September S&P 500 futures (ESU23) are up +0.01%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.03% this morning as market participants geared up for more corporate earnings results while also looking ahead to Friday’s nonfarm payrolls report.
In Friday’s trading session, Wall Street’s major averages closed solidly in the green. Intel Corporation (INTC) soared over +6% and was the top percentage gainer on the blue-chip Dow after the semiconductor giant posted better-than-expected Q2 results and issued upbeat Q3 guidance. Also, T. Rowe Price Group Inc (TROW) climbed more than +8% after the investment management firm posted stronger-than-expected Q2 results. In addition, Procter & Gamble Company (PG) rose over +2% after the consumer behemoth’s Q4 organic sales topped Wall Street consensus estimates. On the bearish side, Enphase Energy Inc (ENPH) plunged more than -7% after providing weaker-than-expected Q3 sales guidance.
Data from the U.S. Department of Commerce on Friday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, stood at +0.2% m/m and +4.1% y/y in June, compared to expectations of +0.2% m/m and +4.2% y/y. Also, the U.S. employment cost index came in at +1.0% q/q in the second quarter versus the expected +1.1% q/q level, the smallest pace of increase in 2 years. In addition, the University of Michigan’s reading of consumer sentiment arrived at 71.6 in July, weaker than expectations of 72.6.
“People are more sanguine about the possibility of inflation being under control and the economy avoiding a recession,” said Win Murray, a director of research at asset manager Diamond Hill.
Minneapolis Fed President Neel Kashkari said on Sunday that the inflation outlook in the U.S. is “quite positive,” but he also acknowledged that the central bank’s aggressive monetary tightening campaign would likely result in some job losses and slower economic growth.
In other news, Citigroup raised its year-end target for the S&P 500 by 15% to 4,600 points amid a higher probability of a soft landing for the U.S. economy.
Second-quarter earnings season continues to roll on, and investors anticipate fresh reports from major global companies this week, including Apple (AAPL), Amazon.com (AMZN), Merck&Co (MRK), Pfizer (PFE), AMD (AMD), Caterpillar (CAT), Starbucks (SBUX), and Qualcomm (QCOM).
In the coming week, the U.S. Nonfarm Payrolls report for July will be the main highlight. Also, investors will be monitoring a spate of economic data, including the U.S. S&P Global Manufacturing PMI, ISM Manufacturing PMI, ISM Manufacturing Prices, JOLTs Job Openings, ADP Nonfarm Employment Change, Crude Oil Inventories, Initial Jobless Claims, Nonfarm Productivity (preliminary), Unit Labor Costs (preliminary), S&P Global Composite PMI, S&P Global Services PMI, Factory Orders, ISM Non-Manufacturing PMI, Average Hourly Earnings, Private Nonfarm Payrolls, and Unemployment Rate.
Today, all eyes are focused on the U.S. Chicago PMI in a couple of hours. Economists, on average, forecast that the July Chicago PMI will stand at 43.0, compared to the previous value of 41.5.
In the bond markets, United States 10-Year rates are at 3.980%, up +0.33%.
The Euro Stoxx 50 futures are up +0.22% this morning as investors digested important Eurozone growth and inflation data while also weighing corporate earnings reports. Food and beverage stocks underperformed on Monday, while mining and healthcare stocks gained ground. Preliminary data released on Monday indicated that Eurozone headline inflation declined further in July, and most measures of underlying price growth also showed signs of easing. A separate data release revealed that the Eurozone economy returned to growth in the second quarter. Over the weekend, European Central Bank President Christine Lagarde stated that the ECB could raise interest rates again, even if it decides to pause at its next meeting. Meanwhile, the Bank of England will conduct its rate-setting meeting on Thursday, and there is divided sentiment among market participants regarding whether policymakers will revert back to a 25-basis point rate hike following a 50-basis point hike in June. In corporate news, Heineken NV (HEIA.A.DX) plunged over -5% after the Dutch brewer cut its 2023 profit growth forecast.
Germany’s Retail Sales, Italy’s GDP (preliminary), Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s GDP (preliminary) data were released today.
The German June Retail Sales stood at -0.8% m/m and -1.6% y/y, compared to expectations of +0.2% m/m and -2.7% y/y.
The Italian GDP has been reported at -0.3% q/q and +0.6% y/y in the second quarter, weaker than expectations of 0.0% q/q and +0.9% y/y.
The Italian July CPI came in at +0.1% m/m and +6.0% y/y, compared to expectations of +0.1% m/m and +6.1% y/y.
Eurozone July CPI arrived at -0.1% m/m and +5.3% y/y, compared to expectations of +0.3% m/m and +5.3% y/y.
Eurozone July Core CPI stood at -0.1% m/m and +5.5% y/y, stronger than expectations of -0.5% m/m and +5.4% y/y.
Eurozone GDP has been reported at +0.3% q/q and +0.6% y/y in the second quarter, stronger than expectations of +0.2% q/q and +0.5% y/y.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.46%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.26%.
China’s Shanghai Composite today closed higher as optimism over additional stimulus measures outweighed concerns about the further deterioration of business activity in July. Official surveys showed on Monday that China’s manufacturing activity declined for the fourth consecutive month in July, and the services and construction sectors were on the verge of contraction, posing a threat to growth prospects for the third quarter. China’s State Council on Monday issued measures to revive and expand consumption in the automobile, real estate, and services sectors, aiming to harness the “fundamental role” of consumption in economic development. Also, major Chinese cities like Beijing and Shenzhen made commitments to enhance their efforts in meeting the increasing housing demands of the public, contributing to national initiatives to revitalize the property market. Meanwhile, Hong Kong-listed tech stocks soared on Monday after the council unveiled measures aimed at supporting the country’s largest tech companies.
“We believe the Chinese government will continue to gradually introduce more supportive policies for the ailing property sector as required,” said Philip Meier, a multi-asset portfolio manager at Gramercy.
The Chinese July Manufacturing PMI stood at 49.3, stronger than expectations of 49.2.
The Chinese July Non-Manufacturing PMI came in at 51.5, weaker than expectations of 52.9.
Japan’s Nikkei 225 Stock Index closed sharply higher and hit a 4-week high today, driven by the Bank of Japan’s announcement of unscheduled bond-purchase operations aimed at containing the selloff triggered by its decision to allow yields to rise above a 0.5% cap. Government data showed on Monday that Japanese factory output recorded its first improvement in two months in June, reflecting manufacturers’ growing confidence boosted by robust demand. Meanwhile, the yen weakened on Monday, lifting export-oriented stocks. In corporate news, Toyota Tsusho Corp climbed over +9% after the company reported favorable quarterly results and raised its full-year consolidated earnings guidance. At the same time, Sumitomo Pharma tumbled about -10% following disappointing trial results for its schizophrenia treatment. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.22% to 18.59.
The Japanese June Industrial Production stood at +2.0% m/m, weaker than expectations of +2.4% m/m.
The Japanese July Household Confidence came in at 37.1, stronger than expectations of 36.0.
Pre-Market U.S. Stock Movers
Apellis Pharmaceuticals Inc (APLS) soared more than +12% in pre-market trading after the company announced data from the GALE extension study of SYFOVRE.
Tencent Music Entertainment Group (TME) fell over -2% in pre-market trading after Citi downgraded the stock to Neutral from Buy.
Chevron Corp (CVX) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral.
Ionis Pharmaceuticals Inc (IONS) gained about +4% in pre-market trading after Citi upgraded the stock to Buy from Neutral.
Ford Motor Company (F) slid over -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.
Adobe Systems Incorporated (ADBE) rose more than +2% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - July 31st
Republic Services (RSG), Arista Networks (ANET), ON Semiconductor (ON), Welltower (WELL), Diamondback (FANG), AvalonBay (AVB), Monolithic (MPWR), Yum China Holdings (YUMC), SBA Communications (SBAC), Symbotic (SYM), Hologic (HOLX), Biomarin Pharma (BMRN), Western Digital (WDC), Lattice (LSCC), CNA Financial (CNA), ZoomInfo (ZI), Regal Beloit (RRX), SoFi Technologies (SOFI), Avis (CAR), Tenet Healthcare (THC), Trex (TREX), TIM Participacoes (TIMB), Amkor (AMKR), Woodward (WWD), DoubleVerify Holdings (DV), Rambus (RMBS), Brixmor Property (BRX), MSA Safety (MSA), Transocean (RIG), Sonoco Products (SON), Huntsman (HUN), Kite Realty (KRG), ImmunoGen (IMGN), Vornado (VNO), One Gas Inc (OGS), Viper Energy Ut (VNOM), PotlatchDeltic (PCH), Kilroy (KRC), Leggett&Platt (LEG), Instructure Holdings (INST), Apellis Pharma (APLS), CVR Energy (CVI), Black Stone Minerals (BSM), Sanmina (SANM), Comstock Resources (CRK), Otter Tail (OTTR), Kemper (KMPR), Varonis Systems (VRNS), J & J Snack Foods (JJSF), Ameresco (AMRC), CNO Financial (CNO), Community Bank System (CBU), Alliance Resource (ARLP), SJW (SJW), Cushman & Wakefield (CWK), Camtek (CAMT), Atlas Energy (AESI), Archrock (AROC), Apollo Commercial RE Finance (ARI), Harmonic (HLIT), Inventrust Properties (IVT), NBT Bancorp (NBTB), Bank of N.T. Butterfield Son (NTB), Ryerson Holding (RYI), Heartland Financial (HTLF), Addus (ADUS), Elme (ELME), Centerra Gold (CGAU), Kforce (KFRC), Golden Entertainment (GDEN), Paramount Group Inc (PGRE), Franklin BSP Realty Trust (FBRT), Orthopediatrics (KIDS), Centerspace (CSR), Alexanders (ALX).
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