Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are up +0.16%, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +0.25%.
Stock indexes this morning are moderately higher. A nearly +1% gain in Apple in pre-market trading is boosting technology stocks after Bloomberg News reported that the company asked suppliers to make 85 million iPhone 15s this year, nearly the same as last year. A decline in T-note yields today is also positive for stock index futures.
Quarterly corporate earnings results will be key to the stock market direction this week, with more than 500 major companies, including Alphabet and Meta Platforms, due to report earnings results. The earnings results will be scoured to see if slowing economic momentum shows up on profit margins.
The markets are expecting the Fed and the ECB this week to both raise their respective interest rates by 25 bp and will look for guidance from the central banks to see if more rate hikes are likely.
This morning’s news showed the Jun Chicago Fed activity index unexpectedly fell -0.4 to -0.32, weaker than expectations of an increase to -0.13.
The markets are discounting the odds at 96% for a +25 bp rate hike at the Tue/Wed FOMC meeting. The markets are anticipating a peak funds rate of 5.42% by November, which is +34 bp higher than the current effective federal funds rate of 5.08%.
Global bond yields are lower. The 10-year T-note yield is down -3.7 bp at 3.798%. The 10-year German bund yield is down -6.9 bp at 2.400%. The 10-year UK Gilt yield is down -8.7 at 4.193%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.49%. China’s Shanghai Composite Index today closed down -0.11%. Japan’s Nikkei Stock Index closed up +1.23%.
The Euro Stoxx 50 today is moderately lower. Economic concerns are weighing on European stocks today after a gauge of manufacturing activity in the Eurozone contracted by the most in three years this month. Also, concerns that the economy may struggle to recover after an expected 25 bp rate hike by the ECB on Thursday are weighing on stocks. On the positive side, bank stocks are finding support today on a +7% jump in Julius Baer Group Ltd after it reported clients added 7.1 billion francs in new money in the first half of the year, above expectations of 6.2 billion francs.
The Eurozone Jul S&P manufacturing PMI unexpectedly fell -0.7 to 42.7, weaker than expectations of an increase to 43.5 and the steepest pace of contraction in more than three years. The Jul S&P composite PMI fell -1.0 to an 8-month low of 48.9, weaker than expectations of 49.6.
China’s Shanghai Composite today dropped to a 3-1/2 week low and closed slightly lower. Skepticism that the government will add any large stimulus measures to revive the economy is weighing on Chinese stocks. China’s real estate sector is in the greatest need of aid after recent news signaled the property market, which along with related industries, accounts for about 20% of the economy, is in decline again after a short-lived rebound. The economic policy meeting held by China’s Politburo, its top decision-making body, indicated a stronger recognition of the challenges facing the economy without offering any big stimulus measures.
Stocks recovered from their worst levels after the National Development and Reform Commission (NDRC) today released a plan that said the government would strive to maintain the share of private investment in overall fixed-asset investment at a “reasonable” level. The NDRC compiled a list of more than 2,900 projects from local governments that private investors can participate in, and the NDRC also promised to improve funding support for the projects.
Japan’s Nikkei Stock Index today posted moderate gains. Japanese stocks found support from last Friday’s report that said BOJ officials see little urgent need to change their yield curve control program at the point, signaling to change to the BOJ’s ultra-easy monetary policy at this Friday’s BOJ meeting. The yen weakened today after a report said the BOJ would raise its consumer inflation projection to around 2.5% for the year ending in March, up from an April projection of 1.8%. Projections for consumer prices for the following fiscal years are expected to be unchanged to reflect a lack of confidence the BOJ can achieve its 2% inflation goal in a stable manner.
Today’s economic news was bearish for stocks after the Japan Jul Jibun Bank manufacturing PMI fell -0.4 to a 4-month low of 49.4.
Pre-Market U.S. Stock Movers
Apple (AAPL) gained nearly +1% in pre-market trading after Bloomberg News reported the company asked suppliers to produce about 85 million units of the iPhone 15 this year, roughly in line with the year before.
Mattel (MAT) rose more than +2% in pre-market trading after Barbie, a movie about the company’s famous fashion doll, became the top-grossing picture in the U.S. and Canadian cinemas, taking in $155 million in ticket sales over the weekend.
Lam Research (LRCX) is up more than +1% in pre-market trading after Stifel upgraded the stock to buy from hold with a price target of $725.
D.R. Horton (DHI) gained more than +1% in pre-market trading after Raymond James upgraded the stock to outperform from market perform with a price target of $160.
Shopify (SHOP) climbed more than +2% in pre-market trading after MoffettNathanson upgraded the stock to outperform from market perform.
AppLovin (APP) rose more than +2% in pre-market trading after BTIG LLC upgraded the stock to buy from neutral with a price target of $34.
Chevron (CVX) gained nearly +1% in pre-market trading after reporting Q2 adjusted EPS of $3.08, better than the consensus of $2.91.
Tesla (TSLA) dropped more than +2% in pre-market trading after UBS downgraded the stock to neutral from buy.
American Express (AXP) dropped more than -1% in pre-market trading after Piper Sandler downgraded the stock to underweight from neutral.
Zions Bancorp (ZION) slid more than -1% in pre-market trading after JPMorgan Chase downgraded the stock to neutral from overweight.
Gilead Sciences (GILD) tumbled more than -3% in pre-market trading after a Phase 3 Enhance Study evaluating the company’s magolimab in combination with azacytidine in higher-risk myelodysplastic syndromes was halted.
ZoomInfo Technologies (ZI) dropped more than -5% in pre-market trading after RBC Capital Markets downgraded the stock to sector perform from outperform.
Twilio (TWLO) fell more than -3% in pre-market trading after RBC Capital Markets downgraded the stock to underperform from sector perform.
Today’s U.S. Earnings Reports (7/24/2023)
Alexandria Real Estate Equities (ARE), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Domino's Pizza Inc (DPZ), F5 Inc (FFIV), NXP Semiconductors NV (NXPI), Packaging Corp of America (PKG), Whirlpool Corp (WHR).
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On the date of publication, Rich Asplund 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.
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