Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are down -0.18%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.32%.
Stock indexes this morning are moderately lower as technology stocks retreat on disappointing earnings results from Microsoft and Texas Instruments.  Also, long liquidation and position-squaring in stocks are weighing on the overall market ahead of an expected 25 bp rate hike from the Federal Reserve later today. Losses were limited after Alphabet jumped more than +6% in pre-market trading after reporting better-than-expected s2 revenue.
Q2 corporate earnings season is off to a strong start, as nearly 80% of U.S. companies that have reported results have beaten profit estimates.
The markets are expecting the Fed today and the ECB tomorrow 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.
The markets are discounting the odds at 97% 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 mixed. The 10-year T-note yield is down -0.8 bp to 3.877%. The 10-year German bund yield is up +2.1 bp at 2.447%. The 10-year UK Gilt yield is down -0.6 at 4.261%. Â
Overseas stock markets are lower. The Euro Stoxx 50 is down -1.48%. China’s Shanghai Composite Index today closed down -0.26%. Japan’s Nikkei Stock Index closed down -0.04%.
The Euro Stoxx 50 today tumbled to a 2-week low and is moderately higher. Weakness in corporate quarterly earnings results is weighing on stocks today. Luxury goods makers are under pressure, led by a -4% fall in LVMH after it reported a first-half profit of 11.6 billion euros ($12.8 billion), weaker than expectations of 11.8 billion euros as sales in the U.S. declined. Also, mining stocks are weaker, led by a -1% fall in Rio Tinto Group after it reported a decline in first-half profit and cut its dividend as China’s economic slowdown dampened earnings.  On the positive side, Rolls-Royce Holdings surged more than +20% after boosting its full-year guidance and said financial results for the first half of the year are expected to be materially above consensus.
Eurozone Jun M3 money supply rose +0.6% y/y, less than expectations of +0.9% y/y and the smallest pace of increase in nearly 13 years.
China’s Shanghai Composite today closed moderately lower as the market waits for signs that Chinese policymakers would follow through with their pledge to support the economy. Stocks gave back some of Tuesday’s sharp gains on long liquidation as Chinese policymakers have repeatedly fallen short of expectations for stronger economic stimulus. Chinese stocks rose sharply Tuesday after this week’s politburo meeting laid out a pre-growth tone that was more dovish than markets expected. Weakness in automakers today led the overall market lower after the China Passenger Car Association said it expects retail passenger vehicle sales for July to drop -4.8% y/y to about 1.73 million units. Losses were limited as property stocks rose for a second day after the politburo signaled it would boost measures to revive the sector.Â
Japan’s Nikkei Stock Index today closed slightly lower. Japanese stocks posted modest losses ahead of the Federal Reserve’s policy decision later today and the BOJ meeting that concludes on Friday. Also, profit-taking and long liquidation weighed on stocks ahead of Japanese corporate earnings announcements that will soon begin in earnest. In addition, strength in the yen today undercut the earnings prospects of exporters and weighed on exporter stocks. Losses in the overall market were contained on signs of easing price pressures after Japan’s service prices for businesses slowed in June by the most in 15 months.
The Japan May leading index CI was revised lower to109.2 from the initially reported 109.5.
Japan Jun PPI services prices eased to+1.2% y/y from +1.7% y/y in May, better than expectations of +1.5% y/y and the slowest pace of increase in 15 months.
Pre-Market U.S. Stock Movers
Microsoft (MSFT)Â tumbled more than -3% in pre-market trading after reporting Q3 cloud revenue of $30.3 billion, below the consensus of $30.5 billion.
Amazon.com (AMZN) is down more than -2% in pre-market trading after Politico reported the U.S. Federal Trade Commission is finalizing an antitrust lawsuit against the company.
Texas Instruments (TXN) dropped more than -3% in pre-market trading after forecasting Q3 revenue of $4.36 billion to $4.74 billion, the midpoint below the consensus of $4.59 billion. Â
Snap (SNAP) plunged more than -18% in pre-market trading after forecasting a Q3 adjusted Ebitda loss of -$50 million to -$100 million, much wider than the consensus of -$2.14 million.Â
Waste Management (WM) fell more than -4% in pre-market trading after reporting Q2 adjusted operating Ebitda of $1.47 billion, weaker than the consensus of $1.50 billion, and cut its full-year adjusted operating Ebitda estimate to $5.78 billion-$5.88 billion from a previous estimate of $5.83 billion-$5.98 billion, below the consensus of $5.90 billion.Â
Thermo Fisher Scientific (TMO) dropped more than -5% in pre-market trading after reporting Q2 adjusted EPS of $5.15, weaker than the consensus of $5.43 and cut its full-year adjusted EPS forecast to $22.28-$22.72 from a previous estimate of $22.70, below the consensus of $23.58.
Target (TGT) fell more than -1% in pre-market trading after Raymond James downgraded the stock to market perform from strong buy.Â
Raytheon Technologies (RTX) slid more than -1% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight.
Alphabet (GOOGL) jumped more than +6% in pre-market trading after reporting Q2 revenue ex-TAC of $62.07 billion, better than the consensus of $60.27 billion. Â
Dish Network (DISH) soared more than +14% in pre-market trading after Bloomberg News reported that the company will start selling its premium wireless service on Amazon.com later this week.Â
Boeing (BA) is up more than +4% in pre-market trading after reporting Q2 adjusted free cash flow of $2.58 billion, well above the consensus of -$73.6 million.
Wells Fargo (WFC) rose more than +2% in pre-market trading after it announced plans to repurchase as much as $30 billion of its stock and boosted its dividend.Â
Stellantis NV (STLA) climbed more than +2% in pre-market trading after reporting a first-half adjusted operating margin of 14.4%, better than the consensus of 12.2%.Â
PacWest Bancorp (PACW) surged more than +30% in pre-market trading after announcing a merger with Bank of California in an all-stock deal.Â
Teladoc (TDOC) rallied more than +6% in pre-market trading after reporting Q2 revenue of $652.4 million, stronger than the consensus of $649 million, and raised the lower end of its full-year revenue forecast to $2.60 billion-$2.68 billion from a previous estimate of $2.58 billion-$2.68 billion, better than the consensus of $2.62 billion.
Today’s U.S. Earnings Reports (7/26/2023)
Align Technology Inc (ALGN), Allegion plc (ALLE), American Water Works Co Inc (AWK), Ameriprise Financial Inc (AMP), Amphenol Corp (APH), Arch Capital Group Ltd (ACGL), AT&T Inc (T), Automatic Data Processing Inc (ADP), Boeing Co/The (BA), Chipotle Mexican Grill Inc (CMG), CME Group Inc (CME), Coca-Cola Co/The (KO), eBay Inc (EBAY), Edwards Lifesciences Corp (EW), Everest Group Ltd (EG), Fiserv Inc (FI), Fortive Corp (FTV), General Dynamics Corp (GD), Globe Life Inc (GL), Hess Corp (HES), Hilton Worldwide Holdings Inc (HLT), IDEX Corp (IEX), Invitation Homes Inc (INVH), L3Harris Technologies Inc (LHX), Lam Research Corp (LRCX), Meta Platforms Inc (META), Mid-America Apartment Communities (MAA), Molina Healthcare Inc (MOH), Old Dominion Freight Line Inc (ODFL), O'Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), PTC Inc (PTC), Quest Diagnostics Inc (DGX), Raymond James Financial Inc (RJF), Rollins Inc (ROL), Seagate Technology Holdings PL (STX), ServiceNow Inc (NOW), TE Connectivity Ltd (TEL), Teledyne Technologies Inc (TDY), Teradyne Inc (TER), Thermo Fisher Scientific Inc (TMO), Tyler Technologies Inc (TYL), UDR Inc (UDR), Union Pacific Corp (UNP), United Rentals Inc (URI), VICI Properties Inc (VICI).
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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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