September S&P 500 E-Mini futures (ESU24) are up +0.98%, and September Nasdaq 100 E-Mini futures (NQU24) are up +1.57% this morning as expectations mounted that Fed Chair Jerome Powell might signal a potential rate cut for September, while investors also awaited a fresh batch of U.S. economic data and an earnings report from Meta Platforms.
In yesterday’s trading session, Wall Street’s main stock indexes closed mixed. CrowdStrike Holdings (CRWD) slumped over -9% and was the top percentage loser on the Nasdaq 100 after CNBC reported that Delta Air Lines had hired lawyers to seek compensation from the cybersecurity firm and Microsoft over the operations meltdown experienced during the global IT outage. Also, Merck & Co. (MRK) slid more than -9% and was the top percentage loser on the S&P 500 and Dow after the pharma giant cut its full-year adjusted EPS forecast. In addition, Procter & Gamble (PG) fell over -4% after reporting weaker-than-expected Q4 sales. On the bullish side, Howmet Aerospace (HWM) surged more than +13% and was the top percentage gainer on the S&P 500 after the supplier to Boeing lifted its FY24 adjusted EPS guidance. Also, PayPal Holdings (PYPL) climbed over +8% and was the top percentage gainer on the Nasdaq 100 after posting upbeat Q2 results and boosting its annual earnings guidance.
A Labor Department report on Tuesday showed that U.S. JOLTs job openings fell to 8.184M in June, compared to an expected figure of 8.020M. Also, the Conference Board’s U.S. July consumer confidence index inched up to 100.3, stronger than expectations of 99.7. In addition, the U.S. S&P/CS HPI Composite - 20 n.s.a. rose +6.8% y/y in May, stronger than expectations of +6.5% y/y.
Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. While the Fed is anticipated to maintain benchmark rates at the highest level in more than two decades, market participants will be closely monitoring for any hints that the start of policy easing is near.
“If the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness - especially if earnings underwhelm,” said Tom Essaye at The Sevens Report.
Meanwhile, U.S. rate futures have priced in a 99.7% chance of at least a 25 basis point rate cut at September’s monetary policy meeting and a 60.6% probability of a 25 basis point rate cut at the November meeting.
On the earnings front, notable companies like Meta Platforms (META), Qualcomm (QCOM), Western Digital Corporation (WDC), Arm Holdings (ARM), Boeing (BA), eBay (EBAY), Altria (MO), and Marriott International (MAR) are slated to release their quarterly results today.
On the economic data front, investors will direct their attention to the U.S. ADP Nonfarm Employment Change data, set to be released in a couple of hours. Economists, on average, forecast that the July ADP Nonfarm Employment Change will stand at 147K, compared to the previous number of 150K.
Also, investors will focus on the U.S. Chicago PMI, which stood at 47.4 in June. Economists foresee the July figure to be 44.8.
The U.S. Employment Cost Index will be reported today. Economists foresee this figure to arrive at +1.0% q/q in the second quarter, compared to the first-quarter number of +1.2% q/q.
U.S. Pending Home Sales data will come in today. Economists expect June’s figure to be +1.4% m/m, compared to last month’s figure of -2.1% m/m.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.600M, compared to last week’s value of -3.741M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.138%, down -0.07%.
The Euro Stoxx 50 futures are up +0.88% this morning, extending gains from the previous session, as investors digested key inflation data from the region and a new wave of earnings reports while also awaiting the Fed monetary policy decision later in the day. Technology stocks led the gains on Wednesday, with Asml Holding (ASML.NA) climbing over +6% after Reuters reported that U.S. President Joe Biden’s administration intends to exempt manufacturers from Japan, South Korea, and the Netherlands from upcoming export restrictions to China. Meanwhile, preliminary data from Eurostat showed on Wednesday that the Eurozone’s annual inflation rate unexpectedly edged up to 2.6% in July from 2.5% in June, posing a new challenge for policymakers seeking signs of sustainable easing in price increases. In other corporate news, HSBC Holdings Plc (HSBA.LN) rose more than +4% after the bank reported a small decline in first-half pretax profit and announced a $3 billion share buyback. Also, Adidas Ag (ADS.D.DX) gained over +1% after the sportswear giant posted an increase in Q2 net profit.
France’s CPI (preliminary), Germany’s Unemployment Rate, Germany’s Unemployment Change, Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), and Eurozone’s Core CPI (preliminary) data were released today.
The French July CPI stood at +0.1% m/m and +2.3% y/y, weaker than expectations of +0.3% m/m and +2.4% y/y.
The German July Unemployment Rate was at 6.0%, in line with expectations.
The German July Unemployment Change came in at 18K, weaker than expectations of 16K.
The Italian July CPI arrived at +0.5% m/m and +1.3% y/y, stronger than expectations of +0.3% m/m and +1.2% y/y.
Eurozone July CPI has been reported at +2.6% y/y, stronger than expectations of +2.5% y/y.
Eurozone July Core CPI stood at +2.9% y/y, stronger than expectations of +2.8% y/y.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +2.06%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.49%.
China’s Shanghai Composite Index closed sharply higher today as expectations grew for Beijing to bolster support for its faltering economy. Securities and insurance stocks outperformed on Wednesday. Sentiment was lifted by a Politburo meeting on Tuesday, where leaders emphasized the need to boost consumption, alongside the appointment of a new vice chairman of the securities regulator. The China Securities Regulatory Commission announced late on Tuesday that Li Ming, head of the enforcement bureau of the CSRC, will succeed Fang Xinghai as vice chairman of China’s securities regulator. Meanwhile, data from the National Bureau of Statistics released on Wednesday indicated that China’s manufacturing activity continued its decline for a third consecutive month in July, signaling ongoing weakness in the economy. Also, data showed that the country’s non-manufacturing PMI, which covers both service and construction activity, dropped to an 8-month low in July but remained in growth territory. In corporate news, Aier Eye Hospital Group surged over +8% after announcing plans to acquire 35 hospitals, named “Aier,” for a total of 898.5 million yuan.
The Chinese July Manufacturing PMI came in at 49.4, in line with expectations.
The Chinese July Non-Manufacturing PMI stood at 50.2, weaker than expectations of 50.3.
Japan’s Nikkei 225 Stock Index closed higher today, reversing earlier losses as investors digested the Bank of Japan’s interest rate hike and reduction in bond purchases. Financial stocks led the gains on Wednesday. The BOJ raised its short-term policy interest rate to about 0.25%, the highest level since 2008, from a range of 0 to 0.1%, according to its statement Wednesday. It also announced a plan to reduce its monthly bond buying to around 3 trillion yen ($19.6 billion) by the first quarter of 2026, down from the current 6 trillion yen. This reduction will take place in quarterly increments of approximately 400 billion yen. In its quarterly outlook issued alongside the rate decision, the BOJ stated that it anticipates core consumer inflation to hit 2.5% in the year ending March 2025, down from a previous projection of 2.8%. The central bank also forecasted that the Japanese economy would grow 0.6% in the current fiscal year, compared with the 0.8% growth predicted in its previous report. BOJ Governor Kazuo Ueda stated that any further hikes this year would depend on data and would only be conducted after assessing the impact of today’s move as well as the rate increase in March. Meanwhile, Japanese government bond yields and the yen climbed following the BOJ’s decision. Preliminary data from the Ministry of Economy, Trade, and Industry on Wednesday indicated that Japan’s industrial production declined less than expected in June compared to the previous month. Separately, data showed that Japan’s retail sales growth accelerated in June, reaching the highest level in four months. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.75% to 21.39.
The Japanese June Industrial Production arrived at -3.6% m/m, stronger than expectations of -4.2% m/m.
The Japanese June Retail Sales came in at +3.7% y/y, stronger than expectations of +3.3% y/y.
Pre-Market U.S. Stock Movers
Advanced Micro Devices (AMD) climbed over +8% in pre-market trading after the semiconductor company reported stronger-than-expected Q2 results, offered a solid Q3 revenue forecast, and boosted its full-year guidance for artificial intelligence chip sales.
Microsoft (MSFT) fell more than -2% in pre-market trading after the tech giant reported weaker-than-expected quarterly revenue growth for its Azure cloud-computing service.
Match Group (MTCH) surged over +10% in pre-market trading after the company reported better-than-expected Q2 revenue and announced plans to lay off about 6% of its staff.
Pinterest (PINS) plunged more than -12% in pre-market trading after providing below-consensus Q3 revenue guidance.
Gap (GPS) gained over +3% in pre-market trading after BofA upgraded the stock to Neutral from Sell with a price target of $25.
McDonald’s (MCD) dropped about -0.8% in pre-market trading after TD Cowen downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - July 31st
Meta Platforms (META), T-Mobile US (TMUS), Qualcomm (QCOM), Arm (ARM), Boeing (BA), Lam Research (LRCX), KKR & Co (KKR), ADP (ADP), Altria (MO), Trane Technologies (TT), Marriott Int (MAR), MetLife (MET), Aflac (AFL), AIG (AIG), Humana (HUM), Johnson Controls (JCI), Hess (HES), Allstate (ALL), Cencora Inc (COR), Kraft Heinz (KHC), Verisk (VRSK), Fair Isaac (FICO), Corteva (CTVA), Cognizant A (CTSH), Agnico Eagle Mines (AEM), Garmin (GRMN), DuPont De Nemours (DD), VICI Properties (VICI), CDW Corp (CDW), AvalonBay (AVB), eBay (EBAY), American Water Works (AWK), WEC Energy (WEC), Carvana (CVNA), CGI Inc (GIB), PTC (PTC), Western Digital (WDC), Fortis Inc (FTS), Cameco (CCJ), Waters (WAT), Entegris (ENTG), Corebridge Financial (CRBG), Mid-America Apartment (MAA), Everest (EG), Sun (SUI), Bunge (BG), IDEX (IEX), United Therapeutics (UTHR), Gfl Environmental (GFL), MGM (MGM), CNH Industrial NV (CNH), Host Hotels Resorts (HST), Clean Harbors (CLH), Lincoln Electrics (LECO), New Oriental Education&Tech (EDU), SCI (SCI), APA Corp (APA), Tetra Tech (TTEK), Wingstop Inc (WING), Albemarle (ALB), Kinross Gold (KGC), Murphy USA Inc (MUSA), CH Robinson (CHRW), Regal Beloit (RRX), Pilgrims Pride (PPC), Qiagen (QGEN), Generac (GNRC), Paycom Soft (PAYC), UL Solutions (ULS), Antero Resources Corp (AR), EXACT Sciences (EXAS), Cognex (CGNX), Dayforce (DAY), Parsons (PSN), Norwegian Cruise Line (NCLH), Lantheus Holdings Inc (LNTH), Confluent (CFLT), Oshkosh (OSK), Etsy Inc (ETSY), BorgWarner (BWA), FMC (FMC), AutoNation (AN), Jazz Pharma (JAZZ), Alamos Gold (AGI), Antero Midstream (AM), Credit Acceptance (CACC), MGIC Investment (MTG), Aurora Innovation (AUR), Noble (NE), Siteone Landscape Supply (SITE), Glaukos Corp (GKOS), OneMain Holdings (OMF), Kyndryl Holdings (KD), Acadia Healthcare (ACHC), Ryman Hospitality Properties (RHP), Timken (TKR), Bausch + Lomb (BLCO), Radian (RDN), Rithm Capital (RITM), Dentsply (XRAY), Option Care Health (OPCH), Enact Holdings (ACT), Magnolia Oil (MGY), National Fuel Gas (NFG), Sonoco Products (SON), Silgans (SLGN), Tenable (TENB), Transocean (RIG), The Hanover Insurance (THG), Clearwater Analytics Holdings (CWAN), Cactus (WHD), CSW Industrials Inc (CSWI), Gates Industrial Corp (GTES), TransMedics (TMDX), Zeta Global Holdings (ZETA), Independence Realty Trust Inc (IRT), Kilroy (KRC), CBIZ (CBZ), Black Hills (BKH), Q2 Holdings (QTWO), Scotts Miracle-Gro (SMG), FormFactor (FORM), Spire (SR), Axcelis (ACLS), PNM Resources (PNM), Macerich (MAC), Graham Holdings (GHC), EPR Properties (EPR), Green Brick Partners Inc (GRBK), Goodyear Tire & Rubber Co (GT), Alkami Technology (ALKT), Park Hotels & Resorts (PK), LXP Industrial Trust (LXP), Marriot Vacations Worldwide (VAC), Riot Platforms (RIOT), Genworth (GNW), Strategic Education (STRA), Remitly Global (RELY), Quidel (QDEL), Urban Edge Properties (UE), AvidXchange Holdings (AVDX), Four Corners Property Trust Inc (FCPT), Gibraltar Industries (ROCK), Mister Car Wash (MCW), Enovix (ENVX), MYR Group (MYRG), Pactiv Evergreen (PTVE), Kodiak Gas Services (KGS), Alamo (ALG), Cimpress NV (CMPR), Evertec Inc (EVTC), Rush Street Interactive (RSI), eXp World (EXPI), Compass (COMP), Hawkins (HWKN), TTM (TTMI).
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