Morning in New York: The Oil Rally Continues

A daily overview and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

Rising oil prices will be the main source of uncertainty for the market following the long weekend. Amid another round of tit-for-tat strikes between the U.S. and Iran, as well as reports of an attack by Yemeni Houthis on Saudi Aramco facilities, Brent and WTI prices reached their highest levels in about six weeks. The escalation of the Middle East conflict increases the risk of disruptions in energy supplies, which fuels inflation through rising fuel costs, complicating the Fed’s task. XLE remains the leading sector ETF year-to-date, gaining more than 45%.

Trade tensions also remain in the spotlight. The Trump administration is stepping up pressure on foreign manufacturers, demanding that they localize production in the U.S. to maintain access to the American market. In particular, the president has threatened Canadian company Bombardier with restrictions if it does not set up production in the country. Effective today, Canada’s retaliatory tariffs on U.S. goods totaling approximately $20 billion also take effect. The risk of further escalation of trade disputes remains.

Among the upcoming macroeconomic releases, the NFIB Small Business Optimism Index and the New York Federal Reserve Bank’s statistics on public inflation expectations for August are of the greatest interest. In July, the one-year inflation expectation stood at 3.63%.

The key macroeconomic events that will influence stock market movements this week will be the August producer price index (PPI) and consumer price index (CPI), which will be released on September 10 and 11, respectively. These releases will be particularly important ahead of the Fed meeting scheduled for September 15–16.

The sharp appreciation of the yen poses a specific risk to carry trade operations. The USD/JPY pair fell to a seven-month low of 152.9. Since last week, the yen has strengthened by about 4.5% amid expectations of further monetary tightening by the Bank of Japan and its ongoing interventions. If carry traders accelerate the closing of their yen short positions, this will increase volatility, particularly in expensive tech stocks. So far, the market’s reaction to the situation has been subdued.

It has been reported that Anthropic’s IPO has been postponed, although the offering is becoming an increasingly likely event, and its approach will influence market sentiment. The prospectus is now expected toward the end of September, and the marketing campaign is scheduled to begin in mid-October. The issuer’s potential valuation could be around $2 trillion.

Before the market opens on September 8, ABM Industries (ABM) and United Natural Foods (UNFI) will report their earnings. After the market closes, Casey’s General Stores (CASY), GameStop (GME), ServiceTitan (TTAN), Braze (BRZE), and Mission Produce (AVO) will release their quarterly results.

U.S. index futures are trading slightly lower. We assess the risk balance for the upcoming session as moderately negative, with average volatility. Investors will continue to focus on reassessing the outlook for the Fed’s monetary policy. Following the significant gains by semiconductor companies in the previous session, the AI sector will also be in the spotlight once again.

— Starting September 21, Bloom Energy (BE), Everpure (P), and Illumina (ILMN) will be added to the S&P 500. The Trade Desk (TTD), Molson Coors (TAP), and Builders FirstSource (BLDR) will be removed from the broad-market index and added to the S&P SmallCap 600, so some passive demand for their shares will remain, but the net effect remains negative due to the much larger volume of capital tracking the S&P 500. The most interesting case is Bloom Energy (BE), where index-driven demand overlaps with a strong narrative around powering data centers.

— Novartis (NVS) shares are down 13% following disappointing results from a study of pelacarsen, a drug designed to reduce the risk of hereditary factors contributing to cardiovascular disease. Despite a significant reduction in the target biomarker, the treatment did not demonstrate a statistically significant reduction in the number of heart attacks, strokes, and other serious cardiovascular events.

— Shares of Ionis Pharmaceuticals (IONS), the developer of the aforementioned pelacarsen, the rights to which were transferred to Novartis, are down 8.7%.

— Amgen (AMGN) shares are down 5% amid concerns about a product the company is developing that has a mechanism of action similar to that of pelacarsen.

Trading on September 4 on U.S. stock markets ended with mixed results. The S&P 500 fell 0.38%, the Dow Jones dropped 0.51%, the Nasdaq-100 rose 0.21%, and the Russell 2000 gained 0.25%. The key macroeconomic release of the day was the U.S. Department of Labor’s August report. Nonfarm payrolls rose by 162,000, compared with the expected 53,000, while the unemployment rate remained at 4.1%. Average hourly earnings rose 0.3% month-over-month and 3.1% year-over-year. The strong data confirmed the resilience of the U.S. economy and reduced expectations for monetary policy easing. The investment community is increasingly factoring into its forecasts that the Fed will maintain its current course or raise rates.

The IT sector emerged as the top performer (+0.7%). However, it was primarily chipmakers that showed positive momentum. The iShares Semiconductor ETF (SOXX), which tracks semiconductor manufacturers’ stocks, rose 3.52%, while the Roundhill Memory ETF (DRAM), focused on companies producing memory chips, gained 6.6%. This indicates continued strong demand specifically for securities related to AI infrastructure and computer memory, while most other market segments showed weaker performance.

The cyclical goods sector (XLY ETF: -1.33%) was the underperformer. Pressure on the sector came from Tesla (TSLA) shares, which fell by about 6% following the Cybercab presentation, which did not provide any new information on pricing, production scale, or the timeline for obtaining regulatory approvals. Investors also reacted negatively to the launch of an investigation by the U.S. National Highway Traffic Safety Administration into the robotaxi. Against the backdrop of high expectations for the autonomous transportation sector, the limited amount of new information and initial reports of service issues intensified profit-taking in TSLA shares.

Netflix (NFLX) shares fell 5.3% following news of a subscription price hike in the U.K. Specifically, the cost of the basic ad-supported plan increased by one-third. Investors fear that such a sharp price increase in a mature and price-sensitive region could slow customer acquisition and worsen customer retention, especially in the ad-supported segment, which Netflix (NFLX) views as a key source of future growth.

This article was AI-translated and verified by a human editor