oil prices settled 2.9% lower at $55.75 a barrel. Prices dropped sharply following a Bloomberg report saying that President Donald Trump weighed easing sanctions on Iran.
The Dow is on track for its 6th day of gains
With less than an hour left in the trading day, the Dow is headed for a sixth day of gains in a row.
Its the first such winning streak since early June.
The index also climbed above 27,000 points again. It hasn’t touched that level in six weeks.
Alliance Bernstein wants its portfolio managers to learn about climate change
Investment manager Alliance Bernstein (AB) is collaborating with Columbia University’s Earth Institute to create an intensive curriculum on climate risk and investment performance.
Called ‘Climate Science and Portfolio Risk’, it will be the first of its kind, AB said in a press release about the venture.
All investment teams at AB will have to enroll in the program, in which they will tackle challenges like how rising sea levels, wildfire hazards and other extreme weather affect companies’ risks and opportunities.
New Apple products put the company in a more competitive position, says investor
The new products that Apple (AAPL) announced Tuesday are helping the sustainability of its business, Gene Munster, managing partner at Loop Ventures told CNN Business’ Alison Kosik on “Markets Now.”
“There is a strong case to be made that Apple has the greatest products in the world,” Munster said.
On top of that, Apple was uniquely positioned to leverage its devices to promote other products, such as Apple TV. Competitors like Netflix (NFLX) won’t be able to do that.
With consumers wanting better battery life, better cameras and lower prices, the California-based tech giant delivered, Munster said.
Even though the future of 5G was missing from Apple’s presentation, the company isn’t behind the curve on the new technology, which is only sparsely available in the United States at this point.
“If Apple came out with a 5G phone today, it would create an assumption of availability among consumers that is simply not there,” Munster said.
A quarter-point Fed cut will instill confidence and calm markets
A quarter percentage interest rate cut might not do much to boost the economy right away, but it will help to instill confidence in the US economy, said Stifel’s chief economist Lindsey Piezga during CNN’s digital live show Markets Now.
“I think it will calm down the market,” Piezga said on the show.
But it remains important to watch the central bank’s tone regarding future moves. “Are they going to emphasize the positives in the economy… or do they point out the rising risks?”
Trump won't be happy unless the Fed cuts at least a half point, trader says
Investors are gearing up for interest rate cuts in the coming weeks, with the European Central Bank’s monetary policy update due tomorrow and the Federal Reserve meeting next week.
“Our Fed will be a little more interesting to watch,” out of the two, Matt Cheslock, equity trader at Virtu Financial, told CNN’s Alison Kosik during the digital live show Markets Now.
President Donald Trump is keeping the pressure on the central bank, tweeting earlier today that interest rates should be cut to “zero, or lower.”
“Everything that comes out from the president has moved the markets. Certainly, that’s not a good sign when the president is calling the barometer of our economy boneheads,” Cheslock said, referencing the earlier tweet.
Trump won’t be happy unless we get at least half a percentage point cut, and the market might not be either, Cheslock said.
Oil price drops 2.5% on report that Trump weighed easing Iran sanctions
US oil prices dropped as much as 2.5% to $55.99 a barrel on Wednesday, following a Bloomberg report saying President Donald Trump weighed easing sanctions on Iran in order to secure a meeting with Iranian President Hassan Rouhani.
Trump’s considerations prompted push-back from former national security adviser John Bolton, who left the administration yesterday. The surprise exit of Bolton prompted speculation that the tensions between the United States and Iran could ease, and oil prices fell on the news.
If Iran sanctions were eased or lifted, oil supply in the global market would increase, thereby pushing down the price.
Gender diversity on boards correlates with higher credit ratings, says Moody's
The representation of women on corporate boards is linked to companies’ credit ratings, says ratings agency Moody’s.
Companies rated triple-A — the best possible credit rating — by the agency have the most gender-diverse boards “with women accounting for an average of 28% of their corporate directors.”
Companies with lesser ratings also had fewer women on their boards. Nevertheless, the pattern suggested a correlation in the data, but not causation, Moody’s said.
“Higher-rated companies also tend to have more women occupying C-suite executive positions. Nearly 25% of executives at Aaa-rated companies are women, versus around 10% for Ca-rated companies.
Regulations that mandate a minimum gender split on boards could, meanwhile, make things worse for companies, as it would require many to turn over directors, which could lead to credit risk in the short-term.
That said, Moody’s also assesses companies’ governance, and one of the five equally weighted risk categories it considers for the score is board oversight and effectiveness. “A board with less than 30% gender diversity is one indicator among many that strays from Moody’s global standards,” the agency said.
Stocks open higher, Dow adds to win streak
US stocks opened higher on Wednesday, as the Dow is aiming for its sixth day of gains in a row.
- The Dow kicked off 20 points, or 0.1%, higher.
- The S&P 500 and the Nasdaq Composite both opened 0.1% higher
Shares of video game retailer Gamestop (GME) dropped more than 16% at the open, after the company reported worse-than-expected sales and said it would close 200 stores.
Producer price index climbs 1.8%
The producer price index rose by 1.8% year-over-year in August, slightly more than economists surveyed by Refinitiv had forecast. But it remains below the Federal Reserve’s 2% inflation target.
Prices rose 2.3% in August when stripping out food and energy prices.
The Fed “can start cutting interest rates down to zero as the president wants as there is no inflation,” wrote Chris Rupkey, chief financial economist at MUFG.
So far, trade worries and tariffs have not yet pushed up the prices of goods made in American factories.
The consumer price index for August is due tomorrow morning at 8:30 a.m. ET.
Mortgage rates hit 3-year low
Mortgages are cheaper than they have been in years.
In the Labor Day holiday week, the average 30-year fixed-rate mortgage in the United States dropped to its lowest level since the week of November 4, 2016, according to the Mortgage Bankers Association.
The average rate on loan balances below $484,350 was 3.84%, while the rate on larger loan balances was 3.84%.
Over the summer, mortgages got cheaper but home buying didn’t quite seem to catch up, in part because home prices rose faster than wages.
In July, however, existing home sales climbed, as the cheap mortgages are finally showing an effect on the market.
Trump calls for US interest rates to be "zero, or less"
The Federal Reserve should cut US interest rates to “zero, or less,” said President Donald Trump in a tweet this morning. Lower rates would give the country the chance to refinance its debt pile at lower rates, Trump said.
(The United States does not refinance its debt this way. Lower rates would, however, make it cheaper for the United States to borrow in the future.)
What Trump is proposing would be extreme: The Fed didn’t even take rates into negative territory in the aftermath of the 2008 financial crisis.
The United States has some $70 trillion of total public and private sector debt. And a debt pile like that comes with a hefty interest bill. According to research from the Institute of International Finance, a 1% rate cut by the Fed could reduce the US interest burden by $20 to $25 billion per year.
Trump has long called on the Fed and Chairman Jerome Powell to lower rates to boost the economy, citing low rates in other countries as proof that America is lagging behind. The European Central Bank, for example, has not yet raised rates since slashing them to ultra-low levels in the wake of the European sovereign debt crisis. The ECB is giving its policy update tomorrow.
But the US economy remains stronger than those of its peers. It does not need interest rates as low as Trump might like them. Even though the pace of growth in America is expected to taper some into the end of the year, it continues to outpace European countries.
Hong Kong makes $37 billion bid for the London Stock Exchange
Hong Kong has just made a surprise £30 billion ($37 billion) bid for the London Stock Exchange.
Hong Kong Exchanges and Clearing (HKXCF) said Wednesday it had made a proposal to the board of the LSE (LNSTY) to “combine the two companies” in a cash and share deal worth £29.6 billion, or £31.6 billion ($39 billion) including debt.
Europe's new tech giant is ... Tencent?
A version of this first appeared in CNN Business’ relaunched “Before the Bell” newsletter. Sign up here!
Naspers, the South African media company that hit the jackpot with an early investment in Tencent, has spun out its 31% stake in the Chinese internet group via the listing of a new company in Amsterdam.
Called Prosus, the company became the largest consumer tech company in Europe when it listed on Wednesday. It’s now the second largest tech company in the region, after Germany’s SAP.
Investors are loving it. Prosus shares soared more than 25% in early trading, per my CNN Business colleague Hanna Ziady in London.
Background: The Tencent stake has been a huge boon for Naspers, which paid just $32 million for it back in 2001. The investment is now worth $130 billion.
But it’s also caused headaches for the South African firm. Before the spin-out, Naspers accounted for 25% of the combined value of the 40 biggest companies on the Johannesburg Stock Exchange. T
hat’s forced investors to sell Naspers shares so they’re not overly exposed to a single stock. The move to Amsterdam should help — and investors in Europe won’t mind either.
The trade war might be taking a breather
A version of this first appeared in CNN Business’ relaunched “Before the Bell” newsletter. Sign up here!
After months of repeated escalation, the United States and China look no closer to hammering out a meaningful trade deal. But for now, at least, tensions look to be easing, not escalating. For investors, that provides an opening.
On Wednesday, Beijing said it had waived import tariffs on more than a dozen US goods — the first such exemptions since the trade fight began. They’ll kick in on September 17, as US and Chinese officials prepare to resume face-to-face talks in Washington.
Investor insight: The announcement could encourage those who have recently unwound positions in safe haven assets such as the yen, which has weakened back to July levels after hitting 2019 highs in August.
Gold prices have also dipped in the past week, and US Treasury yields have been rising as investors sell bonds. The yield on the benchmark 10-year note is up to 1.72%, from 1.46% earlier this month.
Peloton fitness startup seeks to raise over $1 billion
Indoor cycling startup Peloton is looking to raise approximately $1.1 billion as part of its initial public offering, according to a regulatory filing late Tuesday.
The company specializes in at-home stationary bikes and treadmills that can be used to participate in subscription-based online workout classes.
It proposed to price its shares between $26 and $29 and is offering 40 million shares. It plans to list under the ticker PTON on the Nasdaq stock exchange.
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