Equities Gain, Commodities Steady, Fed Independence Concerns Persist

Image Source : Krish Capital Pty Ltd

Index Update:  MongoDB soared nearly 30% and Okta rose about 6% in extended trading after strong earnings fueled by AI-driven demand, while Cracker Barrel jumped over 7% after reversing a controversial logo change. Earlier, U.S. stocks closed higher, with the Dow, S&P 500, and Nasdaq posting gains led by industrials, financials, and health care, despite growing concerns over Federal Reserve independence following the removal of Governor Lisa Cook.

Market Movers:  On Tuesday, the top gainers were EchoStar Corporation (+70.25%), followed by Oriental Culture Holding LTD (+33.22%). On the contrary J-Star Holding Co., Ltd. (-64.63%), and Akanda Corp. (-63.10%) declined the most the same day.

Commodities Update:  WTI and Brent crude prices steadied after a sharp drop, as markets assessed the impact of upcoming U.S. tariffs on Indian goods tied to its oil trade with Russia. Indian refiners, after briefly cutting Russian crude purchases, resumed buying for the coming months, creating uncertainty about demand. Investors also tracked geopolitical tensions, with Russia and Ukraine escalating attacks on energy infrastructure, while U.S. API data showed a smaller-than-expected crude inventory draw. Gold slipped after hitting a two-week high as concerns over the Federal Reserve’s independence grew following President Trump’s move to oust a Fed governor, raising fears of political influence on monetary policy. Markets now see a strong chance of a September rate cut. Trade tensions also escalated, with U.S. tariffs on Indian goods set to double and threats of additional tariffs on China, while Europe faced renewed political risks amid France’s austerity push.

Macro Updates:  U.S. Mortgage Applications Dip Amid Slight Rate Increase

Mortgage applications in the U.S. fell 0.5% in the third week of August, following a 1.4% drop earlier, as the average 30-year fixed mortgage rate inched up to 6.69%. Refinancing applications declined 3.5%, offsetting a 2.2% rise in new home purchase applications. Despite higher rates, demand remains supported by improved inventory and moderating home prices.

U.S. Imposes Anti-Dumping Duties on Corrosion-Resistant Steel Imports

The U.S. Department of Commerce announced final determinations to impose anti-dumping and countervailing duties on $2.9 billion worth of corrosion-resistant steel imports from 10 countries, including Brazil, Canada, Mexico, and Vietnam. The move follows findings that these products were dumped or subsidized, with the International Trade Commission set to assess potential harm to the domestic steel industry.

Dollar Index Climbs Despite Fed Independence Concerns

The dollar index rose above 98.5, recovering prior losses even as worries grew over the Federal Reserve’s independence following President Trump’s move to dismiss Governor Lisa Cook. Markets now price an 87% chance of a September rate cut, while investors await the upcoming PCE inflation report for policy signals.

Bonds Commentary:  The 10-year U.S. Treasury yield held near 4.27% amid concerns over the Federal Reserve’s independence following President Trump’s move to dismiss Governor Lisa Cook. Analysts warned the action could increase chances of earlier rate cuts, with markets pricing in an 87% probability of a 25-basis-point cut in September. Investors also await the upcoming PCE inflation data for further guidance.

Futures Update:  U.S. stock index futures moved slightly higher as investors remained cautious ahead of key earnings from AI leader Nvidia. Major indexes previously closed in positive territory amid optimism surrounding Nvidia’s results, which are viewed as a key indicator for the broader market and AI sector. Despite August’s reputation as a challenging month for equities, all three main U.S. indexes are on track for monthly gains, with the S&P 500, Dow Jones, and Nasdaq each showing solid advances.

Stocks exhibited a lack of clear direction for much of Tuesday’s trading session but ultimately finished the day mostly lower. The S&P 500 edged up by 26.64 points, or 0.41%, closing at 6,465.95. From a technical perspective, the index found support at the 21-period simple moving average and continues to stay above this level. As mentioned in yesterday’s commentary, a period of consolidation appears likely in the near term, which still seems to be the case. Additionally, the 14-day RSI reversed from the midpoint, suggesting a potential positive bias. Key support levels are around 6,366, with resistance expected near 6,555.