September S&P 500 E-Mini futures (ESU24) are up +0.16%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.25% this morning as investors looked ahead to U.S. business activity data and the start of the Jackson Hole Symposium.
The minutes of the Federal Open Market Committee’s July 30-31 meeting, released Wednesday, revealed that several Federal Reserve officials acknowledged there was a “plausible case” for reducing the central bank’s policy rate. “All participants supported maintaining the target range for the federal funds rate at 5.25 to 5.50 percent, although several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision,” according to the FOMC minutes. Policymakers noted at the July meeting that inflation had moderated and that there had been “some further progress” toward the 2% goal in recent months. “The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the minutes said.
“The Fed minutes removed all doubt about a September rate cut,” said Jamie Cox at Harris Financial Group. “The Fed’s communication strategy is to make its meetings less of a market-moving event, and they are following the script to the letter.”
In yesterday’s trading session, Wall Street’s major indices closed higher. Keysight Technologies (KEYS) surged over +13% and was the top percentage gainer on the S&P 500 after the company reported upbeat Q3 results and issued solid Q4 guidance. Also, Target (TGT) climbed more than +11% after the retailer reported stronger-than-expected Q2 results and raised its full-year adjusted EPS forecast. In addition, Take-Two Interactive Software (TTWO) gained over +3% after revealing that its Borderlands 4 video game will be released next year. On the bearish side, American Express (AXP) fell more than -2% and was the top percentage loser on the Dow after BofA downgraded the stock to Neutral from Buy. Also, Macy’s (M) tumbled nearly -13% after reporting weaker-than-expected Q2 revenue and lowering its FY24 net sales outlook.
The Bureau of Labor Statistics said Wednesday that the U.S. payrolls benchmark was revised down by -818,000 for the year through March, a steeper decline than the anticipated -600,000, marking the largest downward revision since 2009. This was a preliminary estimate. The final revision is set to be released in February 2025.
“The main message from the revisions in my mind is to reinforce just how silly it is to let the next jobs number be the determinant in whether to go 25 or 50 in September. What this revision data implies is that whatever the next jobs number is going to be, it’s probably lower in reality,” said Neil Dutta at Renaissance Macro Research.
U.S. rate futures have priced in a 69.5% probability of a 25 basis point rate cut and a 30.5% chance of a 50 basis point rate cut at the next central bank meeting in September.
Meanwhile, the Jackson Hole Economic Symposium kicks off later today, with investors looking forward to a speech by Fed Chair Jerome Powell on Friday. Market participants will be keenly focused on what he indicates about the pace and timing of rate cuts in the coming months.
On the earnings front, notable companies like Intuit (INTU), Workday (WDAY), Ross Stores (ROST), BJ’s Wholesale Club (BJ), and Peloton Interactive (PTON) are set to report their quarterly figures today.
On the economic data front, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading, set to be released in a couple of hours. Economists, on average, forecast that the August Manufacturing PMI will come in at 49.5, compared to last month’s value of 49.6.
Also, investors will focus on the U.S. S&P Global Services PMI, which arrived at 55.0 in July. Economists foresee the preliminary August figure to be 54.0.
U.S. Existing Home Sales data will come in today. Economists foresee this figure to stand at 3.94M in July, compared to 3.89M in June.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 232K, compared to last week’s value of 227K.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.826%, up +1.27%.
The Euro Stoxx 50 futures are up +0.31% this morning as investors digested the latest regional business activity data and awaited the start of the Jackson Hole conference later in the day. Retail stocks led the gains on Thursday, while mining and energy stocks lost ground. A survey released on Thursday indicated that Eurozone business activity demonstrated unexpected strength in August, even as firms increased prices, potentially diminishing prospects for two additional rate cuts from the European Central Bank this year. Meanwhile, investors are also awaiting the release of the minutes from the ECB’s July meeting as well as preliminary consumer confidence data for the Eurozone later in the session. In corporate news, Bavarian Nordic A/S (BAVA.C.DX) surged over +11% after the Danish biotech company reported upbeat Q2 results and announced a large vaccine order from an undisclosed European country amid the current mpox outbreak. Also, Jd Sports Fashion Plc (JD-.LN) climbed more than +6% after the British sportswear retailer posted higher quarterly sales. In addition, Swiss Re Ag (SREN.Z.IX) gained over +3% after the insurer reported a 16% increase in its first-half net profit to $2.09 billion.
France’s Manufacturing PMI (preliminary), France’s Services PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Composite PMI (preliminary), and Eurozone’s Services PMI (preliminary) data were released today.
The French August Manufacturing PMI came in at 42.1, weaker than expectations of 44.4.
The French August Services PMI stood at 55.0, stronger than expectations of 50.2.
The German August Manufacturing PMI was at 42.1, weaker than expectations of 43.4.
The German August Services PMI arrived at 51.4, weaker than expectations of 52.3.
Eurozone August Manufacturing PMI came in at 45.6, weaker than expectations of 45.7.
Eurozone August Composite PMI has been reported at 51.2, stronger than expectations of 50.1.
Eurozone August Services PMI stood at 53.3, stronger than expectations of 51.7.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.27% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.68%.
China’s Shanghai Composite Index closed lower today, dropping for the third consecutive session as persistent economic concerns and the absence of substantial stimulus measures in the country weighed on investor sentiment. Software stocks underperformed on Thursday. Also, shares of most Chinese EV manufacturers slid as Brussels issued its updated tariff plan for China-produced EVs, potentially finalizing the provisional tariffs. Meanwhile, Morgan Stanley further dampened investor sentiment by lowering its target for the MSCI China Index to 56 points from 56.7 points for June 2025. “China’s macro growth had started to trend below target on both real GDP and inflation/deflation recently, especially since July,” Morgan Stanley’s report said on Wednesday. In corporate news, Xiaomi Corp. surged about +9% in Hong Kong after the company reported stronger-than-expected Q2 results. Also, AIA Group gained more than +5% after Asia’s largest insurer posted a 53% increase in its first-half net profit, marking its best first-half performance in five years. At the same time, WuXi Biologics slumped over -8% after reporting a 24% drop in its first-half profit. Investors are now anticipating the People’s Bank of China’s decision on the medium-term lending facility early next week after benchmark lending rates were kept steady in August.
Japan’s Nikkei 225 Stock Index closed higher and hit a 3-week high today, tracking gains on Wall Street overnight as dovish Fed minutes and the U.S. government’s revision of payrolls strengthened hopes for Fed rate cuts. Healthcare and materials stocks led the gains on Thursday, while financial stocks slumped. A business survey showed on Thursday that Japan’s factory activity contracted in August amid weak demand, though the pace of decline eased, while the service sector expanded, reflecting upbeat conditions in some industries. Meanwhile, Bank of Japan Governor Kazuo Ueda is set to attend a special session at Japan’s parliament on Friday to discuss the July 31st interest rate hike, which unsettled global markets. Ueda’s testimony will include sessions in the lower and upper houses of parliament, each lasting two and a half hours. Bloomberg reported that Ueda is anticipated to provide reassurances without significant policy shifts. Market participants are also awaiting Japanese inflation figures, due on Friday, to gain insight into the Bank of Japan’s monetary policy trajectory. In corporate news, Japan Tobacco rose over +1% after the tobacco and drink maker agreed to acquire U.S.-based Vector Group in a deal valued at approximately $2.4 billion. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.30% to 27.13.
The Japanese August au Jibun Bank Japan Manufacturing PMI (preliminary) arrived at 49.5, weaker than expectations of 49.8.
Pre-Market U.S. Stock Movers
Paramount Global (PARA) rose more than +2% in pre-market trading after the Wall Street Journal reported that Edgar Bronfman boosted his offer to $6 billion for National Amusements and a minority stake in Paramount.
Snowflake (SNOW) slumped over -8% in pre-market trading after the company reported weaker-than-expected Q2 billings.
Zoom Video (ZM) gained more than +3% in pre-market trading after the company posted better-than-expected Q2 results and raised its full-year guidance.
Charles Schwab (SCHW) slid over -3% in pre-market trading after TD Bank Group said it would sell 40.5 million shares of the brokerage firm’s common stock.
SentinelOne (S) rose more than +3% in pre-market trading after Wells Fargo upgraded the stock to Overweight from Equal Weight with a price target of $29.
Estee Lauder (EL) advanced over +2% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $114.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - August 22nd
Intuit (INTU), Workday (WDAY), NetEase (NTES), Ross Stores (ROST), Baidu (BIDU), Williams-Sonoma (WSM), BJs Wholesale Club (BJ), CAVA Group (CAVA), Bilibili (BILI), Lancaster Colony (LANC), Bill Com (BILL), Advance Auto Parts (AAP), iQIYI (IQ), Weibo Corp (WB), Hovnanian Enterprises (HOV), Peloton Interactive (PTON), Opera (OPRA), Canadian Solar Inc (CSIQ), Ehang (EH), ID Systems (AIOT), Youdao (DAO).
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