September S&P 500 futures (ESU23) are down -0.19%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.28% this morning after three major U.S. benchmark indices rallied on Tuesday as soft economic reports bolstered expectations that the Federal Reserve would pause its interest-rate hikes in September, while investors also braced for a new round of economic data.
In Tuesday’s trading session, the benchmark S&P 500 notched a 2-1/2 week high, the blue-chip Dow posted a 1-1/2 week high, and the tech-heavy Nasdaq 100 rose to a 3-week high. Catalent Inc (CTLT) climbed over +4% after the contract drugmaker entered into a cooperation agreement with activist investor Elliott Investment Management and announced that its board had established a committee to review its business, strategy, and operations. Also, U.S.-listed shares of PDD Holdings (PDD) surged more than +15% after the Chinese e-commerce firm posted a big jump in Q2 revenue. In addition, Verizon Communications Inc (VZ) and AT&T Inc (T) rose over +3% after Citi upgraded the telecom companies to Buy from Neutral.
Economic data on Tuesday showed that the U.S. JOLTS job openings fell to a nearly 2-1/2 year low of 8.827M in July, weaker than expectations of 9.465M. Also, U.S. CB consumer confidence came in at 106.1 in August, weaker than expectations of 116.0. In addition, U.S. June S&P/CS HPI Composite - 20 n.s.a. stood at -1.2% y/y, stronger than expectations of -1.3% y/y.
“Today’s JOLTS report bodes well for the Fed’s ‘soft landing’ dreams. We suspect the FOMC will want to see today’s data confirmed in future JOLTS reports as well as in other indicators, particularly those tied to labor compensation growth. That said, today’s data are yet another sign that the inflation pressures of the past few years are slowly diminishing,” said Sarah House, managing director and senior economist at Wells Fargo.
Meanwhile, U.S. rate futures have priced in a 13.5% probability of a 25 basis point rate increase at the September FOMC meeting and a 43.6% chance of a 25 basis point rate hike at the November FOMC meeting.
On the earnings front, notable companies like Salesforce Inc (CRM), Crowdstrike Holdings (CRWD), and Chewy (CHWY) are set to report their quarterly figures today.
Today, all eyes are focused on the U.S. GDP preliminary reading in a couple of hours. Economists, on average, forecast that the U.S. GDP will stand at +2.4% q/q in the second quarter, compared to the first-quarter value of +2.0% q/q.
Also, investors will likely focus on U.S. ADP Nonfarm Employment Change data, which came in at 324K in July. Economists foresee the August figure to be 195K.
U.S. Pending Home Sales data will also be closely watched today. Economists expect July’s figure to be -0.6% m/m, compared to the previous number of +0.3% m/m.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -3.267M, compared to last week’s value of -6.135M.
In the bond markets, United States 10-year rates are at 4.145%, up +0.53%.
The Euro Stoxx 50 futures are down -0.62% this morning, weighed down by losses in utilities, while investors also awaited further crucial data to assess the region’s economic health. Losses in utilities stocks are leading the overall market lower, with Orsted As (ORSTE.C.DX) slumping over -20% after the Danish power generator projected potential impairments of up to $2.3 billion on its U.S. portfolio. Data from the European Automobile Manufacturers Association on Wednesday indicated that new car registrations surged 15.2% in July, marking the twelfth consecutive month of expansion as the automotive industry recovers from supply chain issues stemming from the pandemic. In corporate news, Prudential Plc (PRU.LN) rose more than +3% after the Asia-focused insurer posted a better-than-expected first-half operating profit.
Spain’s CPI (preliminary) and Eurozone’s Consumer Confidence data were released today.
The Spanish August CPI has been reported at +0.5% m/m and +2.6% y/y, compared to expectations of +0.4% m/m and +2.6% y/y.
Eurozone August Consumer Confidence stood at -16.0, in line with expectations.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.33%.
China’s Shanghai Composite today closed slightly higher following gains in the previous two sessions as a series of policy steps by authorities to revitalize markets contributed to soothing investor concerns. China’s southern city of Guangzhou issued a notice that it would relax mortgage restrictions, permitting prospective homebuyers to access preferential loans for first-home purchases without being constrained by their prior credit record. Also, reports indicate that China’s state-owned banks are gearing up to reduce interest rates on existing mortgages and deposits. Meanwhile, semiconductor stocks outperformed on Wednesday due to speculation that Huawei’s newly introduced smartphones would support 5G technology, potentially providing advantages to companies within its supply chain. In other news, China’s embassy in Washington Tuesday defended its business practices in response to comments from U.S. Commerce Secretary Gina Raimondo, who stated that American companies informed her that China had become “uninvestable.” Investor focus is now squarely on Chinese PMI readings, due on Thursday.
Japan’s Nikkei 225 Stock Index closed higher today, rising to more than a 2-week high as investors scooped up beaten-down stocks, while an overnight surge on Wall Street also buoyed market sentiment. Chip stocks advanced on Wednesday, with chip-making equipment maker Tokyo Electron rising about +1% and chip testing-making equipment maker Advantest gaining about +0.7%. Meanwhile, Japanese government bond yields rose on Wednesday following recent remarks from BOJ board member Naoki Tamura, indicating that the central bank might contemplate tweaking its ultra-loose policy given that the 2% inflation target was “in sight.” In other corporate news, Toyota Motor Corp climbed more than +1% after the automaker announced that it would restart operations at its Japanese assembly plants on Wednesday following a production system glitch that had temporarily halted domestic output. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.44% to 17.74.
The Japanese August Household Confidence stood at 36.2, weaker than expectations of 37.5.
Pre-Market U.S. Stock Movers
HP Inc (HPQ) fell over -8% in pre-market trading after the PC giant posted mixed Q3 results and cut its full-year cash flow and profit outlook.
FibroGen Inc (FGEN) plunged more than -22% in pre-market trading following the company’s announcement that a Phase 3 study for its drug pamrevlumab, intended for the treatment of ambulatory Duchenne muscular dystrophy, failed to meet its primary endpoint.
Ambarella Inc (AMBA) tumbled over -20% in pre-market trading after the company reported mixed Q2 results and issued downbeat Q3 revenue guidance.
Texas Instruments Incorporated (TXN) dropped more than -2% in pre-market trading after Bernstein downgraded the stock to Underperform from Market Perform.
Centene Corp (CNC) slid over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.
Peloton Interactive Inc (PTON) fell more than -1% in pre-market trading after Macquarie downgraded the stock to Neutral from Outperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - August 30th
Salesforce Inc (CRM), Crowdstrike Holdings (CRWD), Cooper (COO), Chewy (CHWY), Five Below (FIVE), Greif Bros (GEF), Patterson (PDCO), Harmony Gold Mining (HMY), Victoria’s Secret Co (VSCO), REX American Resources (REX), Phibro (PAHC), Mastercraft Boat (MCFT).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
