Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are up +0.83% at a 16-month high, and Sep Nasdaq 100 E-Mini futures (NQU23) are up +1.47%.
Stock indexes this morning are climbing on speculation the Federal Reserve may be close to ending its 16-month-long policy-tightening cycle. Also, technology stocks are rallying, led by an +8% jump in Meta Platforms after it reported better-than-expected Q2 revenue. In addition, chip stocks are moving higher in pre-market trading after Samsung Electronics said artificial intelligence will provide a boost to memory demand before the year’s end.
Stock indexes extended their gains this morning on signs that the U.S. economy may achieve a soft landing after U.S. Q2 GDP expanded more than expected, boosted by stronger-than-expected consumer spending. Also, the Q2 core PCE price index advanced at a slower-than-expected pace.
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.
As expected, the ECB raised its main refinancing rate today by 25 bp to 4.25% and said, "The Governing Council's future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target."
U.S. weekly initial unemployment claims unexpectedly fell -7,000 to a 5-month low of 221,000, showing a stronger labor market than expectations of an increase to 235,000.
U.S. Q2 GDP rose +2.4% (q/q annualized), stronger than expectations of +1.8%, as Q2 personal consumption rose +1.6%, stronger than expectations of +1.2%. The Q2 core PCE price index eased to +3.8% q/q from +4.9% q/q in Q1, better than expectations of +4.0% q/q and the slowest pace of increase since Q1 2021.
U.S. Jun capital goods new orders nondefense ex-aircraft and parts unexpectedly rose +0.2% m/m, stronger than expectations of a decline of -0.1% m/m.
The markets are discounting the odds at 23% for a +25 bp rate hike at the September 20 FOMC meeting.Â
Global bond yields are mixed. The 10-year T-note yield is up +4.2 bp to 3.909%. The 10-year German bund yield is down -3.3 bp at 2.452%. The 10-year UK Gilt yield is up +1.2 at 4.293%. Â
Overseas stock markets are mixed. The Euro Stoxx 50 is up +1.87%. China’s Shanghai Composite Index today closed down -0.20%. Japan’s Nikkei Stock Index closed up +0.68%.
The Euro Stoxx 50 today climbed to a 15-year high and is sharply higher. Positive corporate earnings results are boosting the overall market, with BNP Paribas SA, Nestle SA, and Carrefour SA all climbing after reporting stronger-than-expected earnings results. Also, speculation that the ECB and Fed are close to the end of their interest rate hiking cycles is giving stocks a lift. On the negative side, Shell Plc retreated after its profits slowed and Barclays Plc tumbled after it reported a -41% decline in quarterly trading revenue.
The German Aug GfK consumer confidence index rose +0.8 to -24.4, stronger than expectations of -24.8.
China’s Shanghai Composite today fell back from a 1-1/2 week high and closed moderately lower. A slide in telecom stocks and their suppliers weighed on the overall market after Chinese smartphone shipments fell -2.1% in Q2.  Smartphone shipments in China have now fallen every quarter since the start of 2022. The Shanghai Composite today initially moved up to a 1-1/2 week high on a rally in technology stocks as electric-vehicle shares surged on news that Volkswagen AG plans to invest in China’s XPeng. Also, property stocks extended their recent gains after a Securities Times report said analysts are expecting the government to continuously ease property policies in the second half of this year.
China Jun industrial profits fell -8.3% y/y, the fourth straight monthly decline.
Japan’s Nikkei Stock Index today rallied to a 3-week high and finished moderately higher. Japanese stocks rose on speculation the Fed may be close to the end of its 16-month-long tightening cycle. Also, stronger-than-expected earnings results from Samsung Electronics sparked a rally in Japanese electronics makers. Gains in the overall market were limited as the yen moved higher against the dollar, undercutting exporter stocks. The yen rose on short covering ahead of Friday’s BOJ meeting in case policymakers decide to tweak the BOJ’s ultra-loose monetary policy. The BOJ is said to be considering a sharp increase to their inflation forecast for this fiscal year, a move that may lead to a tightening of monetary policy in coming meetings.Â
Pre-Market U.S. Stock Movers
Meta Platforms (META)Â rallied more than +8% in pre-market trading after reporting Q2 revenue of $32.00 billion, better than the consensus of $31.06 billion, and cut its full-year capex estimate to $27 billion-$30 billion form a prior estimate of $30 billion-$33 billion, below the consensus of $31.71 billion.
Semiconductor stocks are climbing in pre-market trading after Samsung Electronics, South Korea’s largest company, reported better-than-expected Q2 net income and said artificial intelligence will boost memory demand before the year’s end. As a result, Micron Technology (MU), Nvidia (NVDA), Applied Materials (AMAT), KLA Corp (KLAC), Advanced Micro Devices (AMD), and Qualcomm (QCOM) are up +1% or more. Â
Lam Research (LRCX) rose more than +4% in pre-market trading after reporting Q4 adjusted EPS of $5,98, well above the consensus of $5.01.
Electric vehicle makers are moving higher in pre-market trading after Volkswagen AG said it plans to invest $700 million in Chinese EV maker XPeng. As a result, Tesla (TSLA), Rivian Automotive  (RIVN), and Lucid Group (LCID) are up +1% or more. Â
McDonald’s Corp (MCD) gained more than +1% in pre-market trading after reporting Q2 comparable same-store sales rose +11.7%, stronger than the consensus of +9.36%.Â
Textron (TXT) jumped more than +8% in pre-market trading after reporting Q2 revenue of $3.42 billion, stronger than the consensus of $3.40 billion.
Align Technology (ALGN) surged more than +14% in pre-market trading after reporting Q2 net revenue f $1.00 billion, stronger than the consensus of $990.4 million.Â
AbbVie (ABBV) rose more than +1% in pre-market trading after reporting Q2 adjusted EPS of $2.91, better than the consensus of $2.79, and raised its full-year adjusted EPS estimate to $10.90-$11.10 from a prior view of $10.57-$10.97.Â
Airline stocks are falling in pre-market trading after Southwest Airlines raised its full-year non-fuel expenses to fly each seat a mile, an industry gauge of efficiency, to a decline of -1% to -2% from a previous estimate of as much as a -4% drop. As a result, Southwest Airlines (LUV) is down more than-6%, and American Airlines Group (AAL), United Airlines Holdings (UAL), and Delta Air Lines (DAL) are down more than -1%.
Ebay (EBAY) tumbled more than -5% in pre-market trading after forecasting Q3 adjusted EPS from continuing operations of 96 cents-$1.01, weaker than the consensus of $1.02. Â
Bristol-Myers Squibb (BMY) dropped more than -2% in pre-market trading after reporting Q2 revenue of $11.23 billion, below the consensus of $11.79 billion.
Chipotle Mexican Grill (CMG) sank more than -8% in pre-market trading after reporting Q2 comparable same-store sales rose +7.4%, weaker than the consensus of +7.67%.
Edwards Lifesciences (EW) dropped more than -5% in pre-market trading after forecasting Q3 adjusted EPS of 55 cents-61 cents, below the consensus of 63 cents.Â
Harley Davidson (HOG) fell more than -4% in pre-market trading after reporting Q2 EPS of $1.22, below the consensus of $.125, and cutting its full-year HDMC revenue estimate to 0% to 3% from a previous estimate of up +4% to +7%.
Today’s U.S. Earnings Reports (7/27/2023)
A O Smith Corp (AOS), AbbVie Inc (ABBV), American Electric Power Co Inc (AEP), American Tower Corp (AMT), Arthur J Gallagher & Co (AJG), Baxter International Inc (BAX), Boston Scientific Corp (BSX), Bristol-Myers Squibb Co (BMY), Carrier Global Corp (CARR), CBRE Group Inc (CBRE), CenterPoint Energy Inc (CNP), Cincinnati Financial Corp (CINF), CMS Energy Corp (CMS), Comcast Corp (CMCSA), Dexcom Inc (DXCM), Digital Realty Trust Inc (DLR), DTE Energy Co (DTE), Eastman Chemical Co (EMN), Edison International (EIX), Enphase Energy Inc (ENPH), Equity Residential (EQR), Essex Property Trust Inc (ESS), First Solar Inc (FSLR), Ford Motor Co (F), Hartford Financial Services Group (HIG), HCA Healthcare Inc (HCA), Healthpeak Properties Inc (PEAK), Hershey Co/The (HSY), Honeywell International Inc (HON), Intel Corp (INTC), International Paper Co (IP), Juniper Networks Inc (JNPR), Keurig Dr Pepper Inc (KDP), Kimco Realty Corp (KIM), KLA Corp (KLAC), Laboratory Corp of America Hol (LH), Linde PLC (LIN), Live Nation Entertainment Inc LYV), LKQ Corp (LKQ), Martin Marietta Materials Inc (MLM), Masco Corp (MAS), Mastercard Inc (MA), McDonald's Corp (MCD), Mettler-Toledo International Inc (MTD), Mohawk Industries Inc (MHK), Mondelez International Inc (MDLZ), Norfolk Southern Corp (NSC), Northrop Grumman Corp (NOC), Pentair PLC (PNR), PG&E Corp (PCG), Principal Financial Group Inc (PFG), Royal Caribbean Cruises Ltd (RCL), S&P Global Inc (SPGI), Southwest Airlines Co (LUV), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services I (WST), Westinghouse Air Brake Technol (WAB), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW), Xcel Energy Inc (XEL).
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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.
