Market Analysis

What's influencing markets: Apollo's disclosed Intel investment plan, and the impending Fed speech

Amos Simanungkalit · 23 Sep152.4K Views

Image Credit: Reuters

US stock futures exhibited volatility, fluctuating around the neutral mark as traders prepared for upcoming economic data and awaited insights from Federal Reserve officials following last week's significant interest rate reduction. Additionally, asset manager Apollo Global Management is reportedly considering a $5 billion investment in chipmaker Intel, while US House Republicans have introduced a new stopgap funding plan to avert a potential government shutdown just weeks ahead of the November presidential election.

Futures Show Mixed Movements
On Monday, US stock futures moved unevenly, as investors anticipated fresh economic indicators this week that could influence the Federal Reserve's monetary policy for the remainder of the year.

By 03:30 ET (07:30 GMT), Dow futures had decreased by 116 points (0.3%), S&P 500 futures were down 15 points (0.3%), and Nasdaq 100 futures fell by 63 points (0.3%).

Wall Street's main averages were largely flat on Friday, following a buying frenzy that eased after a strong rally triggered by an aggressive interest rate cut from the Fed earlier in the week. However, the Dow Jones Industrial Average reached a new record high, driven by a surge in shares of athletic apparel company Nike (NYSE), which announced the resignation of CEO John Donahoe.

Federal Reserve Officials Set to Speak
Comments from Fed officials in the coming days are expected to provide clarity on last week’s notable 50-basis point rate cut.

Atlanta Fed President Raphael Bostic will speak on Monday, followed by Chicago Fed President Austan Goolsbee. Fed Governor Michelle Bowman, who was the first official to dissent from a Fed decision since 2005, will address the public on Tuesday and again on Thursday. Last week, Bowman expressed concerns that the large rate cut could mislead regarding the current pace of price increases, which remain above the Fed's 2% target. Her views contrasted with those of fellow Fed Governor Christopher Waller, who argued that the substantial cut was necessary to prevent inflation from falling below the Fed's goal.

Fed Chair Jerome Powell is scheduled to speak on Thursday at the 10th annual US Treasury Market Conference, where New York Fed President John Williams and Vice Chair of Supervision Michael Barr will also present.

Apollo Global Management’s $5 Billion Investment Proposal for Intel
Apollo Global Management (NYSE) has reportedly proposed an investment of up to $5 billion in struggling chipmaker Intel Corporation (NASDAQ), according to Bloomberg News.

The asset manager indicated it is open to making an equity-like investment in Intel, which is currently considering the offer. This investment could provide Intel with much-needed financial relief as it faces a significant drop in sales and potential cash flow issues. Intel has previously announced plans to reduce its workforce by up to 15,000 employees as part of cost-cutting efforts. Earlier this year, Apollo also stated its intention to acquire a 49% stake in a joint venture for Intel's new production facility in Ireland for $11 billion.

House Republicans Introduce Temporary Funding Bill
US House Republicans have put forth a new plan designed to maintain government funding for three months and prevent a partial shutdown.

This proposal excludes a key immigration provision favored by Republican presidential candidate Donald Trump and is expected to be voted on by the House on Wednesday, as reported by Reuters. The current $1.2 trillion discretionary funding is set to expire on September 30.

If Congress fails to pass the funding bill, large portions of the government could be forced to close just weeks before the pivotal November elections, risking furloughs for thousands of federal employees. Republican House Speaker Mike Johnson stated that allowing a shutdown so close to such a critical vote would constitute "political malpractice."

Oil Prices Slightly Rise Amid Middle East Tensions
Crude oil prices remained stable on Monday, buoyed by concerns that escalating conflict in the Middle East could impact regional supply.

By 03:32 ET, Brent crude had risen by 0.2% to $73.81 a barrel, while US crude futures (WTI) were up 0.2% at $71.10 per barrel.

Traders are adding a risk premium to oil prices due to ongoing military actions by Israel in Gaza and Lebanon, with fears of a wider conflict in this oil-rich area. Hezbollah recently vowed to retaliate against Israel after the country reportedly detonated several electronic devices linked to the group. The ongoing violence and threats of war have heightened concerns over potential supply disruptions, contributing to a two-week rebound in crude prices from near three-year lows, driven by fears stemming from Hurricane Francine.