Dow closes nearly 200 points lower as rising oil prices drag down stocks: Live updates

Stocks finished lower Tuesday to start the holiday-shortened week.

The Dow Jones Industrial Average lost 195.74 points, or 0.56%, to finish at 34,641.97. The S&P 500 dropped 0.42% to close at 4,496.83. The Nasdaq Composite edged down 0.08% to settle at 14,020.95.

— Samantha Subin

Energy is the top pick for Wolfe Research chief investment strategist Chris Senyek.

Senyek said on Tuesday that the energy sector is his “favorite,” citing OPEC’s commitment to voluntary crude oil production cuts, strength in Brazil’s economy, which was partly lifted by the country’s solid crude oil output, as well as the energy sector’s ability to hold up in the face of gloomy economic news from China. The S&P Energy sector is leading the broader market, up 11.7% this quarter.

Aside from energy, Senyek is optimistic on technology and communication services, which are up nearly 2% and 6.2% for the quarter, respectively.

“We think that the market will go into two phases here in the back half of the year. The first phase will be slowdown is good news, because it means inflation is coming down…In that environment, I think folks are going to want to continue to be overweight to technology and consumer.” Senyek said on CNBC’s “The Exchange.”

Further into the year, Senyek sees investors becoming slightly more weary into owning technology stocks, but not enough to drop the sector entirely.

— Pia Singh

Jeremy Grantham, famed investor with a history of calling bear markets, is doubling down on his recession call, saying a downturn may arrive this year, according to an interview on Bloomberg Wealth with David Rubenstein.

“I think we are descending from the 2021 bubble, which was one of the great bubbles,” Grantham said. “Every great bubble has been followed by a recession. Personally, I think AI is very important. But I think it’s perhaps too little too late to save us from a recession.”

Grantham, the co-founder of Grantham Mayo van Otterloo in 1977, is a widely followed investor and market historian with a track record of identifying market bubbles. He foresaw the dot-com bubble bursting of 2000 and the 2008 bear market.

“…we will have a recession running perhaps deep into next year and an accompanying decline in stock prices,” he added.

— Yun Li

TD Cowen is “cautiously optimistic” on retail heading into the fall as consumers remain confident, although there are some headwinds ahead, the firm said Tuesday. It is predicting back-to-school sales to increase 4% to 6% this year, compared to the 12.5% year-over-year increase forecast by the National Retail Federation.

“We see a consumer prioritizing needs over wants, seeking value and extending more credit, while unfavorable warmer weather and student loan overhang are headwinds,” analyst Oliver Chen wrote in a note Tuesday.

Among the names it likes in this environment are Walmart, for its prices and essential products, and Kohl’s for its new holiday strategies.

— Michelle Fox

Wolfe Research’s Peter Supino upgraded shares of Liberty Media Formula One to outperform from peer perform. He also issued a price target of $84 per shares. That implies upside of 21.7% from Friday’s close.

The analyst cited optimism around the sport’s inaugural race in Las Vegas as a catalyst for the upgrade. “While the first year in Las Vegas was always bound to be expensive, and with recent management commentary reinforcing that view, we see an exciting efficiency opportunity in 2024 and beyond,” Supino wrote.

He also noted that Formula One stands out as a brand as “one whose revenue has yet to catch up with its rising franchise value. Why? While F1’s heritage dates to 1950s, the business began a new life in 2017 when Liberty Media acquired it from Bernie Ecclestone. Since then, attendance per Grand Prix has risen by almost +50%, EBITDA +70%, and team values multiplied.”

Formula One shares are up nearly 120% since the start of 2017, outperforming the S&P 500 in that time.

— Fred Imbert, Michael Bloom

The recent price action from the Invesco QQQ Trust may signal that its hit a short-term high, according to BTIG’s Jonathan Krinsky.

“At a minimum we think upside for QQQ is limited here, but the recent action suggests to us that QQQ may have put in a tactical high,” the chief market technician said in a Monday note to clients.

Fueling this expectation is the fact that the QQQs on Friday filled the gap from Aug. 2 before reversing to the downside.

— Samantha Subin

While Northwestern Mutual Wealth Management Company remains skeptical the economy can achieve a soft landing, the August jobs report suggests some encouraging signs.

“The so-called ‘quits’ rate, which is viewed as a proxy for the level of confidence employees feel about the job market, came in at 2.3 percent. … the lowest reading since January 2021. Notably, the industries that saw the greatest decrease in quits were on the services side of the economy,” chief investment officer Brent Schutte wrote in a Tuesday note.

“The services side of the economy has been resilient and has been a source of employment strength for several months. While it is too early to tell with any certainty, the declining number of quits on the services side of the economy may point to slowing growth,” Schutte added.

He added that consumers also appear to be sensing an easing in the job market.

“While still tight, the labor market may be showing some signs of loosening,” Schutte said.

— Hakyung Kim

Autoimmune disease drugmaker Cabaletta Bio could soon have a multi-billion-dollar product on its hands, according to Citi. Analyst Samantha Semenkow initiated research coverage with a buy rating on Cabaletta shares in a Tuesday note.

Last October, the biotech firm obtained an exclusive, worldwide license for its autoimmune disease therapy CABA-201. The treatment is a CD19-directed chimeric antigen receptor modified T-cell therapy (CART), a treatment for patients with relapsed or refractory B-cell non-hodgkin lymphoma. 

Shares surged more than 16% early Tuesday, reaching a new 52-week high. Cabaletta has jumped more than 69% year to date. Shares were last up about 7%.

To read more about the call, click here.

— Hakyung Kim

Fewer companies are discussing recessionary risks with investors, data suggests.

Of S&P 500 companies, 62 used the term “recession” on second-quarter earnings calls between June 15 and Aug. 31, per FactSet data.

That marks a decline for the fourth straight quarter. And it’s about a quarter of the 238 companies that used the word at its peak in the second quarter of 2022.

At 62, the quarter is also below the five-year average of 82. But it’s modestly above the 10-year average of 60.

Recessionary talk was most prominent among financial names within the index, as 22 companies, or 32% of the sector, used the word. That marks both the highest total number and share of companies of any of the S&P 500’s 11 sectors, according to FactSet.

— Alex Harring

Dine Brands‘ scale, franchise model and attractive price make the stock hard to ignore, according to UBS.

Analyst Dennis Geiger initiated coverage of the Applebee’s and IHOP parent as a buy. His $68 price target implies a 24% over where the stock finished last week.

“DIN’s scale and heavily franchised business model provide unique benefits within casual dining, while brands Applebee’s and IHOP are leaders in their categories,” he said in a note to clients Tuesday.

The stock has underperformed in 2023, down almost 15% year to date.

— Alex Harring

Cantor Fitzgerald moved off the sidelines on Shoals Technologies, noting the clean energy stock’s strengthening leadership position.

“We believe Shoals is arguably the company that’s best positioned to benefit from long term secular growth trends in utility-scale solar,” analyst Derek Soderberg said in a note to clients Tuesday when upgrading shares to overweight from neutral. Soderberg raised his price target by $1 to $28, implying an upside of 36.4% over where the stock finished last week.

He noted Shoals is growing its U.S. market share. The company also has incremental growth opportunities in its battery storage and electric vehicle charging businesses, he added.

— Alex Harring

Shares of United Airlines were down more than 3% in afternoon trading after the company requested a nationwide groundstop for its flights.

The reason for the request was an “equipment outage,” according to the Federal Aviation Administration, which could include computer issues.

— Jesse Pound

Check out the companies making headlines in midday trading.

Read here for the complete list.

— Pia Singh

Student loan payments surged in the last several weeks, ahead of the lifting of the three-year, pandemic-induced pause, according to Goldman Sachs.

While borrowers may have voluntarily started early, the Wall Street firm thinks the likely explanation is that some people paid off principal before interest started to accrue again beginning Sept. 1, chief economist Jan Hatzius wrote in a note Friday. Payments restart in October.

The resumption of payments in full is equal to about $70 billion, or 0.3% of disposable income —subtracting 0.8 percentage points from personal consumption expenditures growth in the fourth quarter, he said. However, the effects may be smaller due to some borrowers who might not resume payments right away and those who are likely to qualify for lower payments through the Biden Administration’s income-based repayment plan, Hatzius noted.

— Michelle Fox

Investors looking to participate in equity markets should consider taking a defensive stance in the near term, according to Darrell Cronk.

“Right here, the risk reward on equities is just not terribly good,” the chief investment officer at Wells Fargo Investment Institute told CNBC’s “Squawk on the Street” on Tuesday. “We’re stuck between a 4,300 and 4,600 range.”

Cronk added that risk premiums currently hover near a 19-year low, meaning investors aren’t getting rewarded to take risk.

Given this setup, he recommends that equity investors opt for sectors with stronger earnings such as industrials, health care and materials.

— Samantha Subin

Vietnamese electric vehicle maker VinFast, whose shares once experienced frantic trading, sold off another 7% Tuesday, bringing its two-day losses to over 20%.

VinFast’s rally was once so furious that its market cap briefly surpassed some of the world’s largest automakers such as Ford and GM. At its peak, the stock was up 700% from when it first got listed via a special purpose acquisition company, or SPAC, in mid-August. However, the run turned out to be short-lived.

— Yun Li

Homebuilding stocks on a tear in 2023 dropped during Tuesday’s session.

Shares of PulteGroup, up more than 70% year to date plunged more than 6%. Lennar and D.R. Horton fell nearly 5% each. Both stocks have gained more than 26% since the start of the year.

— Samantha Subin

Shares of Airbnb and Blackstone popped after the S&P Dow Jones Indices announced on Friday that both company would join the S&P 500 beginning Sept. 18.

Vacation rental stock Airbnb surged more than 7% on the news, while Blackstone jumped 3.6%.

The companies will replace Lincoln National and Newell Brands, which are set to join the S&P Small Cap 600.

— Samantha Subin

Berkshire Hathaway Class B shares reached an all-time high on Tuesday, even as the broader market struggled to find its footing. However, the momentum didn’t last for the stock, with it last trading slightly lower.

Eli Lilly and Broadridge Financial also traded at all-time highs. Check out the other stocks that posted 52-week highs earlier in the day:

Paramount, meanwhile, fell to its lowest levels going back to April 2020. General Mills, Kellogg and Sysco also posted 52-week lows, along with these other names:

— Fred Imbert, Chris Hayes

Morgan Stanley Investment Management’s Andrew Slimmon says inflation could be difficult to continue taming next year.

“I’m more worried about 2024 than I am about 2023,” the head of applied equity advisors told CNBC’s “Squawk Box.” “Right now the, the monthly year-over-year inflation numbers are coming down, but that’s going to get tougher next year. The bar is going to get harder, and a time when the Fed is still pressing on this 2% goal, I see that as a tough thing to overcome.”

He added, however, that the election could stave off a market selloff, as well as excessive stimulus taking hold in the fourth quarter.

— Brian Evans

Factory orders decreased in July, though not by as much as expected, the Commerce Department reported Tuesday.

New orders for manufactured goods declined 2.1% on the month, which was better than the Dow Jones estimate for a drop of 2.3%. A 5.2% slide in durable goods demand was the big driver behind the decrease as orders for transportation equipment tumbled 14.3%.

Orders rose 2.3% in June and had been up for four straight months.

—Jeff Cox

Recent economic data is boosting the case that the central bank can “proceed carefully” in its rate hiking campaign to tame inflation, according to Federal Reserve Governor Christopher Waller.

“That was a hell of a good week of data we got last week, and the key thing out if it is it’s going to allow us to proceed carefully,” told CNBC’s Steve Liesman during a “Squawk Box” interview. “We can just sit there, wait for the data, see if things continue.”

The comments from Waller come on the heels of Friday’s U.S. nonfarm payrolls report, which showed the unemployment rate hit its highest level in more than a year and average hourly wages rise less than expected.

— Jeff Cox

The rally for the S&P 500 in the final week of August was a sign of increased optimism for investors, according to Roth MKM chief market technician JC O’Hara.

“The soft-landing scenario seems to have moved into consensus thinking among market participants. The futures market is currently pricing in a 93% chance the Fed leaves rates unchanged during its September 20th meeting. Falling yields helped to fuel the gains within the equity market,” O’Hara said in a note to clients on Monday.

The rally also looked strong underneath the surface even as trading volumes were low, O’Hara said.

“Looking at the cumulative advancers to decliners on the S&P 500, we find the line remains constructive. This is an indication that under the surface conditions are still favorable for the average stock,” the note said.

— Jesse Pound

Shares of Oracle have surged nearly 48% in 2023 and close to 62% over the past 12 months. And Barclays thinks the company is set to maintain high levels of growth in the near future as its tailwinds have yet to fully take effect. 

Analyst Raimo Lenschow upgraded shares to overweight from equal weight.

“We see a multi-year opportunity for solid growth at high margins driven by an ongoing positive mix effect of better [software-as-a-service] and [Oracle Cloud Infrastructure] outweigh the lower growth parts of the business,” Lenschow wrote in a Tuesday note.

CNBC Pro subscribers can read more about his upgrade here.

Shares rose about 0.5%.

— Hakyung Kim

Oil prices popped on Tuesday morning after Saudi Arabia extended its 1-million-barrels-per-day voluntary oil production cut until the end of the year, according to the state-owned Saudi Press Agency.

Brent crude futures for November were up $1.49, or 1.67%, at $90.49 a barrel, while U.S. West Texas Intermediate crude October futures edged $1.95 higher, or 2.28%, to $87.50 a barrel.

Riyadh first applied the 1 million-barrels-per-day reduction in July and has since extended it on a monthly basis. This cut adds to another 1.66 million barrels per day of voluntary crude output declines that some other OPEC members have put in place until the end of 2024. Read more here.

— Pia Singh, Ruxandra Iordache

Stocks opened little changed to kick off a shortened week of trading.

The Dow Jones Industrial Average hovered near the flatline, while the S&P 500 slipped 0.1%. The Nasdaq Composite lost about 0.3%

— Samantha Subin

RBC expects investor sentiment to be more mixed as credit quality and spending trends normalize in the near-to-medium term, and student loan payments restart next month.

Amid this environment, the firm said it favors American Express due to its limited revenue reliance on late fees. 

“In this environment, we believe top-of-wallet players are best positioned to outperform,” analyst Jon Arfstrom wrote in a Tuesday note.

Shares of American Express gained 1% Wednesday premarket.

CNBC Pro subscribers can read more about his call here.

— Hakyung Kim

The market is coming off a strong week.

The Dow and Nasdaq Composite finished last week about 1.4% and 3.3% higher. Both performances were the best for each respective index since July

The S&P 500, meanwhile, gained 2.5% last week. That marked the best week for the broad index since June.

— Alex Harring

Check out some of the companies making headlines in premarket trading.

Oracle — The software stock added 1.8% in premarket trading following an upgrade to overweight from equal weight by Barclays. The firm said the company’s cloud business should feel tailwinds from artificial intelligence.

Brady Corporation — Shares climbed nearly 11% after the company reported quarterly results. Brady posted an adjusted $1.04 profit per share, while analysts polled by FactSet forecast 93 cents.

Warner Bros. Discovery — Shares dipped 1.4% after the company warned that strikes from writers and actors could negatively impact cash flow by a range of $300 million to $500 million.

Read the full list here.

— Brian Evans

Goldman Sachs encourages investors to buy shares of potato products maker Lamb Weston, anticipating a comeback for the stock after a difficult few months.

Analyst Adam Samuelson upgraded shares to buy from neutral.

“We see recent underperformance providing an attractive entry point,” Samuelson wrote in a Monday note. He added that the company’s stronger-than-expected fiscal fourth-quarter and 2024 fiscal year outlook suggest “a balance of risks skewed to the upside.” 

To read more about his upgrade, click here.

— Hakyung Kim

Goldman Sachs cut the odds of a recession in the U.S. to just 15% from 20% prior and said the Federal Reserve may keep rates the same when in it next meets on Sept. 19-20.

“We view Chair Powell’s promise at Jackson Hole to ‘proceed carefully’ as a signal that a September hike is off the table and the hurdle for a November hike is significant,” wrote Jan Hatzius, the bank’s chief economist in a note dated Monday.

CNBC PRO subscribers can read more about the bold Goldman calls here.

—John Melloy

Chip designer Arm filed an updated regulatory filing for a U.S. initial public offering, setting a range between $47 per share and $51 per share. SoftBank, which owns Arm, plans to sell 95.5 million shares. This all implies a valuation of up to $54.5 billion.

— Fred Imbert.

The market could be characterized by a somewhat counterintuitive trend in which seemingly positive news on the economy is interpreted on Wall Street as a negative for stocks, Goldman noted.

“‘Good news’ from growth has been ‘bad news’ for markets,” strategist Andrea Ferrario noted. “With fading recession risk, there is a risk that good news on growth might trigger more hawkish repricing of real rates if accompanied by stickier inflation.”

“This could ultimately weigh on risky assets, given risk premia are already low,” Ferrario noted.

— Fred Imbert, Michael Bloom

U.S. Treasury yields climbed on Tuesday as markets reopened after the Labor Day holiday and investors considered what could be next for the economy following last week’s key data releases, including the latest U.S. jobs report.

At 4 a.m. ET, the yield on the 10-year Treasury was up by over four basis points to 4.2163%. The 2-year Treasury yield was last at 4.8991% after having risen by more than three basis points.

Yields and prices move in opposite directions. One basis point equals 0.01%.

— Sophie Kiderlin

The Reserve Bank of Australia held its benchmark policy rate at 4.1%, extending its pause to three straight months.

RBA Governor Philip Lowe said in a statement that inflation in Australia has passed its peak and the inflation rate for July showed a further decline. “But inflation is still too high and will remain so for some time yet,” Lowe added.

He also noted that the Australian economy is experiencing a period of below-trend growth, “and this is expected to continue for a while.”

Despite this, Lowe did not give an indication for rate cuts, instead saying that some further tightening of monetary policy may be required, but that will continue to depend upon the data and the central bank’s assessment of risks.

— Lim Hui Jie

Chinese property developer Country Garden Holdings wired bond coupon payments that were due last month, Reuters reported, citing a source close to the company.

China’s largest private property developer failed to pay a $22.5 million coupon on two U.S. dollar bonds on Aug. 6, raising market fears of a default. Both payments had 30-day grace periods.

— Lim Hui Jie

China’s services sector recorded its slowest expansion since December 2022, according to a Caixin survey.

The Caixin purchasing managers index for August came in at 51.8, down from 54.1 in July.

The survey noted that this was amid a softer rise in overall new work, adding that “notably, new business from abroad fell for the first time in 2023 so far.”

Nevertheless, companies remained optimistic onthe 12-month outlook, and planned company expansions supported a further increase in employment across the sector, the report said.

— Lim Hui Jie

South Korea’s consumer price index climbed 3.4% year-on-year in August, the first rise recorded in the inflation rate since January.

The figure was sharply higher than the 2.3% gain in July and also higher than the 2.7% expected by economists polled by Reuters.

The consumer price index also rose by 1% month-on-month, higher than the 0.3% expected.

— Lim Hui Jie

UBS is sticking by its view of a “softish” landing for the U.S. economy, saying inflation is moving closer to the Federal Reserve’s target without a recession this year.

“August was a tough month for investors,” said Mark Haefele, global wealth management chief investment officer at UBS, noting that the S&P 500 ended last month down 1.6%. “Contradictory evidence and conflicting interpretations of economic data, asset pricing, and the outlook for Fed policy have buffeted asset prices in recent weeks as expectations of a soft landing for the US economy have ebbed and flowed.”

Some remaining uncertainties could still keep market on edge, Haefele said in the Monday note. Last month’s increase in core PCE came out well above the Fed’s target, which could sustain the possibility of another rate hike, the analyst said. UBS is also watching for a potential rebound in savings rates and further cooling in the labor market.

“Our base case view is that by the November FOMC meeting, the economy will have shown clear signs of slowing, leading the Fed to finally put an end to its sharpest rate hike cycle since the 1980s. We expect US Treasury yields to fall by year-end as both US economic growth and inflation moderate,” Haefele wrote.

— Pia Singh

Investors are preparing for what history says is the weakest month for markets.

In September, traders will weigh fresh data from economic reports, including the personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation measure. Traders also await September’s two-day Fed meeting, during which central bank policymakers will announce their interest rate decision Sept. 20.

CNBC Pro subscribers can read more here about what to expect in the week ahead.

— Pia Singh, Sarah Min