Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Investing.com - U.S. stock futures are mixed ahead of the publication of crucial inflation data that could offer more clarity around the Federal Reserve’s interest rate trajectory. Meanwhile, the current chief economist of the conservative think tank Heritage Foundation is tapped to be the new commissioner of the U.S. Bureau of Labor Statistics, just days after the former head was dismissed following a weak jobs report. Elsewhere, billionaire Elon Musk accuses Apple (NASDAQ:AAPL) of favoring a OpenAI’s ChatGPT on its App Store over a model from his artificial intelligence start-up xAI.
1. Futures mixed
U.S. stock futures hovered around both sides of the flatline on Tuesday, as investors geared up for the release of key inflation data.
By 02:58 ET (06:58 GMT), the Dow futures contract had risen by 75 points, or 0.2%, S&P 500 futures had dipped by 7 points, or 0.1%, and Nasdaq 100 futures had slipped by 38 points, or 0.2%.
The main averages on Wall Street slipped in the prior session, with markets assessing a reported move by semiconductor majors Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) to agree to grant the U.S. government a 15% cut of their artificial intelligence chip sales to China. Shares of both firms were choppy, ending down by 0.35% and 0.28%, respectively, as observers flagged that the levy could dent their margins and establish a precedent allowing the White House to tax critical exports.
Traders also seemed to shrug at President Donald Trump’s announcement of a 90-day extension to a trade truce between the U.S. and China, analysts at Vital Knowledge said, adding that the outcome was "widely expected." The detente agreed on earlier this year was due to expire on Tuesday.
2. CPI ahead
Economic data is once again set to be in the spotlight, with the latest monthly consumer price index due out on Tuesday.
The closely-monitored gauge of inflation is expected to accelerate slightly to 2.8% in the twelve months to July, and cool to 0.2% month-over-month. Stripping out volatile items like food and fuel, so-called "core" CPI is tipped to speed up to 3.0% year-over-year and 0.3% on a monthly basis.
Analysts anticipate that the Federal Reserve’s interest rate decision next month could be swayed in part by the latest numbers.
Following a weak July jobs report and sharp downward revisions to the readings for June and May, bets have risen that the central bank will slash borrowing costs by 25 basis points at its upcoming gathering in September. As a result, any indication that inflation is either in-line or below projections could further bolster these wagers.
However, signs of hotter-than-estimated price gains may give policymakers some pause, particularly as the Fed has recently adopted a more cautious attitude to rate cuts partially due to worries that Trump’s aggressive tariff agenda could drive up inflation. The stance has drawn the ire of Trump, who has called for immediate and deep drawdowns, while dissent to the "wait-and-see" approach was notable in the Fed’s last policy decision in July.
3. Trump nominates new BLS head
Swirling around the inflation numbers will likely be fresh questions around the reliability of government data, especially after Trump fired the commissioner of the Labor Department’s Bureau of Labor Statistics in the wake of last month’s soft jobs report.
Without providing evidence, Trump accused the head of BLS, Erika McEntarfer, of doctoring the figures to damage him politically.
On Monday, Trump said he had nominated economist E.J. Antoni as McEntarfer’s replacement. The Senate must still confirm the appointment.
Antoni holds a doctoral degree in economics and has previously been an outspoken critic of the BLS, which is charged with collecting and publishing numbers on the world’s largest economy that are tracked by investors, companies and policymakers alike.
Trump wrote on his social media platform that "E.J. will ensure that the Numbers released are HONEST and ACCURATE."
Yet analysts quoted by Reuters have flagged some reservations around Antoni, who is currently the chief economist of the conservative think tank Heritage Foundation. They added that there may be an increase in demand for private-label data as a result of the nomination.
4. Musk threatens Apple with legal action
Elon Musk accused Apple’s App Store of engaging in anticompetitive behavior, saying his artificial intelligence startup xAI will take “immediate legal action” over what he described as favoritism toward OpenAI’s ChatGPT.
In posts on his social media platform X late on Monday, Musk said Apple’s practices “make it impossible for any AI company besides OpenAI to reach #1 in the App Store, which is an unequivocal antitrust violation."
The Tesla (NASDAQ:TSLA) CEO questioned why X and xAI’s chatbot app Grok were absent from Apple’s “Must Have” section despite, as he claimed, being the world’s top news app and the fifth-ranked app overall, respectively.
“Are you playing politics? What gives?” Musk wrote, also alleging that ChatGPT appears “in every list where (Apple has) editorial control.”
OpenAI CEO Sam Altman responded on X, saying, “This is a remarkable claim given what I have heard alleged that Elon does to manipulate X to benefit himself and his own companies and harm his competitors and people he doesn’t like.”
5. RBA rate decision
The Reserve Bank of Australia slashed interest rates as expected and signaled that it will likely ease monetary policy further as officials gauge possibly cooling inflation in the country.
Tuesday’s cut to the RBA’s benchmark rate to 3.60% from 3.85% is the third such move this year. It previously kicked off the easing cycle in the first quarter.
The RBA said that slowing inflation will likely spur more rate cuts. It also lowered its outlook for economic growth in 2025, which it now sees falling below 2%.