September S&P 500 E-Mini futures (ESU24) are down -0.10%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.15% this morning as market participants awaited a new round of U.S. economic data, with particular attention on the ADP National Employment figures.
In yesterday’s trading session, Wall Street’s major indexes ended mixed. Dollar Tree (DLTR) plummeted over -22% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the discount store operator posted downbeat Q2 results and cut its full-year guidance. Also, Zscaler (ZS) tumbled more than -18% after the cybersecurity company provided a below-consensus FY25 forecast. In addition, Super Micro Computer (SMCI) slid over -4% after Barclays downgraded the stock to Equal Weight from Overweight with a price target of $438. On the bullish side, Gitlab (GTLB) surged more than +21% after the DevOps company posted upbeat Q2 results and lifted its FY25 guidance. Also, Advanced Micro Devices (AMD) gained over +2% after appointing former Nvidia executive Keith Strier as its senior vice president of global AI markets.
A Labor Department report on Wednesday showed that the U.S. JOLTs job openings fell to a 3-1/2 year low of 7.673M in July, compared to an expected figure of 8.090M. Also, the U.S. July trade deficit widened to -$78.80B from -$73.00B in June (revised from -$73.10B), the largest deficit in 2 years. At the same time, U.S. factory orders rose +5.0% m/m in July, stronger than expectations of +4.7% m/m and the largest increase in 4 years.
“The markets may not be as nervous as they were a month ago, but they’re still looking for confirmation the economy isn’t cooling off too much,” said Chris Larkin at E*Trade from Morgan Stanley. “So far this week, they haven’t gotten it.”
Meanwhile, the Federal Reserve said Wednesday in its Beige Book survey of regional business contacts that economic activity was flat or declining in most U.S. regions in recent weeks. The report noted that economic activity grew slightly in three districts but declined or remained flat in nine, compared to five in the previous period. Employment levels were mostly flat or showed a slight increase. While layoffs were infrequently reported, some companies mentioned reducing shifts and hours, leaving advertised positions vacant, or decreasing headcount through attrition. “Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook,” according to the Beige Book. In addition, the report stated that “Consumer spending ticked down in most districts, having generally held steady during the prior reporting period.”
San Francisco Fed President Mary Daly stated on Wednesday that the central bank needs to reduce interest rates to maintain a healthy labor market, but the extent of the cut will depend on incoming economic data. “As inflation falls, we’ve got a real rate of interest that’s rising into a slowing economy; that’s a basic recipe for over-tightening,” Daly told Reuters in an interview.
U.S. rate futures have priced in a 59.0% chance of a 25 basis point rate cut and a 41.0% chance of a 50 basis point rate cut at the September FOMC meeting.
On the earnings front, notable companies like Broadcom (AVGO), DocuSign (DOCU), Samsara (IOT), UiPath (PATH), and Smith & Wesson (SWBI) are set to report their quarterly earnings today.
Today, all eyes are focused on the U.S. ADP Nonfarm Employment Change data, set to be released in a couple of hours. Economists, on average, forecast that the August ADP Nonfarm Employment Change will stand at 144K, compared to the previous number of 122K.
Investors will also focus on the U.S. ISM Non-Manufacturing PMI and the U.S. S&P Global Services PMI. Economists foresee the August ISM Non-Manufacturing PMI to arrive at 51.3 and the August S&P Global Services PMI to be 55.2, compared to the previous values of 51.4 and 55.0, respectively.
U.S. Unit Labor Costs and Nonfarm Productivity data will be reported today. Economists forecast Q2 Unit Labor Costs to be at +0.9% q/q and Q2 Nonfarm Productivity to stand at +2.3% q/q, compared to the first-quarter numbers of +4.0% q/q and +0.2% q/q, respectively.
U.S. Initial Jobless Claims data will come in today. Economists predict this figure will hold steady at 231K, consistent with last week’s number.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.600M, compared to last week’s value of -0.846M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.771%, up +0.08%.
The Euro Stoxx 50 futures are down -0.06% this morning as investors digested fresh economic data from the region while cautiously anticipating the key U.S. jobs report set for release on Friday. Technology and mining stocks lost ground on Thursday, while real estate and utilities stocks outperformed. Data from the Federal Statistical Office on Thursday revealed that Germany’s monthly factory orders unexpectedly increased in July, providing a rare glimmer of hope for the country’s struggling manufacturing sector. Separately, data from the EU statistics agency released on Thursday indicated that Eurozone monthly retail sales edged higher in July. In corporate news, Associated British Foods Plc (ABF.LN) fell over -4% after stating it expects Primark’s like-for-like sales to decline by 0.5% in the second half of the year due to unfavorable weather in the UK and Ireland.
Germany’s Factory Orders and Eurozone’s Retail Sales data were released today.
The German July Factory Orders stood at +2.9% m/m, stronger than expectations of -1.6% m/m.
Eurozone July Retail Sales arrived at +0.1% m/m and -0.1% y/y, compared to expectations of +0.1% m/m and +0.1% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.14%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.05%.
China’s Shanghai Composite Index closed marginally higher today as risk sentiment improved, while investors continued to evaluate the economic and policy outlook in the country. Real estate stocks surged on Thursday after Bloomberg News reported Wednesday that Chinese regulators have proposed cutting rates on outstanding mortgages nationwide by a total of about 80 basis points to alleviate homeowners’ burden. Insurance stocks also gained ground. Meanwhile, Citi analysts Griffin Chan and Cindy Li stated in a research note on Thursday that China’s property sector is moving into a phase of sustained recovery, given the potential for more policy relief in the second half of the year. In other news, JPMorgan dropped its buy recommendation for the nation’s stocks, pointing to weak policy support and potential volatility associated with the upcoming U.S. presidential election. China was downgraded to Neutral from Overweight in the bank’s emerging markets allocation, as noted by strategists led by Pedro Martins in a report on Wednesday. In corporate news, Jiangmen Kanhoo Industry surged over +8% after submitting an application for credit totaling 70 million yuan. Investors are now turning their attention to Chinese inflation and trade data due next week to gain further insights into the health of the world’s second-largest economy.
Japan’s Nikkei 225 Stock Index closed lower today, continuing its decline from the previous session and tracking overnight losses on Wall Street. Also, Japanese equities remained under pressure from a strengthening yen, which extended its gains on Thursday following an increase in Japan’s real wages. Technology stocks led the declines on Thursday. Government data released on Thursday indicated that Japan’s inflation-adjusted wages unexpectedly grew 0.4% year-over-year in July, rising for the second straight month due to a boost in summertime bonuses. ING economists stated that Japan’s latest labor cash earnings data supported their expectation of another rate hike in the fourth quarter. Meanwhile, Bank of Japan board member Hajime Takata stated on Thursday that the central bank should keep raising interest rates if it verifies that positive economic trends, such as wage growth, are firmly in place. “I believe it is necessary to shift gears again - to further adjust the degree of monetary accommodation - and make, so to speak, a world with interest rates,” Takata said. In corporate news, Nippon Steel swung between gains and losses before closing down about -0.4% after Reuters reported that U.S. President Joe Biden was nearing a decision to block the company’s acquisition of U.S. Steel due to national security risks. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.54% to 29.09.
Pre-Market U.S. Stock Movers
C3.ai (AI) tumbled over -18% in pre-market trading after the enterprise software maker provided weaker-than-expected Q2 revenue guidance.
Yext (YEXT) gained more than +2% in pre-market trading after the company reported stronger-than-expected Q2 adjusted EPS and raised its full-year revenue guidance.
Copart (CPRT) slumped over -6% in pre-market trading after the company reported weak Q4 results.
Verint Systems (VRNT) plunged more than -14% in pre-market trading after posting downbeat Q2 results.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - September 5th
Broadcom (AVGO), Samsara (IOT), Guidewire (GWRE), DocuSign (DOCU), Toro (TTC), UiPath (PATH), Science Applications (SAIC), Smartsheet (SMAR), Braze (BRZE), Korn Ferry (KFY), John Wiley&Sons (WLY), Bowlero (BOWL), G-III Apparel (GIII), Shoe Carnival (SCVL), Argan (AGX), Quanex Building Products (NX), Secureworks (SCWX), Smith & Wesson (SWBI).
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.
