Hedge funds hold the largest Nasdaq Futures short position ever recorded, raising red flags for September, historically stocks' worst month. DA Davidson upgraded Duolingo (DUOL) to Buy with a $160 target, while Raymond James cut Abercrombie & Fitch (ANF) to Market Perform. The 30-year Treasury yield hit 5.32%, its highest since 2007, while Iran tensions drove Brent Crude up 3% to $91.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Micron Technology didn't make the cut. Grab the names FREE today. Futures are trading lower after a rough start to the week, as rising oil prices, tensions with Iran, and rising interest rates have dampened the big risk-on move across equities over the last 3 weeks.
When the final bell rang on Monday, all the major indices ended the day lower, with the small-cap Russell 2000 closing down 0.40% at 3,056, while Dow Jones industrials took a similar hit, closing at 53,459, down 0.51%. After closing at a new all-time high last week, the S&P 500 closed at 7,745, down 0.52%, and the tech-heavy Nasdaq closed at 26,644, down 0.32%. With summer drawing to a close and second-quarter earnings nearly over, trading volumes have moved lower, which could add to volatility.
It should be noted that Asset Managers and Hedge Funds have now constructed the largest Nasdaq Futures short position ever recorded. That doesn't bode well for September, which is annually the worst month for stocks. The Bond vigilantes were back at work to start the week, as yields were mostly higher across the Treasury curve, as oil and geopolitics were big factors Monday.
The yield on the 30-year bond closed Monday at 5.32%, the highest print since 2007. The yield on the benchmark 10-year note closed at 4.73%. Slowly but surely, the bond market is doing what the Federal Reserve may not have to do by moving rates higher.
The odds that the Fed will raise rates in September have dropped to 25%. Kalshi has 72% saying rates are unchanged and 28% for a 25-basis-point increase. Some bellicose rhetoric from Iran, and the Strait of Hormuz traffic dropping to zero over the weekend, fanned the buyers in the energy complex on Monday.
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