Markets
markets
Luke Kawa

US stocks rise as soft job growth fortifies bets on a Federal Reserve rate cut this month

ETFs that track major US stock indexes are higher and short-term yields are falling after the August jobs report continued to confirm the trend of labor market cooling, calcifying bets on a Federal Reserve rate cut this month.

Nonfarm payrolls rose by just 22,000 in August, while economists had expected an addition of 75,000. The unemployment rate ticked up to 4.3%, in line with estimates. Revisions to the past two months were also negative, but not as severe as in the July report.

The SPDR S&P 500 ETF was up 0.3% to session highs in the minutes following the release, while two-year US Treasury yields fell below 3.5%.

A report and market reaction like this suggests traders are embracing the idea that the softening in the US labor market is primarily driven by supply-side factors in light of major changes to net immigration, as recently argued by economists at the St. Louis Federal Reserve Bank, and isn’t a worrying sign that the US economy is on the verge of a recession.

With revisions, June’s nonfarm payroll growth is now -13,000. That’s the first month of net job losses since December 2020. And the underemployment rate — or U6, which includes the unemployed, those employed part time who want a full-time job, and those who want a job but aren’t looking for one currently — rose to 8.1%, its highest level since October 2021.

Some see this data as much more concerning than the market reaction implies.

“Since a month or two ago, policy hawks, growth bulls (I call them wrong), have been arguing two things. First, sequential growth should perk up because the weakness in the summer was all a function of uncertainty around Liberation Day. Second, focus on the ratios because the unemployment rate is still low,” Neil Dutta, head of US economics at Renaissance Macro Research, wrote. “Both of these views were wrong as we now know. Employment growth is still cooling (there is no uptick in hours either) and the unemployment rate is rising. Bye Felicia!”

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markets
Matt Phillips

Oklo reports larger-than-expected full-year loss per share

Oklo, the revenue-free nuclear power start-up that more than tripled last year and became a favorite of retail traders, reported full-year results after the close of trading Tuesday. 

It reported: 

  • A full-year net loss per share of $0.72 vs. the $0.61 loss per share that Wall Street analysts expected for the year.

  • R&D expenses of $58.9 million vs. the $46.0 million consensus estimate, according to FactSet.

Earnings have not been a big driver of Oklo shares. After all, analysts don’t expect the company to generate consistent revenues until at least 2028. 

(The stock has tended to trade more on the company’s latest announcements about regulatory approvals and incremental steps toward generating revenue, such as those it made this morning.) 

This report seems unlikely to turn around the recent performance of the shares, which has been awful. Oklo was down slightly in the after-hours session on Tuesday.

Oklo has dropped roughly 60% from its all-time high, which it hit back in mid-October. That’s also when Goldman Sachs’ themed basket of unprofitable tech stocks — of which Oklo is a member — topped out, suggesting that Oklo’s ills have, at least, something to do with shifting market sentiment among investors toward long-shot tech bets, in addition to its own performance. 

Tasha Matsumoto
14h
Stocks edge higher as investors shrug off an uptick in oil prices

Stocks built on yesterday’s gains in spite of the ongoing conflict in Iran. A rise in oil propelled energy stocks higher.

(GERMANY OUT) White cows in a field, Connemara County Galway, Ireland
markets
Luke Kawa

Nvidia’s Jensen Huang says the chip designer is getting closer to selling AI chips to China

H200 sales to China are back 𝚘̶𝚗̶ 𝚘̶𝚏̶𝚏̶ 𝚘̶𝚗̶ 𝚘̶𝚏̶𝚏̶ 𝚘̶𝚗̶ 𝚘̶𝚏̶𝚏̶ 𝚘̶𝚗̶ 𝚘̶𝚏̶𝚏̶ 𝚘̶𝚗̶ 𝚘̶𝚏̶𝚏̶ on the menu.

Bloomberg headlines from Nvidia’s conference in San Jose on Tuesday indicate that CEO Jensen Huang said the chip designer has received purchase orders from Chinese customers, received licenses for many customers, and that it’s firing up manufacturing to sell these AI chips from the Hopper generation to buyers in the world’s second-largest economy.

The situation in China has changed, he added.

Earlier this month, the FT had reported the opposite: that Nvidia had asked TSMC to ramp down its production of H200 chips in order to produce Vera Rubin, its upcoming flagship generation.

The situation loosely remains that Nvidia wants to sell AI chips to China, Chinese buyers want them, but authorities in both DC and Beijing don’t seem to want Chinese companies to be able to get their hands on too many of these processors.

Shares of Nvidia are ending the day lower, and are off more than 3% from their Monday knee-jerk peak reached after Jensen said that the company’s Blackwell and Vera Rubin sales would total at least $1 trillion through 2027.

It’s another case of good financial news from Nvidia failing to give the stock anything more than a short-lived lift.

Crowd of businessmen with multiple expressions

Corporate America won't shut up about agentic AI, or AI in general

In fact, executives are saying the word “AI” more than they’re saying “earnings” on earnings calls.

Hyunsoo Rim, David Crowther16h
markets
Matt Phillips

Space, drone, and satellite stocks continue their Iran war-driven rally

Space, drone, and satellite stocks like Rocket Lab, Redwire, Intuitive Machines, AST SpaceMobile, and Planet Labs are outperforming both broader indexes and the thematic baskets of momentum stocks and shares with high retail sentiment with which they are often lumped.

There’s little clear news on the tape to attribute for the move higher. (Though the FAA did announce a streamlining of launch licensing rules that cover a number of these companies, including Rocket Lab and Firefly Aerospace, as well as Tesla CEO Elon Musk’s commercial space giant, SpaceX.)

More broadly, the outbreak of war with Iran has burnished the space, drone, and satellite sector in the eyes of investors, as the conflict underscores the importance of the three technologies to the future of defense. And in a world where nations are growing unsure of traditional alliances, countries across the board will look to boost their own capabilities. (Belgium just announced that it has selected Redwire, for example, to provide its first national security satellite system. Belgium!)

As Goldman Sachs analysts put it in a research note from January:

“Companies with native drone and satellite technology cultures like AeroVironment and Rocket Lab may find themselves particularly well positioned. And in Europe, a remilitarization of the Continent is underway that could require a $160bn investment over the next 5 years just to catch up with Russia.”

Since the start of the Iran war, most of these types of shares have handily outpaced the Nasdaq Composite Index. Rocket Lab, Redwire, and Intuitive Machines are all up more than 12% during that period, compared to a Nasdaq that’s just slightly in the red, as of shortly before 12 p.m. ET on Tuesday.

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