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US index futures are down in Tuesday’s pre-market, reflecting the ongoing risk aversion observed in recent days. Investors are concerned about the prospect of higher interest rates for an extended period and are closely monitoring developments both in China and the United States. In addition to the trajectory of Treasury rates, which has been a concern in the markets since the Federal Reserve adopted a more hawkish stance, signaling a possible rate hike later this year, investors are now focusing on the possibility of a government shutdown in the United States in October.

At 7:01 AM, Dow Jones futures (DOWI:DJI) fell 126 points, or 0.37%. S&P 500 futures dropped 0.43%, and Nasdaq-100 futures fell 0.48%. The yield on 10-year Treasury bonds was at 4.509%.

In the commodity market, West Texas Intermediate crude oil for November fell 0.75% to $89.02 per barrel. Brent crude oil for November dropped 0.74% to near $92.60 per barrel. Iron ore with a 62% concentration fell 1.64% to $115.10 per ton.

On the U.S. economic calendar for Tuesday, investors are awaiting the S&P Case-Shiller Home Price Index for July at 09:00 AM, as well as new home sales at 10:00 AM, which are expected to be around 700,000 in August compared to the same period last year. At the same time, the Conference Board will release the Consumer Confidence Index for September, projected to be at 105.5 points, while the Richmond Fed will publish the industrial data for September.

At 1:00 PM, the government will hold a Treasury auction of two-year notes. At 1:30 PM, a speech by Fed Governor Michelle Bowman is scheduled. In the late afternoon, at 4:30 PM, the American Petroleum Institute (API) will report its weekly oil inventory, which had a reduction of 5.2 million barrels in the previous week.

Investors are keeping an eye on the possibility of a government shutdown under the Biden administration. Negotiations between the government and the Republican Party, which controls the House, are facing difficulties, increasing the risk of furloughs for thousands of federal employees and the suspension of a wide range of services after October 1st.

In Europe, the economic calendar is relatively empty as market participants eagerly await the release of inflation data in the Eurozone later this week. These numbers are expected to influence future decisions by the European Central Bank (ECB).

In Asia, markets closed lower, with the Chinese real estate market once again in the spotlight. Real estate developer Evergrande canceled important meetings with its creditors scheduled for this week, and its subsidiary, Hengda Real Estate, failed to make payments on bonds totaling $547 million. This led to another day of decline in Chinese real estate stocks, dragging down the Shanghai Composite Index, with Evergrande’s shares falling more than 8%.

On a positive note, China has requested the European Union to lift restrictions on high-tech products from China. This initiative came from Chinese Vice Premier He Lifeg, who met with EU Commissioner Valdis Dombrovskis, as reported by Reuters. Both are seeking to stabilize supply chains.

In Monday’s closing, the Dow Jones rose 43.04 points or 0.13% to 34,006.88 points. The S&P 500 gained 17.38 points or 0.40% to 4,337.44 points. The Nasdaq Composite increased by 59.51 points or 0.45% to 13,271.32 points. Gains were modest following the Federal Reserve’s conservative policies and concerns about a possible government shutdown. Simultaneously, the economic situation in China, reflected by S&P’s reassessment and crises in the real estate sector, such as Evergrande and China Aoyuan, intensified global concerns about Chinese economic stability. However, the S&P 500 and Nasdaq broke a four-day losing streak.

Ahead of Tuesday’s corporate earnings, investors will be watching, before the market opens, reports from Cintas (NASDAQ:CTAS), Ferguson (NYSE:FERG), TD Synnex (NYSE:SNX), Unfi (NYSE:UNFI), Thera Technologies (NASDAQ:THTX). After the close, results are awaited from Costco Wholesale (NASDAQ:COST), AAR (NYSE:AIR), MillerKnoll (NASDAQ:MLKN), Progress (NASDAQ:PRGS) and Nanobiotix (NASDAQ:NBTX).

Microsoft (NASDAQ:MSFT) – Microsoft shares nearly posted their worst losing streak in a year but recovered, closing up 0.2% on Monday. Guggenheim analyst John DiFucci upgraded the stock to “Neutral,” which was previously Wall Street’s only Sell rating for Microsoft. He cited the positive influence of the company’s generative AI narrative.

Meta Platforms (NASDAQ:META) – Messaging app Threads, while having a successful launch, is struggling to attract new users, trailing major social platforms in terms of user numbers in the US. Insider Intelligence predicts that it will remain in second-to-last place until 2025. Meta, the parent company, is exploring new features to increase its attractiveness, but monetization will only occur when the app is more established. Analysts suggest that Threads needs to build a unique identity to become relevant in the market.

Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) – Apple Vice President Eddy Cue will testify in court where Google faces charges from the US Department of Justice for using licensing agreements to monopolize online search. The deal between Google and Apple, involving billions, is under scrutiny. Cue will defend Google’s choice as the default search engine on the iPhone, highlighting its superior quality and users’ freedom to change their default search engines.

Ford Motor (NYSE:F) – Ford has halted construction of a $3.5 billion battery plant in Michigan, citing competitive concerns and impasses in contract negotiations. The decision was criticized by UAW President Shawn Fain as a threat to cut jobs and was made despite improvements in Ford’s offer during union negotiations. The fate of the workers remains uncertain, while management expresses hope for successful negotiations. Ford Motor revealed that despite some progress, there are still “significant gaps” on economic issues vital to reaching a new agreement with the union.

General Motors (NYSE:GM) – Unifor union chose GM as the second target for contract negotiations, after ratifying a contract with Ford in Canada. Negotiations with GM begin on Tuesday.

Tesla (NASDAQ:TSLA) – Tesla is at the center of a European Union (EU) investigation into possible Chinese subsidies to electric vehicle manufacturers for their exports from China to the EU. The investigation will examine the extent to which China subsidized manufacturers, potentially affecting competitiveness in the EU’s electric vehicle market. This analysis could reshape competitive dynamics and trigger possible retaliation, impacting manufacturers on both sides, including BMW and Renault, which operate in joint ventures in China. Tesla, benefiting from significant advantages in China, could face significant consequences depending on the results of the investigation.

NIO (NYSE:NIO) – There are unconfirmed reports of a $3 billion capital increase, although NIO denies such claims. Uncertainty influences the value of shares, reflecting concerns about future capital increases, although the situation appears to be the result of speculation.

Thor Industries (NYSE:THO) – Recreational vehicle producer Thor Industries projects earnings of between $6.25 and $7.25 per share for fiscal 2024, with sales estimated at between $10.5 billion and US$11 billion. Analysts anticipated earnings of US$7.12 per share and sales of approximately US$10.9 billion. Thor noted that despite signs of improvement, the retail scenario remains challenging due to inconsistent macroeconomic data and dealer prudence. Shares fell 2.5% in pre-market trading on Tuesday.

JetBlue (NASDAQ:JBLU) – The National Transportation Safety Board is investigating a JetBlue flight where severe turbulence resulted in eight injuries. The incident occurred near Jamaica on an Airbus A320. All those affected have been hospitalized and the aircraft is out of service for inspection.

Boeing (NYSE:BA),  Air Canada (USOTC:ACDVF) – Air Canada has signed an agreement to acquire 18 787 Dreamliner jets from Boeing, with the option to purchase 12 more, aiming to capitalize on high demand for travel and improve fuel efficiency.

KKR & Co  (NYSE:KKR) – KKR & Co has added Kimberly Ross, former CFO of  WeWork  (NYSE:WE), to its board. Ross, also a former CFO of Baker Hughes (NASDAQ:BKR) and a member of the boards of Northrop Grumman (NYSE:NOC) and Cigna (NYSE:CI), started as an independent director on September 20 as KKR seeks to overcome market challenges.

Nomura Holdings (NYSE:NMR) – Nomura Holdings’ Charles Wang Zhonghe has been ordered by Chinese authorities to remain in the country, intensifying Western companies’ concerns about operating in China. The travel restriction, possibly linked to a broader investigation, comes amid an economic slowdown and strict laws, impacting the perception of business in the country.

Moody’s (NYSE:MCO) – Moody’s warned that a government shutdown in the US will hurt the country’s credit. Such a scenario will arise if Congress does not finance the new fiscal year, with direct consequences for the country’s credit profile, potentially leading to a downgrade. The situation highlights political and fiscal fragility, placing pressure on debt affordability, due to growing polarization and instability in Washington, despite reaffirmations of the commitment to a responsible fiscal environment.

JPMorgan Chase (NYSE:JPM) – Jamie Dimon, CEO of JPMorgan, predicted potential interest rates of 7%, diverging from the expectations of the market and its economists, following the recent Fed decision. He advised clients to be prepared for stresses related to such a scenario of high rates. Dimon, however, did not express concerns about the intersection of social media and digital banking, highlighting the robustness of some banks during crises. In other news, JPMorgan Chase’s private bank has added a team of three former Citi Private Bank advisors who managed more than $2 billion in assets. Based in Seattle, Olive Goh, James Harding and Jorge Valcarcel will focus on high-net-worth individuals and families, contributing to JPMorgan’s efforts to expand its wealth management services.

Goldman Sachs (NYSE:GS), HSBC (NYSE:HSBC) – Goldman Sachs and HSBC, along with other banks, are adopting a common global approach to disclosing clients’ equity positions, aiming to cut costs and increase transparency. Working with Droit, a RegTech specialist, these banks seek to create tools to minimize risks of underreporting and ensure compliance with disclosure rules through a unified interpretation, aiming for accuracy and consistency in regulatory reporting.

Goldman Sachs (NYSE:GS) – The appreciation of oil and the depreciation of the British pound could favor the United Kingdom’s FTSE 100 index, according to an analysis by Goldman Sachs. The FTSE has a strong correlation with oil prices, and companies such as Shell (NYSE:SHEL) and BP (NYSE:BP), significant members of the index, have already experienced gains. A weaker pound is also advantageous for FTSE 100 companies due to their extensive international revenue, enhancing the index’s attractiveness in a global context.

Citigroup (NYSE:C) – Investors are positioning themselves against the Nasdaq 100 index, with short positions reaching US$8.1 billion, indicates Citigroup. This movement reflects concerns about the persistence of high interest rates, negatively impacting sectors with high evaluations such as technology. Even after falls, the market positioning is not excessive, highlighting a global bearish sentiment.

Deutsche Bank (NYSE:DB) – Deutsche Bank unit DWS Investment Management Americas will pay $25 million to resolve SEC allegations of misrepresentations in its ESG investment process and anti-money laundering failures in mutual funds. DWS agreed to the payment without admitting or denying the findings. The company said it was satisfied with the resolution and had already taken steps to resolve the issues raised.

UBS Group AG (NYSE:UBS) – UBS has recruited 30-year trading veteran Brian Williamson to expand its U.S. execution center, which helps asset managers and hedge funds reduce administration costs of negotiation tables.

AIG (NYSE:AIG), Aviva (LSE:AV.) – Aviva has agreed to acquire AIG’s UK life insurance business for $563 million, marking the largest acquisition under CEO Amanda Blanc. The transaction, expected to close in the first half of 2024, will significantly add to Aviva’s customer base, strengthening its market position and aligning with its capital-light growth strategy.

DraftKings (NASDAQ:DKNG) – DraftKings was upgraded to Overweight from Neutral by JPMorgan, and the bank also raised its price target on the gambling company’s shares to $37 from $26. As a result, the stocks experienced a 3.8% increase in pre-market trading on Tuesday, trading at $28.40.

Spotify Technology (NYSE:SPOT) – Spotify is testing an AI feature that translates podcasts into several languages, using technology from OpenAI. This feature, which imitates the original announcer’s style, represents a breakthrough in the company’s attempt to expand its audience and revenue through innovation in generative artificial intelligence.

Peloton Interactive (NASDAQ:PTON) – UBS analyst Arpine Kocharyan predicts further declines for Peloton Interactive shares, maintaining the sell rating and lowering the price target to $4 from $8. She cited uncertainties in subscription growth and recent negative trends in Peloton’s website visits, as well as a decline in subscribers and unmet expectations in connected fitness as reasons for her pessimism. The shares have already fallen 45% this year.

CRH (NYSE:CRH) – Construction solutions provider CRH has moved its primary equity listing from Europe to the US, seeking greater exposure to North American investors and taking advantage of its significant North American operation. The company expects the move to enhance its growth opportunities and increase the visibility and trading volume of its shares, as CRH generates around three-quarters of its profits in the region.

3M (NYSE:MMM) – 3M is exploring options to accelerate the shutdown of PFAS chemical production in Belgium, anticipating significant impacts due to continued plant downtime. PFAS, long-lasting chemicals associated with health risks, are used in many products. The company plans to cease all PFAS production by 2025.

Honeywell International (NASDAQ:HON), ESS Tech (NYSE:GWH) – Honeywell is investing $27.5 million in energy storage startup ESS Tech, forming a strategic collaboration to advance battery energy storage technologies of iron flux. The partnership aims to accelerate decarbonization in several sectors, while ESS Tech saw its shares jump more than 28% in a period of 1 week. ESS solutions are economically advantageous and can be applied on a large scale, offering up to 12 hours of energy.

Alcoa (NYSE:AA) – Alcoa named William Oplinger as its new CEO, succeeding Roy Harvey. The change, part of the “succession planning process”, surprised investors. Oplinger, previously the company’s COO, assumed the role of CEO unexpectedly, raising suspicions and uncertainty in the market.

Cleveland-Cliffs (NYSE:CLF), Steel Dynamics (NASDAQ:STLD) – The focus surrounding the bidding war for United States Steel should not overshadow the performance of steel companies such as Cleveland-Cliffs and Steel Dynamics, both of which were recently upgraded to “Buy.” Alexander Hacking from Citi maintains positive expectations, despite the volatility in steel prices, highlighting favorable prospects for appreciation and the stabilization of raw material prices. The price target for Cliffs remained unchanged at $22 per share while the price target for Steel Dynamics shares remained at $130 per share.

Yum! Brands (NYSE:YUM) – KFC’s exit from Russia has been delayed due to intervention by the US sanctions authority OFAC and new demands from Moscow, including an “exit tax”, complicating the process for foreign companies. Sergei Levin, from Unirest, asset manager for Yum! Brands in Russia expressed the complexities faced during the exit process.

Alibaba Group (NYSE:BABA) – Alibaba intends to spin off its logistics unit, Cainiao, through an IPO in Hong Kong, which could raise at least US$1 billion. This decision comes after the recent restructuring of the technology giant. Cainiao operates globally, promising fast deliveries and has partnerships with several logistics agents.

Krispy Kreme (NASDAQ:DNUT) – Krispy Kreme announced Josh Charlesworth as its new CEO starting in January, succeeding Michael Tattersfield. Charlesworth, with the company since 2017, has served in several leadership positions. Tattersfield will remain an investor and board member, and the company maintains its 2023 financial projections.

Costco Wholesale (NASDAQ:COST) – Costco’s quarterly results may not surprise, but a potential increase in membership rates could boost the stock, analysts say. Costco, which has previously provided monthly sales updates, has reduced the chances of big surprises. Even with sales below forecasts, an increase in membership fees, delayed by inflation and high costs, could benefit the company’s shares, which have already appreciated 22% this year.

Coty (NYSE:COTY) – Coty has initiated a global offering of 33 million shares and is seeking a dual listing on the Paris Stock Exchange. The proceeds will be used to reduce debts and invest in the business. The company, which sees potential in European investors, experienced a boost in sales, benefiting from the post-pandemic increase in demand for luxury beauty products.

Shoe Carnival (NASDAQ:SCVL) – On Monday, Shoe Carnival announced the immediate appointment of Patrick Edwards as new CFO. Edwards had been with the company since 2021 as director of accounting. Erik Gast, the previous CFO, left the company to explore new opportunities. Shares were flat in premarket trading Tuesday.

Victoria’s Secret (NYSE:VSCO) – Victoria’s Secret, following criticism for its overly sensual image and losses of $1.8 billion since 2018, is revamping its marketing and merchandise. Efforts include reintroducing the famous fashion show and creating the VS Collective with more diverse representatives. Despite changing leadership and new initiatives, the company is still struggling to reshape its image and regain consumer trust, while other brands, like Aerie and Skims, are gaining ground by focusing on inclusivity and comfort.

Pfizer (NYSE:PFE) – Pfizer has resumed production on most lines at its North Carolina plant, which was hit by a tornado in July. However, it warned that some medicines may have their supply interrupted by mid-2024. The affected facility produces around 25% of the company’s injectable medicines, which are essential for hospitals in the US.

Merck (NYSE:MRK) – A recent study revealed that molnupiravir, Merck’s antiviral drug for Covid-19, can induce mutations in the virus, with the potential to accelerate its evolution. The drug, which causes mutations in the virus to weaken it, has been shown, in some cases, to survive the virus and generate mutated variants, increasing scrutiny over its benefits and risks. Merck disputes these findings, reiterating the lack of concrete evidence about the drug contributing to viral mutations.

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