September S&P 500 futures (ESU23) are down -0.13%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.33% this morning as market participants looked ahead to the Federal Reserve’s interest rate decision due later in the day.
In Tuesday’s trading session, the benchmark S&P 500 rose to a 15-1/2 month high, and the blue-chip Dow posted a 17-1/2 month high. 3M Company (MMM) climbed over +5% and was the top percentage gainer on the Dow after the industrial conglomerate posted upbeat Q2 results and raised its FY23 adjusted EPS guidance. Also, General Electric Company (GE) soared more than +6% after the company reported stronger-than-expected Q2 results and boosted its annual guidance. On the bearish side, General Motors Company (GM) fell over -3% after the company reported better-than-expected Q2 results but said it would bring back the Chevy Bolt EV amid cost-cutting pressures.
Economic data on Tuesday showed that the U.S. CB Consumer Confidence index rose to a 2-year high of 117.0 in July, stronger than expectations of 111.8. Also, U.S. May S&P/CS HPI Composite - 20 n.s.a. came in at -1.7% y/y compared to the forecasted -2.2% y/y figure. In addition, the U.S. Richmond manufacturing index stood at -9 in July, stronger than expectations of -10.
Meanwhile, the International Monetary Fund Tuesday raised its global 2023 GDP forecast to 3.0% from an April projection of 2.8% amid resilient service sector activity in the first quarter and a strong labor market.
On the earnings front, Alphabet Inc (GOOGL) soared over +6% in pre-market trading after the company reported upbeat Q2 results. At the same time, Microsoft Corporation (MSFT) dropped more than -3% in pre-market trading after the tech giant reported tepid sales growth in Q4 and projected a continued slowdown in its Azure cloud services business.
Second-quarter earnings season picks up steam, with investors awaiting fresh reports from major companies today, including Meta Platforms (META), Coca-Cola (KO), Union Pacific (UNP), Boeing (BA), and AT&T (T).
Today, all eyes are focused on the U.S. Federal Reserve’s monetary policy decision later in the day. U.S. rate futures have priced in a 98.9% chance for the Fed to raise its fed funds target range by another 25 basis points to 5.25-5.50%. In addition, market participants will closely monitor Fed Chair Jerome Powell’s post-decision press conference for insights into the future outlook for interest rates.
“The market will be closely watching the Fed’s statement to see if there’s a tilt towards dovishness or whether it will stay more hawkish around the inflation rhetoric,” said Marcella Chow, a global market strategist at JPMorgan Asset Management.
Also, investors are likely to focus on the U.S. Building Permits data, which was at 1.496M in May. Economists foresee the June figure to be 1.440M.
U.S. New Home Sales data will also be closely watched today. Economists foresee this figure to stand at 725K in June, compared to the previous number of 763K.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -2.348M, compared to last week’s value of -0.708M.
In the bond markets, United States 10-Year rates are at 3.884%, down -0.79%.
The Euro Stoxx 50 futures are down -0.88% this morning as investors parsed a deluge of corporate earnings reports while also bracing for another interest rate hike from the U.S. Federal Reserve. Losses in consumer staples and mining stocks are leading the overall market lower. In corporate news, Lvmh (MC.FP) slid about -4% after the world’s top luxury group narrowly topped analysts’ quarterly sales forecast, indicating a slowdown in spending by wealthy consumers in the U.S. Also, Rio Tinto Plc (RIO.L.EB) fell more than -2% after the company posted an almost 34% drop in first-half underlying earnings and cut its interim dividend. At the same time, Rolls-Royce Holdings Plc (RR-.LN) surged over +19% after the British aero-engineer boosted its annual operating profit guidance by about 45%.
The European economic data slate is mainly empty on Wednesday.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.26%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.04%.
China’s Shanghai Composite today closed lower as investors locked in some profits after a Tuesday rally, while optimism regarding additional stimulus measures in China seemed to have waned. The Chinese securities regulator pledged Tuesday to enhance reforms in the capital markets and increase openness in the second half of the year, aligning with the policy support promised by the country’s top leaders. At the same time, investors are skeptical about the possibility of the Chinese government implementing substantial stimulative measures to boost the economy. Chinese property stocks listed in Hong Kong declined on Wednesday amid growing concerns over Country Garden’s ability to repay significant debts. Hong Kong-listed tech stocks also retreated.
Japan’s Nikkei 225 Stock Index closed just below the flatline today as investors exercised caution ahead of the Bank of Japan’s two-day policy meeting starting on Thursday. The BOJ is leaning towards maintaining its yield control policy unchanged, as policymakers prefer to carefully analyze additional data to ensure wages and inflation keep rising. However, Pierre-Olivier Gourinchas, the International Monetary Fund’s chief economist, said Tuesday the Bank of Japan should start preparing for future monetary tightening by transitioning away from its yield control policy. Meanwhile, automobile stocks underperformed on Wednesday, with Mitsubishi Motor and Mazda Motor falling over -1%. On the positive side, Otsuka Holdings rose more than +1% after the Pocari Sweat health drink maker boosted its forecast for the six months ended June. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -3.27% to 19.21.
“There were no negative cues to sell stocks. Investors were just cautious ahead of the central bank decision,” said Shoichi Arisawa, a general manager of the investment research department at IwaiCosmo Securities.
Pre-Market U.S. Stock Movers
PacWest Bancorp (PACW) surged over +36% in pre-market trading after the regional lender agreed to combine with Banc of California in an all-stock merger transaction.
Snap Inc (SNAP) tumbled more than -18% in pre-market trading after the company reported better-than-expected Q2 results but provided a glum Q3 outlook.
DISH Network Corporation (DISH) climbed over +14% in pre-market trading after Bloomberg reported that the company will start selling its premium Boost Infinite mobile service on Amazon.
Texas Instruments Incorporated (TXN) fell more than -3% in pre-market trading after the company reported upbeat Q2 results but posted weak Q3 guidance.
Wells Fargo & Company (WFC) rose over +2% in pre-market trading after the company raised its dividend by 16.7% to $0.35 and authorized a new common stock repurchase program of up to $30B.
NetApp Inc (NTAP) gained about +2% in pre-market trading after Morgan Stanley upgraded the stock to Equal Weight from Underweight.
Dycom Industries Inc (DY) slid more than -2% in pre-market trading after B. Riley downgraded the stock to Neutral from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - July 26th
Meta Platforms (META), Coca-Cola (KO), Thermo Fisher Scientific (TMO), Union Pacific (UNP), Boeing (BA), ServiceNow Inc (NOW), AT&T (T), ADP (ADP), Lam Research (LRCX), Fiserv (FI), CME Group (CME), Santander ADR (SAN), General Dynamics (GD), Stellantis NV (STLA), O’Reilly Automotive (ORLY), Chipotle Mexican Grill (CMG), Edwards Lifesciences (EW), Amphenol (APH), Hess (HES), TE Connectivity (TEL), Old Dominion Freight Line (ODFL), Hilton Worldwide (HLT), L3Harris Technologies (LHX), Ameriprise Financial (AMP), Otis Worldwide (OTIS), VICI Properties (VICI), United Rentals (URI), Arch Capital (ACGL), American Water Works (AWK), Fortive (FTV), eBay (EBAY), Agnico Eagle Mines (AEM), Align (ALGN), CGI Inc (GIB), Rogers Communications (RCI), Raymond James Financial (RJF), Rollins (ROL), Invitation Homes (INVH), Teledyne Technologies (TDY), Molina Healthcare (MOH), Mid-America Apartment (MAA), Teradyne (TER), Sun (SUI), Tyler Technologies (TYL), PTC (PTC), Quest Diagnostics (DGX), Everest (EG), IDEX (IEX), Check Point Software (CHKP), Avangrid Inc (AGR), UDR (UDR), Graco (GGG), Carlisle (CSL), Gfl Environmental (GFL), Seagate (STX), RPM (RPM), Owens Corning (OC), Penske Automotive (PAG), Allegion PLC (ALLE), Globe Life (GL), Churchill Downs (CHDN), Morningstar (MORN), SEI (SEIC), Chemed (CHE), New Oriental Education&Tech (EDU), Lithia Motors (LAD), Mattel (MAT), Nov (NOV), Antero Resources Corp (AR), Landstar (LSTR), West Fraser Timber (WFG), Stifel (SF), STAG Industrial (STAG), Wyndham Hotels (WH), BOK Financial (BOKF), Valmont Industries (VMI), Comfort Systems (FIX), Affiliated Managers (AMG), OneMain Holdings (OMF), Evercore (EVR), Prosperity Bancshares (PB), Trinet Grou (TNET), Euronet (EEFT), Pilgrims Pride (PPC), Antero Midstream (AM), Taylor Morn Home (TMHC), Silgans (SLGN), Silicon Labs (SLAB), Alkermes Plc (ALKS), Popular (BPOP), Alamos Gold (AGI), Element Solutions (ESI), Western Union (WU), Pegasystems (PEGA), Crescent Point Energy (CPG), Quantumscape (QS), Ryder System (R), ASGN (ASGN), Independence Realty Trust Inc (IRT), Blackstone Mortgage (BXMT), Moelis & Co (MC), Mr. Cooper (COOP), CONMED (CNMD), Sendas Distribuidora (ASAI), Group 1 Automotive (GPI), Travel + Leisure Co (TNL), Methanex (MEOH), Virtu Financial Inc (VIRT), Enovix (ENVX), Albany (AIN), LivaNova PLC (LIVN), First Interstate BancSystem (FIBK), Plexus (PLXS), MaxLinear (MXL), Evertec Inc (EVTC), M/I Homes (MHO), Constellium Nv (CSTM), Goosehead Insurance (GSHD), MYR Group (MYRG), Navient (NAVI), Sunnova Energy (NOVA), Century Communities (CCS), Oceaneering International (OII), Tronox (TROX), Hess Midstream Partners (HESM), Stepan (SCL), Impinj (PI), Empire State Realty (ESRT), Celestica Inc. (CLS), RPC (RES), PROG Holdings (PRG), Vista Outdoor Inc (VSTO), Cimpress NV (CMPR), Veris Residential (VRE), Getty (GTY), Pathward Financial (CASH), Viking Therapeutics Inc (VKTX), Ladder Capital A (LADR), Taro Pharma Industries (TARO), Stewart Info Services (STC), Helix (HLX), Monro Muffler Brake (MNRO), Companhia Brasileira de Distribuicao (CBD), Wabash National (WNC), Netstreit (NTST), LendingClub Corp (LC), Healthcare Services (HCSG), A10 Network (ATEN), Origin Bancorp (OBK).
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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.
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