BofA Reports Largest Weekly Equity Outflows Since 2020
Bank of America has indicated that its clients recently sold off equities at the fastest pace seen since late 2020, signaling potential concerns in the market.
1. Futures Lower
U.S. stock futures were down early Wednesday, pointing to a continuation of the decline seen in the previous session. By 03:34 ET (07:34 GMT), Dow futures were down 80 points, or 0.2%, S&P 500 futures had dropped 23 points, or 0.4%, and Nasdaq 100 futures had lost 127 points, or 0.7%.
Tuesday’s trading session marked a rough start to September, following a turbulent August. Historically, September has been one of the weakest months for stocks, and investors are closely monitoring upcoming job market data, which could influence the Federal Reserve’s next move on interest rates. The negative sentiment was compounded by weaker-than-expected results from the Institute for Supply Management’s report on U.S. manufacturing activity, raising fears of an economic slowdown.
All major indexes, including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, recorded their largest daily percentage declines since August. The decline hit tech stocks particularly hard, with the so-called “Magnificent Seven” tech giants, including Nvidia, taking a significant hit. Nvidia alone dropped nearly 10%, shedding a record $279 billion in market capitalization.
2. JOLTS Report Ahead
Investors will be closely watching the release of key job openings data on Wednesday. The Job Openings and Labor Turnover Survey (JOLTS), often seen as a proxy for broader labor demand, is expected to show a decline in available roles, down to 8.090 million in July from 8.184 million in June.
This report is seen as a precursor to Friday’s nonfarm payrolls data, which will likely influence Federal Reserve Chair Jerome Powell’s approach to monetary policy. Powell recently indicated that the Fed might shift focus from controlling inflation to addressing potential risks in the labor market. The Fed is expected to consider a 25-basis point rate cut at its upcoming meeting on September 17-18, with current interest rates at a 23-year high of 5.25% to 5.5%.
3. DOJ Subpoenas Nvidia – Bloomberg News
The U.S. Department of Justice (DOJ) has reportedly issued a subpoena to Nvidia as part of an escalating antitrust investigation, according to Bloomberg News. Nvidia’s shares fell by more than 3% in premarket trading following the report.
Bloomberg’s sources suggest that the DOJ is concerned Nvidia may be making it difficult for customers to switch suppliers and penalizing those who don’t exclusively use its AI-optimized processors. Nvidia has defended its practices, stating that customers are free to choose the solutions that best meet their needs and that its success is due to the merit of its products.
This investigation follows previous reports that the DOJ had begun examining competition concerns raised by Nvidia’s rivals.
4. Nippon Steel Pledges U.S. Management for US Steel
Japan’s Nippon Steel has announced that if its planned $14.9 billion acquisition of U.S. Steel goes through, the core senior management and the majority of board members at U.S. Steel will be Americans. The company also noted that U.S. Steel would be owned by Nippon Steel’s New York-based subsidiary, Nippon Steel North America, which has operated in the U.S. for over 50 years.
This statement follows concerns raised by U.S. Democratic presidential candidate Kamala Harris, who argued that U.S. Steel should remain American-owned and operated, echoing similar sentiments expressed by President Joe Biden.
5. Crude Oil Retreats
Crude oil prices continued to decline on Wednesday, extending the previous session’s losses amid concerns about global economic growth and the possibility that Libyan oil exports could resume soon. By 03:35 ET, Brent crude had dropped 1.3% to $72.81 per barrel, while U.S. crude futures (WTI) fell 1.3% to $69.41 per barrel. Both contracts had fallen more than 4% on Tuesday, reaching their lowest levels since December.
The recent decline in oil prices is linked to reports of a potential resolution to the political dispute between rival factions in Libya, which had cut the country’s oil output by half and curbed exports.
Key Economic Data
- Wednesday: JOLTS Report
- Thursday: Jobless Claims
- Friday: Nonfarm Payrolls (NFP)
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