Here are five things you must know for Friday, July 29:
1. -- Stock Futures Higher On Fading Rate Bets Fade, Big Tech Boost
U.S. equity futures extended gains Friday, pushing stocks to one of their best monthly gains in two years, as a pair of better-than-expected big tech earnings, as well as fading bets on big Fed rate hikes, added to improving investor sentiment.
Investors are paring bets on another jumbo Fed rate hike in September, with the CME Group's FedWatch suggesting a near 80% chance of a 50 basis point increase, following yesterday's grim assessment of first quarter growth.
The economy likely contracted by 0.9% over the three months ending in June, following a 1.6% slump over the first quarter, potentially tipping it into a full-blow recession, and compelling a Fed re-think on the level of aggression with which is should continue to tackle inflation.
Those pressures aren't likely to recede quickly, however, with data from Europe this morning showing July HICP, the region's harmonized inflation measure, rising to a record 8.9% over the month of July. The Fed's preferred gauge, the PCE Price Index, will be published at 8:30 am Eastern time, with economics expecting the biggest monthly increase for the core component reading in six months.
Still, better-than-expected earnings from Apple (AAPL) and Amazon (AMZN) after the close of trading last night look firm enough to give stocks another boost ahead of today's inflation data, as well as another round of June quarter updates prior to the opening bell, highlighted by oil giants Exxon Mobil (XOM) and Chevron (CVX).
In overseas markets, European stocks were trading firmly higher in Frankfurt, boosted by data showing that the German economy, the region's biggest, avoided turning negative over the second quarter, while Eurozone GDP -- the measure of growth for countries using the single currency -- came in better than forecast at +0.6%.
The region-wide Stoxx 600 index was marked 0.83% higher in early trading, putting the benchmark on pace for a July gain of around 7%.
Overnight in Asia, the region-wide MCSI ex-Japan index fell 0.37% as China stocks slumped following a statement from the Communist Party that omitted mention of a specific economic growth target for the 2022 year, promising only to "strive to achieve the best possible results."
In U.S. markets, fading rate hike bets and slowing growth forecasts continue to pressure Treasury bond yields, with 2 year notes falling to 2.864% in overnight dealing and 10-year notes trading at 2.699%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.43% lower at 105.909.
On Wall Street, futures tied to the S&P 500 are indicating a 27 point opening bell gain while those liked to the Dow Jones Industrial Average are priced for a 60 point bump. Futures linked to the tech-focused Nasdaq are indicating a 145 point advance.
2. -- Apple Shares Jump After Q3 Earnings Beat, iPhone Revenue Growth
Apple shares powered higher in pre-market trading after the world's most-valuable tech company topped Street earnings forecasts, noting the anticipated supply chain hit was lighter than it had forecast while China sales held up despite the country's spring Covid lockdown.
Apple earned more than $19.44 billion for the three months ending in June, the group's fiscal third quarter, as revenues rose 2% from last year to $82.96 billion. iPhone revenues rose 2.8% from last year to $40.67 billion while China sales fell 1% to $14.6 billion amid the country's weakest economic growth in a decade.
Bottom line earnings were pegged at $1.20 per share, down 7.7% from the same period last year and just ahead of the Street consensus forecast of $1.16 per share.
Apple declined to provide detailed September quarter revenue guidance, but hinted that it would likely plan price increases for certain hardware items in overseas markets in order to compensate for the surging U.S. dollar.
"Overall, we believe our year-over-year revenue growth will accelerate during the September quarter compared to the June quarter despite approximately 600 basis points of negative year-over-year impact from foreign exchange," CFO Luca Maestri told investors on a conference call late Thursday. "On the product side, we expect supply constraints to be lower than what we experienced during the June quarter."
Apple shares were marked 2.5% higher in pre-market trading to indicate an opening bell price of $161.25.
3. -- Amazon Shares Soar As Sales Growth, Forecast Offset Surprise Q2 Loss
Amazon shares ripped higher in pre-market trading after better-than-expected second quarter sales softened the impact of the online retail giant's second consecutive quarterly loss.
Amazon said its second quarter loss was pegged at $2 billion, or 20 cents per share, down from a profit of 76 cents per share over the same period last year, thanks in part to a $3.9 billion hit from its stake in Rivian Automotive.
Revenues rose 7.2% from last year to $121.2 billion, firmly ahead of analysts' estimates of a $119.08 billion tally, while its workhorse Amazon Web Services Division saw revenues rise 33% to $19.74 billion.
Looking into the current quarter, Amazon said it sees operating income of between zero and $3.5 billion, on revenues in the range of $125 billion to $130 billion, compared to the Refinitiv forecast of around $126.5 billion, with this year's Prime Day factored into the forecast.
"There's a certain amount of conservatism always built into (forecasts) because we are in a very difficult macroeconomic state," CFO Brian Olsavsky told investors on a conference call late Thursday. "We're not seeing it hit our businesses directly, but we're cognizant that things could change quickly."
Amazon shares were marked 12.4% in pre-market trading to indicate an opening bell price of $137.39 each.
4. -- Intel Shares Slump After Q2 Earnings Miss, Disappointing Guidance
Intel (INTC) shares slumped lower in pre-market trading after the chip maker posted much weaker-than-expected second quarter earnings, while cutting its full-year sales forecast, amid a pullback in demand for laptop and desktop computers.
Intel's adjusted bottom line for the June quarter was pegged at 29 cents per share, well shy of Street forecasts of 70 cents, as revenues fell 22% to $15.3 billion thanks to weakness in the computing group. Current quarter sales, Intel added, would likely range between $15 billion and $16 billion, again missing analysts' forecasts.
For the year, Intel clipped its revenue forecast to between $65 billion and $68 billion, as softening demand, supply chain disruption and run-away inflation continue to hammer PC demand.
“This quarter’s results were below the standards we have set for the company and our shareholders," said CEO Pat Gelsinger. "We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues.”
Intel shares were marked 9.1% lower in pre-market trading to indicate an opening bell price of $36.09 each.
5. -- Roku Shares Collapse After Dismal Q2 Highlights Ad Market Meltdown
Roku (ROKU) shares collapsed in pre-market trading after the streaming service hub posted a wider-than-expected second quarter loss and pulled its full-year sales guidance amid the ongoing pullback in global advertizing spending.
Roku said revenues for the three months ending in June were pegged at $764 million, missing Street forecasts, with active accounts rising 3% from last year to 63.1 million. Total streaming hours slipped to 20.7 billion, Roku said.
Roku posted a loss of 82 cents per share, 13 cents wider than Street forecasts, and withdrew its full-year sales growth guidance due to "uncertainties and volatility in the macro environment."
"For the second half of the year, we are forecasting that advertising spend, particularly in the scatter market, will continue to be negatively impacted. We also believe that consumer discretionary spend will continue to moderate, pressuring both Roku TV and Roku player sales," the company told shareholders in a letter released alongside last night's earnings.
Roku shares were marked 25.7% lower in pre-market trading to indicate an opening bell price of $63.26 each.
