Wall St drifts lower as Fed party ends; Trump keen for more deals

Stocks on Wall Street drifted lower as the ebullience from the Federal Reserve-inspired rally on Friday subsided and as investors await Nvidia’s result on Wednesday for a steer on all things AI.

Meanwhile, Elon Musk’s xAI has lobbed in a legal suit against OpenAI and Apple, claiming their partnership undermines competition for artificial intelligence players.

Fresh from the Intel deal giving the US federal government a 10% stake in the chipmaker, President Donald Trump is keen for his administration to get hands-on with more companies.

And New Zealand’s corporate earnings season continues with electricity generator-retailer Genesis Energy and media group NZME among those on the schedule.

Simmering down

US stock markets started the week in a subdued fashion after the strong rally on Friday triggered by Federal Reserve chair Jerome Powell’s shift towards lowering interest rates.

The Dow Jones Industrial Average was down 0.6% in late trading, with pharmaceutical group Merck & Co and paint and coatings firm Sherwin Williams leading the blue-chip index lower.

“Markets have settled after the significant price action seen in the wake of Fed chair Powell’s dovish pivot in his speech at Jackson Hole on Friday night,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “A strong rebound in non-farm payrolls or an ugly CPI print ahead of the meeting could still derail the prospect of a rate cut, hence the market is pricing ‘only’ 21 basis points for the meeting.”

Intel shares pared some of Friday’s gains on the chipmaker’s deal with the White House, where the US government will get a 10% stake in exchange for the grants issued under Joe Biden-era legislation. President Donald Trump said he wants to make more such deals, marking a move away from the traditional approach of only playing an active role as a last resort.

Nvidia was one of the few gainers on the Dow, helping the tech-heavy Nasdaq Composite edge up 0.1%. That's ahead of the chipmaker’s quarterly result on Wednesday, which investors are eagerly awaiting for more clues on the sustainability of the AI sector’s rapid pace of growth.

Apple dipped 0.1% after Elon Musk’s xAI launched a lawsuit against the iPhone maker and AI startup OpenAI, accusing the pair of undermining competition in the sector through their partnership.

Home town favourite

Local favourite Rocket Lab was another gainer on the Nasdaq, climbing 8.1% after its successful Electron mission and expanded investment in semiconductors, which warranted a mention in the Wall Street Journal’s ‘Stocks to Watch’ in its live markets coverage.

Keurig Dr Pepper dropped 11% after agreeing to buy coffee firm JDE Peet for US$18 billion as a prelude to spinning out its coffee business as a separately listed company. Peet surged 17%.

The downbeat tone is set to carry over into the antipodes, with Australian futures pointing to a 0.3% decline for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 58.50 US cents at 7am in Auckland from 58.66 cents yesterday.

The local earnings season continues with Genesis Energy the latest gentailer to report, while media group NZME’s result will provide a gauge on advertising demand – often seen as a bellwether for the economy.

Vulcan Steel and Channel Infrastructure are also due to report their results, while across the Tasman, supermarket chain Coles Group and miner Fortescue are in the earnings diary.

Third Age Health Services and Promisia Healthcare are holding their annual meetings today, while Metro Performance Glass has a special meeting this afternoon, where shareholders will vote on whether to approve a recapitalisation plan.

No major local data are scheduled for today.

Reporting by Paul McBeth. Image from Matteo Catanese on Unsplash.