Finance

In this article1735-TWErin Scott/Bloomberg via Getty ImagesThe Labor Department is pumping $240 million into the nation’s unemployment system to fight ongoing fraud, part of a broader effort to fix flaws in the system exposed by the Covid pandemic.Criminals have targeted unemployment benefits at a high rate since spring 2020, after federal lawmakers significantly expanded the safety net for the jobless.More from Personal Finance:Federal rental assistance still not reaching peopleThere are six more months free of federal student loan paymentsMake these financial moves before quitting your jobThey continue to do so — and frequently use new tactics to try to steal money, according to Michele Evermore, a senior policy advisor for unemployment insurance at the Labor Department.”What we’re seeing now is really terrifying,” she said. “Fraud has gotten so big.”It’s unclear exactly how much money has been lost to theft. The Labor Department’s Office of Inspector General estimates about $87 billion in benefits may ultimately be paid improperly, a significant portion due to fraud, while pandemic-era programs are intact. Those programs are slated to end Sept. 6.Much of the early fraud had been concentrated around a federal program for the self-employed and others that let applicants self-certify their eligibility for benefits. That feature helped deliver aid more quickly but opened the door to criminals looking to exploit the system.Now, officials are seeing more fraudsters “hijack” the claims of legitimate applicants who need benefits, Evermore said.The department is allocating $240 million in grants to help states combat fraud, according to two memos the agency issued Wednesday, $100 million from leftover CARES Act funding and $140 million from the American Rescue Plan.States may use the money to beef up such measures as identity verification of applicants, fraud detection and prevention, cybersecurity, and efforts related to recovering overpayments.Broader planThe funds are part of a broader department effort to improve the U.S. unemployment system, using roughly $2 billion in funding from the American Rescue Plan.The pandemic exposed significant issues with benefit administration, which differs from state to state. Many use antiquated mainframes that made it difficult to adapt to changing federal rules and programs. States were also faced with the lowest levels of administrative funding in 50 years and record claims for benefits on top of elevated criminal activity, Evermore said.Many are still struggling to pay benefits to all applicants quickly. Sometimes, new anti-fraud measures states have implemented since last year snag legitimate applications, delaying benefits.”This isn’t a blame-the-state mentality,” Evermore said. “It’s very hard for states to deal with the onslaught.”The Department plans to issue another $260 million in equity grants to states. The funds, a first-of-its-kind undertaking for the agency, aim to improve outreach and customer service with an eye toward addressing potential ethnic and racial disparities. The agency has also deployed teams of consultants in six volunteer states — Colorado, Nevada, Kansas, Virginia, Washington and Wisconsin — which will develop a list of recommended system tweaks.The Labor Department is allocating $200 million for states to make those fixes, which can then be leveraged by other states with similar issues, Evermore said.The agency has also begun building centralized technology that any state with outdated features will be able to leverage, Evermore said.However, revamping some aspects of the U.S. unemployment system would require federal legislation. For example, there have been calls for a federal instead of state system of benefits administration, to address some of the broad regional disparities in areas like weekly benefit amount, duration of benefits and qualification rules.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

THESE DAYS politicians in Beijing and Washington seem to agree on very little. Yet on the subject of ending the listing of Chinese firms on American exchanges they are in uncommon harmony. The collapse last year of Luckin Coffee, a Chinese beverage-delivery group listed on the Nasdaq that was caught inflating its sales, reignited political grievances in America. The result was the Holding Foreign Companies Accountable Act, which requires companies traded on American exchanges to submit to audits or face delisting within three years. The precise rules are still being drawn up, but will probably eventually involve a great shedding of shares.China, for its part, seems happy for its companies to leave American markets. Its regulators seemed unbothered when their actions demolished the share price of Didi Global, a Chinese ride-hailing company, just days after it listed in New York. New rules from the country’s cyberspace watchdog will make it harder for some firms to list outside of China. A sudden rule change in late July made online-tutoring firms serving school-aged children ineligible for overseas listings, wiping billions of dollars from several New York-traded Chinese stocks.Rare as this moment of Sino-American agreement is, it hardly spells good news for investors. The American market has come to host $1.5trn-worth of Chinese companies. That sort of market value has not been cast off by exchanges before. So what kind of damage might delisting do to shareholders?That Chinese companies still trade in New York at all is remarkable. For a decade now Beijing and Washington have sparred over the fate of China’s American Depositary Receipts (ADRs), as the shares of foreign companies trading in America are called. As a wave of accounting scandals at New York-listed Chinese firms began to wash over markets in 2011, American regulators started insisting on gaining access to certain accounting documents. Chinese officials have dug their heels in, refusing the requests and even making sharing the materials a crime.There are some stocks for which delisting need not involve much pain. Many ADR contracts say that investors can convert those shares into corresponding securities listed on other exchanges, notes Wei Shang-Jin of Columbia Business School. Some of the biggest Chinese companies have been prepared, pursuing secondary listings in Hong Kong to which shares can be transferred. This started with BeiGene, a biotech group, when it launched a secondary listing in Hong Kong in 2018. Alibaba, which raised $25bn in New York in 2014, held a second listing in Hong Kong in 2019 to raise another $11bn. Of the 236 Chinese companies listed in New York, 16 have secondary listings in Hong Kong, with a combined market capitalisation of $980bn.The situation looks bleaker for shareholders in other firms. Stock prices will be dragged down by the potential for instability. (The Nasdaq Golden Dragon China Index, which tracks Chinese firms listed in New York, is down by 45% since February.) This will give managers and other company insiders a chance to buy out American shareholders’ stock on the cheap, says Jesse Fried of Harvard Law School. The companies could eventually relist in China or Hong Kong at much higher valuations, but the original investors in the ADRs will not see a cent from the relisting. And shareholders are unlikely to have the right to review the valuation at which companies are taken private, notes Shaswat Das of King & Spalding, a law firm.There is an even worse case. Some companies may simply “go dark”, meaning they stop reporting to American regulators and are delisted with no buyout at all. This might sound far-fetched—but it has happened before. In the aftermath of the accounting scandals of a decade ago, more than 100 Chinese companies vanished from New York’s exchanges, destroying some $40bn in market value. Many did not compensate investors. And shareholders in general stand little chance of recouping losses: because most Chinese groups have few assets in America, an angry shareholder seeking legal recourse would have to go to a Chinese court, says Joel Greenberg of Arnold & Porter, another law firm.The smart move, then, is not to be caught holding these shares when delisting draws near. But here’s the catch. Ten years ago experts also called time on cross-border listings for Chinese groups. The market capitalisation of Chinese firms listed on American exchanges has risen ten-fold since.This article appeared in the Finance & economics section of the print edition under the headline “Cease and delist” More

ECONOMICS IS ABOUT supply and demand—just not in financial markets. A building block of asset-pricing theory is that the value of stocks and bonds is determined by their expected future payoffs rather than by ignorant trades. If an investor unthinkingly throws money at, say, shares in Apple, opportunistic short-sellers are supposed to line up to take the other side of the bet, keeping the share price anchored to where it ought to be, given Apple’s likely profits. Free money gets picked up and dumb money gets picked off. Markets are efficient, in that prices come to reflect genuine information about the future.At this point your columnist may be in danger of provoking guffaws. It has been a bad year for the textbooks. Retail investors have driven up the prices of meme stocks such as GameStop and AMC. Cryptocurrencies, the fundamentals of which cannot easily be analysed, have soared too. Even America’s bond market is a puzzle: the ten-year Treasury yield is only 1.4% even though annual consumer-price inflation has reached 5.4%. So-called “technical” explanations for market movements—“where you put things that you can’t quite explain”, according to Jerome Powell, the chairman of the Federal Reserve—are in fashion. So it is apt that an emerging theory of how markets work says that even random financial flows may matter a great deal to asset prices.In a recent working paper Xavier Gabaix of Harvard University and Ralph Koijen of the University of Chicago study how the aggregate value of America’s stockmarket responds to buying and selling. Researchers have studied flows before, typically finding noticeable effects as investors sell one stock and buy another. Messrs Gabaix and Koijen are interested in whether this finding scales up to move the market as a whole—a thesis that is consistent with the smaller-scale findings, but more provocative.The first challenge is getting definitions straight. The financial press often writes about money flowing into stocks, but for a security to be bought, it also has to be sold. The authors’ definition of inflows relies on the fact that investment funds often promise to maintain a fraction of their portfolio in equities (a retirement fund offered by Vanguard, say, might offer investors 80% exposure to stocks and 20% to bonds). A flow into stocks is defined as an investor using fresh cash, or the proceeds of selling bonds, to buy funds that hold at least some equities. The higher the share devoted to equities, the larger the “flow”. The amount of securities in existence does not change—for every buyer, there is a seller—but their price is forced up until the value of the market is sufficient to satisfy each fund’s mandate to hold the target fraction of its portfolio in stocks.Using statistical wizardry the authors isolate flows into stocks that appear unexplained (by, for example, GDP growth) over the period from 1993 to 2019. They find that markets respond in a manner contrary to that set out in the textbooks: they magnify, rather than dampen, the impact of flows. A dollar of inflows into equities increases the aggregate value of the market by $3-8. Markets are not “elastic”, as textbooks say they should be. Messrs Gabaix and Koijen therefore call their idea the “inelastic markets hypothesis”.Does inelastic mean inefficient? A trader who could see flows coming would get rich quickly. (It has long been known that the so-called “front-running” of big trades, which is usually banned, is profitable.) But flows are hard to predict, says Mr Koijen. A true believer in markets might argue that unforeseeable flows are the mechanism by which the right price is reached, and reflect new information coming to the fore.Even if flows are ill-informed, though, the opportunity to profit from them is small once they have already moved the price, says Mr Gabaix. And the arbitrageurs who are meant to keep the whole market anchored to fundamentals do not seem to exist. The authors note that at the onset of the global financial crisis hedge funds owned less than 4% of the stockmarket, and that their trades tended to amplify market movements, not dampen them. Funds are constrained by limits on leverage and by the fact that they must cope with the investments and redemptions of underlying investors. Different parts of the market do not trade much with each other, as would be necessary for markets to be elastic.The paper will surprise the typical economist, who, according to the authors’ surveys, believes that flows do not affect prices. It also threatens associated financial theories. One is the Modigliani-Miller theorem, which says that it does not matter whether a company finances itself with equity or with debt. In inelastic markets, by contrast, a firm that issues debt to buy back its stock will find that it drives up both its own share price and the broader market. The authors look only at stocks, but other research suggests that bond markets are inelastic (albeit to a lesser degree). As a result, central banks’ quantitative-easing policies, under which they buy bonds, will affect bond yields—something that many traders take as given but that purists say should not happen.Messrs Gabaix and Koijen hope to inspire research that explains market movements using the granular, observable choices of investors, rather than attributing gyrations in markets to unobservable changes in beliefs. And portfolio managers who typically try to forecast future business conditions might find it productive to try to predict flows into and out of investment funds instead.Keynesian beautyThere may be an irony here. The authors do not study whether markets have become less elastic over time, but in recent decades funds that passively allocate fixed percentages to indices have grown in popularity, making their theory more plausible. The trend is a vote of confidence in markets’ efficiency, which should make the returns to active stock-picking low. Yet passivity may breed inelasticity—and therefore create opportunities for a canny investor who is ahead of the crowd. ■This article appeared in the Finance & economics section of the print edition under the headline “The fundamentals of finance” More

Digital cryptocurrencies, Bitcoin, Ripple, Ethernum, Dash, Monero and Litecoin.Chesnot | Getty ImagesA person claiming to be the hacker behind one of the biggest cryptocurrency heists of all time says they stole the funds “for fun.”More than $600 million worth of crypto was stolen in the cyberattack, which targeted a decentralized finance platform called Poly Network.Decentralized finance — DeFi, for short — is a fast-growing space within the crypto industry that aims to reproduce traditional financial products like loans and trading without the involvement of any middlemen.While it has attracted billions of dollars in investment, the DeFi space has also given rise to new hacks and scams. For example, a token backed by billionaire investor Mark Cuban recently dropped from $60 to several thousandths of a cent in an apparent “bank run.”Poly Network is a platform that looks to connect different blockchains so they can work together. A blockchain is a digital ledger of transactions that’s maintained by a distributed network of computers, rather than a central authority.On Tuesday, a hacker exploited a flaw in Poly Network’s code which allowed them to steal the funds. According to researchers at blockchain security firm SlowMist, Poly Network lost more than $610 million in the attack.Poly Network then pleaded with the hacker to return the money and, sure enough, nearly half of the crypto haul was returned by Wednesday. As of Thursday morning, $342 million worth of assets had been returned, according to Poly Network.In a Q&A embedded within a digital currency transaction Wednesday, a person claiming to be the anonymous hacker explained their reasoning behind the hack — “for fun.””When spotting the bug, I had a mixed feeling,” the person said. “Ask yourself what to do had you facing so much fortune. Asking the project team politely so that they can fix it? Anyone could be the traitor given one billion!””I can trust nobody!” they continued. “The only solution I can come up with is saving it in a _trusted_ account while keeping myself _anonymous_ and _safe_.”The person also gave a reason for why they returned the funds, claiming: “That’s always the plan! I am _not_ very interested in money! I know it hurts when people are attacked, but shouldn’t they learn something from those hacks?”Tom Robinson, chief scientist at blockchain analytics firm Elliptic, said the person writing the Q&A was “definitely” the hacker behind the Poly Network attack.”The messages are embedded in transactions sent from the hacker’s account,” Robinson told CNBC. “Only the holder of the stolen assets could have sent them.”CNBC could not independently verify the authenticity of the message and the hacker, or hackers, have not been identified. SlowMist said its researchers had tracked down information on the attacker’s IP and email information. In the Q&A, the hacker claimed they took care to ensure their identity was “untracable.”TVWATCH LIVEWATCH IN THE APPUP NEXT | More

In this articleSONOBMBLUTZCYB-FFPLTREBAYCheck out the companies making headlines before the bell:Palantir Technologies (PLTR) – The software platform company matched Wall Street forecasts with adjusted quarterly earnings of 4 cents per share and revenue beating analyst forecasts. Sales rose 49% from a year ago, and the stock rallied 5.7% in the premarket.CyberArk Software (CYBR) – The cybersecurity company earned an adjusted 1 cent per share for its latest quarter, compared with a consensus estimate of 2 cents, while revenue came in above estimates with subscription revenue more than doubling from a year ago. CyberArk shares slid 4.9% in premarket trading.Utz Brands (UTZ) – The snack maker’s stock fell 4.5% in the premarket after it missed estimates by 2 cents with adjusted quarterly earnings of 13 cents per share, although revenue did beat Wall Street forecasts. Utz expects continued strong demand for its products, but also expects costs to remain elevated for the remainder of the year.eBay (EBAY) – eBay beat estimates by 4 cents with adjusted quarterly earnings of 99 cents per share. However, it reported a decline in active buyers and is forecasting lower than expected revenue for the current quarter as overall e-commerce trends soften. eBay fell 1.5% in premarket action.Bumble (BMBL) – Bumble lost 6 cents per share for its latest quarter, compared with consensus estimates for a 1 cent per-share profit. However, the dating service operator’s revenue topped forecasts as its paying user numbers jumped 20% from a year earlier, and it issued upbeat current-quarter revenue guidance. Bumble gained 1.7% in the premarket.Sonos (SONO) – Sonos surged 11.6% in premarket trading after it reported a surprise profit of 12 cents per share, with analysts having expected a quarterly loss of 17 cents per share. The maker of home audio equipment also issued strong current-quarter and full-year sales guidance.Opendoor (OPEN) – Opendoor soared 19.5% in premarket action after reporting it lost 24 cents per share for its latest quarter, 10 cents less than analysts had been projecting. The home buying and selling company also reported better-than-expected revenue, in addition to issuing an upbeat current-quarter sales forecast.Lordstown Motors (RIDE) – Lordstown Motors is seeing its shares rally in the premarket after saying it was on track to begin limited production of its Endurance electric pickup truck by the end of September. Lordstown gained 1.6% in the premarket.DoorDash (DASH) – DoorDash held talks over the past two months to buy grocery delivery service Instacart, according to people familiar with the matter who spoke to The Information. The news website said the talks have fallen apart in recent weeks amid concerns that such a deal would have a difficult time winning regulatory approval. DoorDash rose 2.3% in premarket trading.Hims & Hers Health (HIMS) – Hims & Hers lost 3 cents per share for its second quarter, smaller than the 9 cents loss that Wall Street had been anticipating. The telehealth platform operator also reported better-than-expected revenue. The stock leaped 11% in the premarket.Rackspace Technology (RXT) – Rackspace beat estimates by 2 cents with an adjusted quarterly profit of 24 cents per share, and the cloud computing company’s revenue also topped forecasts. However, Rackspace also gave weaker-than-expected current-quarter guidance, with the company saying it is in a “transient phase” as it phases out older business segments. Shares slumped 9.3% in premarket action.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Delivery workers wait for the light to turn green at a major intersection in Beijing on July 30, 2021.Evelyn Cheng | CNBCBEIJING — Investors in Chinese companies were caught off guard this summer by Beijing’s actions against homegrown tech giants, including comments about overseas-listed shares.One of the surprises was a mandate in late July that Chinese education businesses should restructure and remove investment from foreigners. A separate order earlier last month called for app stores to remove Chinese ride-hailing app Didi — just days after its massive IPO in New York.Didi shares have dropped more than 30% since the listing. The KraneShares CSI China Internet ETF (KWEB), whose top holdings include U.S.-listed stocks Alibaba and JD.com, has fallen 29% over the last 60 trading days.”It’s probably important, especially for international investors to note, there is a big and deep change of philosophical thinking on the economic policy, what’s more important in China’s economy,” said Zhu Ning, professor of finance and deputy dean at the Shanghai Advanced Institute of Finance. “Foreign investors need to understand and (brace) for that.”It may sound like internet platforms provide us with more opportunities, but it also puts more financial burdens on us.restaurant owner in BeijingIn a “very big shift,” Zhu pointed to the Chinese Communist Party’s political pledge to deliver “common prosperity” — moderate wealth for all, in contrast to the country’s growing income inequality. That contrasts with ensuring that at least some “get rich first,” Zhu said.Anger at big tech firmsEfforts to achieve this pledge have accelerated in the last 12 months.The Chinese government shielded Alibaba from foreign competition for years, until the company grew so large under its founder Jack Ma that authorities abruptly suspended its affiliate Ant Group’s massive IPO in November and fined Alibaba 18.23 billion yuan in April.Resentment toward tech companies is also growing in China, especially from small businesses that feel squeezed by the digital behemoths.”It may sound like internet platforms provide us with more opportunities, but it also puts more financial burdens on us,” said a restaurant owner in Beijing who requested anonymity out of fear of retaliation by the online food delivery services. CNBC translated her Mandarin-language remarks.She initially listed her restaurant on Meituan — China’s dominant food delivery platform — in early 2019, and paid a commission fee of 18%. She said Meituan staff told her that since it was the lowest fee available on the site, she could not list on other food delivery sites.When the pandemic cut off revenue from in-store diners, she listed her restaurant on Alibaba’s Ele.me food delivery platform. That prompted angry calls from Meituan staff, who said she would have to pay a higher 25% commission fee if she didn’t delist from Ele.me. She decided to quit Meituan.Meituan declined to comment on the individual business case.The tech giant came under fire last year for allegedly underpaying its 9.5 million delivery riders, who reportedly face high risk of injury or death from rushing for deliveries to make algorithmically calculated delivery times.Growing criticismIn late July, China’s anti-trust regulator ordered food delivery platforms to pay workers the local minimum wage. Earlier that month, the State Council — China’s the top executive body — decided to remove restrictions on the country’s 200 million gig economy workers’ ability to access local health insurance and pension plans.The policy changes come as Chinese news media organizations — which are themselves strongly influenced by the government — have become more critical of Chinese tech companies and their culture of overwork.Earlier this year, two employees at e-commerce giant Pinduoduo allegedly died due to excessive work. The company confirmed one death in an online statement, while a representative was not immediately available for comment on the other death as of publication.This summer, short-video companies Kuaishou and subsequently TikTok parent ByteDance, reportedly halted a policy of asking employees to regularly work on weekends.If all these daily life (needs) are all controlled by one or two companies, how can we have bargaining power?Yang Guangconvenience store operatorChina’s anti-monopoly regulation is a good thing, said Yang Guang, who operates a convenience store in a Beijing apartment complex with his wife.”If all these daily life (needs) are all controlled by one or two companies, how can we have bargaining power?” Yang asked, in Mandarin, according to a CNBC translation. He said he doesn’t want to list his store on delivery platforms such as Meituan or Ele.me because they would want about 15% to 25% in commission fees.Instead, he and his wife deliver purchases themselves to nearby customers, communicating with them through the WeChat messaging app.Struggling small businessesThere are roughly 139 million small businesses in China, according to one official tally. Small businesses are often talked about at government meetings that discuss their operating difficulties and Beijing’s efforts to help them.But small businesses surveyed for the official Purchasing Managers Index in July revealed worsening conditions for a second-straight month, while large businesses said they saw slight growth.The latest regulatory crackdown has focused on limiting monopolistic practices, increasing data protection and even encouraging more births.Read more about China from CNBC ProJefferies picks the Chinese stocks likely to benefit from an aging populationBeijing’s crackdown hangs over China markets, but some stocks may be getting less riskyThese Chinese U.S.-listed stocks could be relatively safe as Beijing crackdown continuesAuthorities are “trying to address the income inequality issue” in a year when they have a rare opportunity to tackle long-term problems without needing to worry much about growth, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.Officials set a GDP growth target of over 6% for this year, which is relatively low compared with the 8% or 8.5% growth that many economists predict for China.”This window, sometime down the road, probably will not always be open … So the intensity of these policies came in surprisingly high,” Zhang said.While he said it would be helpful for authorities to communicate more support for foreign investment and private entrepreneurs overall, Zhang noted the latest crackdown has targeted sectors such as education “which the general public complained about in the past.”New direction for start-upsU.S.-listed Chinese education stocks plunged double-digits on a single day last month after new policy forced after-school tutoring companies to become non-profits, and banned investment from foreign capital.Hongye Wang, China-based partner at venture capital firm Antler, said tutoring companies often took advantage of Chinese parents’ willingness to pay whatever necessary to give their children a good education.That meant for two years, investors like himself could get a 5-fold return on education companies, regardless of the economic environment, Wang said.The purpose of the new government policy is to lower education costs, especially for poorer people living in rural areas, Wang said. He added that the state would likely want to improve people’s access to medical care as well.Beijing’s scrutiny on big Chinese tech companies comes as U.S. investors and financial regulators are increasingly worried about the regulatory risk for investing in China. In late July, U.S. Securities and Exchange Commission Chair Gary Gensler announced that Chinese companies need to disclose whether Beijing denied them from listing on U.S. exchanges.For Chinese start-ups, perceived uncertainty about their ability to go public could restrict their ability to raise capital, said Nick Xiao, vice president at Hong Kong-based asset manager Hywin. “In this context, Chinese start-ups will probably want to sharpen their pitch on why their business model is resiliently scalable and how it creates genuine value – both commercial and societal.”TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Traders work on the floor of the New York Stock Exchange.NYSEU.S. stock futures were mixed Wednesday night after the market shrugged off the July inflation report and the Dow Jones Industrial Average and S&P 500 hit records.Dow futures rose 9 points, or 0.03%. S&P 500 futures and Nasdaq 100 futures fell 0.02% and 0.14%, respectively.In the regular trading session, the Dow gained 0.6% to reach 35,484.97 and close at a new record. The S&P 500 rose 0.2% to an all-time high of 4,447.70. The Nasdaq Composite traded about 0.1% lower to 14,765.13.The Labor Department reported that the consumer-price index rose 5.4% from a year earlier, for the month of July, and 0.5% from the previous month.Core inflation, however, rose by just 0.3% in July (and 4.3% on a year-over-year basis). Core inflation excludes energy and food prices and is considered a more reliable measure by economists since energy and food prices can be so volatile.”Inflation has, at a minimum, paused,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “For both the headline and core figures, the monthly and annual numbers were stable or down from last month. Based on that data, inflation is certainly not on an unstoppable increase.”Treasury yields dipped after the inflation report and a 10-year note auction showed strong demand. Dallas Fed President Robert Kaplan told CNBC the Fed should start removing stimulus in October, adding to the decline in yields.”The inflation story is more about isolated components, rather than general increases in prices, and even those components are showing signs of peaking,” McMillan said. “As we dig into the numbers, inflation is above where it has been but is showing signs of rolling over and returning to more comfortable levels.”Investors are keeping an eye on the weekly jobless claims data, which will be released Thursday morning.Dustin Qualley of Build Asset Management said he expects a continued decline, which would support the narrative of a strengthening jobs market.This is a more high-frequency indicator than payrolls,” he said. “Should claims unexpectedly spike, I worry this recovery will take longer than expected. An unexpected spike in payrolls would be bullish for rates.”Baidu is scheduled to report earnings before the opening bell. Palantir and CyberArk Software are also set to report later in the day.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Stocks may be at all-time highs, but Ally Invest’s Lindsey Bell is anticipating market turbulence.According to the firm’s chief investment strategist, surging Covid-19 cases and uncertainty surrounding when the Federal Reserve will meaningfully step away from its easy money policy could propel stocks into a near-term pullback.To help mitigate potential losses, Bell is encouraging investors to consider adding more health care exposure. “It really is underrated which is a shame because we’re in this great year of innovation with different vaccines and treatments to address the pandemic,” she told CNBC’s “Trading Nation” on Wednesday. “We remain optimistic that health care can do well especially in periods of angst which may occur over the next couple of months.”For now, it appears Wall Street is breathing a sigh of relief. The Dow and S&P 500 closed at record highs following the highly-anticipated Consumer Price Index data. It showed inflation wasn’t as hot as many investors fear.Right now, Bell believes inflation is transitory, but she indicates it’s premature to sound the all-clear.”I’ll take the CPI report today as a win for the transitory camp. But it doesn’t mean that we’re out of the woods yet,” she said. “Time is really going to tell, and I think we could see inflation run a little hotter into the end of the year.”Between inflation, the jump in delta variant case and seasonal headwinds, Bell warns it will be tough for the market to avoid turbulence between now and fall.”One of the biggest risks continues to be the Fed. We’ve got the Jackson Hole meeting this month, and there’s still a question mark about what the Fed is going to do from a tapering perspective and then when rates will rise,” added Bell, a CNBC contributor.Bell contends health care should be largely immune from potential market fallout because of new innovation and historical performances.”Those companies have gotten bigger and have improved their cash flow. And, the health care sector overall for long periods of time has easily outperformed the S&P 500,” Bell said. “You got to remember it is a sector that provides a nice dividend and has solid cash flow.”The Health Care Select Sector SPDR Fund, which tracks the health care industry, is up 16% so far this year versus 18% for the S&P 500.Disclaimer More