Article published at 10 a.m. CT
JJ Kinahan is Senior Vice president, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Markets move to upside in early trading
- Crude oil prices are jumping too
- Chips stocks again are moving Nasdaq
The market moved higher in early trading as investors set their sights on earnings results and expectations despite the volatile conflicts in the Middle East. Crude oil prices are on the upswing after the U.S. struck Iran and Iran retaliated – a pattern that we’ve seen repeated for 10 straight days.
The Nasdaq Composite is up 1% in the early going, boosted by chip stocks, while the S&P 500 Index advanced by 0.45% and the Dow Jones Industrial Average edged higher by 0.45%. Let’s see if these advances could hold throughout the day, reversing yesterday’s movement of early momentum that slowly drifted to the downside to the close.
WTI Crude Oil prices rose 2.5% to trade in the $85 a barrel range early on, pushing higher as the markets opened and reaching where they were in early June. That indicates that there is concern about the oil shortages coming out of the war in the Middle East, even while the markets continue to chug along. While oil prices have been unstable as the war drags on, the Cboe Volatility Index® (VIX® Index) has stayed steady, back under 18 in early trading today. With a warning level usually around 20, the signs that you usually see of caution aren’t flashing too brightly overall.
Chip stocks are again moving to higher ground. They were on a comeback path yesterday as most finished to the upside. In the early going today, Micron is adding 6.2%, Advanced Micro Devices is rising by 3.9%, Marvell is tipping higher by 10.7%, Nvidia advancing by 2.6% and SK Hynix higher by 8.9%. Intel shares are also getting in on the upward momentum, adding 5.4% and are up 73% over the last year.
Shares of General Motors were higher by 2.6% in early trading after the automaker outpaced second-quarter income expectations and upped its full-year guidance. GM said it expects earnings before income and taxes to come in about $500 million higher to a range of $14 billion to $16 billion.
Consumer demand in North America coupled with firm pricing models for pickup trucks and SUVs drove the profits, despite a 7.2% fall out in global deliveries, its third straight quarterly decline. What’s more, the company is still trying to right-size its electric vehicle production and said related charges are expected to dent net earnings, which were forecast to fall by at least $1.5 billion to a range of $9.9 billion to $14 billion. Shares have been on a rocky road this year and are down 6.4% year-to-date.
3M also beat earnings expectations and raised its forecast, fueling an 8.3% jump in shares early on as the industrial and consumer products maker continues its turnaround. The conglomerate, which is the maker of Post-Its, has turned its attention to organic growth focused on data centers and AI infrastructure that have led to new partnerships for its technology.
Monday’s trading started off on a positive foot, but ended in the red across the board. Higher oil prices led to a slight pullback by 0.19% for the S&P while the Nasdaq slipped 0.05% — still on track for a second straight month of falloffs. The Dow was partly weighed down by a drop in Apple shares, ending the session off 0.59%.
Investors appeared to be taking profits after Apple hit record highs last week. The stock is slipping by 0.45% in the early going. It settled yesterday 2.1% lower after reaching a fresh peak of $334.99 and a closing record of $333.74 last Friday.
Investors will be looking for earnings results tomorrow from Alphabet, Tesla and IBM. Implied moves in either direction for each were in mid- to high single digits: Alphabet’s expected move is roughly 9.1%, Tesla’s is at 7%, mirroring the last couple years, and IBM is at a 6% move, which has tracked lower four of the last five quarters.
Happy trading!
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