Stocks Move Lower After a Rocky Week of Trading

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.48%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.26%.

Amazon.com is up +9% after reporting earnings. However, gains are muted, with Apple down more than -4% after delivering a lackluster outlook for its fourth quarter.

U.S. Jul nonfarm payrolls rose +187,000, below expectations of +200,000, which was slightly dovish for Fed policy.  The Jul unemployment rate unexpectedly fell -0.1 to 3.5%, showing a stronger labor market than expectations of 3.6%.

U.S. Jul average hourly earnings rose +0.4% m/m and +4.4% y/y, stronger than expectations of +0.3% m/m and +4.2% y/y, which was hawkish for Fed policy.

Fed comments today were dovish for Fed policy and bullish for stocks.  Atlanta Fed President Bostic said U.S. employment gains are slowing in an orderly manner, and there is no need to raise interest rates further to ease inflation. Also, Chicago Fed President Goolsbee said we've been getting promising numbers on inflation, and the Fed should start thinking about how long to hold interest rates in restrictive territory.

The markets are discounting the odds at 12% for a +25 bp rate hike at the September 20 FOMC meeting, falling from 17% on Thursday. 

Global bond yields are lower.  The 10-year T-note yield fell back from an 8-3/4 month high of 4.204% and is down -7.1 bp at 4.105%.  The 10-year German bund yield fell from a 3-week high of 2.651% and is down -3.1 bp at 2.574%.  The 10-year UK gilt yield fell back from a 2-1/2 week high of 4.499% and is down -6.8 bp at 4.403%.  

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.64%.  China’s Shanghai Composite Index today closed up +0.23%.  Japan’s Nikkei Stock Index closed up +0.10%.

Today’s stock movers…

Amazon.com (AMZN) is up more than +11% to lead gainers in the S&P 500 after reporting Q2 net sales of $134.38 billion, stronger than the consensus of $131.63 billion, and forecasting Q3 net sales of $128 billion-$143 billion, above the consensus of $138.3 billion. 

Atlassian (TEAM) is up more than +18% to lead gainers in the Nasdaq 100 after reporting Q4 revenue of $939.1 million, better than the consensus of $915.7 million, and forecast Q1 revenue of $950 million-$970 million, above the consensus of $955.7 million.

Booking Holdings (BKNG) is up more than +9% after reporting Q2 revenue of $5.46 billion, stronger than the consensus of $5.17 billion.  That prompted CFRA to upgrade the stock to buy from hold. 

Gen Digital (GEN) is up more than +7% after reporting Q1 adjusted EPS of 47 cents, better than the consensus of 46 cents. 

DaVita (DVA) is up more than +7% after reporting Q2 operating income of $405.3 million, stronger than the consensus of $381 million, and raising its full-year free cash flow estimate to $850 million-$1.10 billion from a prior view of $750 million-$1.0 billion, better than the consensus of $899.5 million.

Amgen (AMGN) is up more than +5% to lead gainers in the Dow Jones Industrials after forecasting Q2 adjusted EPS of $5.00, well above the consensus of $4.48, and raising its full-year adjusted EPS estimate to $17.80-$18.80 from a previous estimate of $17.60-$18.70. 

Stryker (SYK) is up more than +4% after reporting Q2 net sales of $5.00 billion, better than the consensus of $4.82 billion. 

Cboe Global Markets (CBOE) is up more than +3% after reporting Q2 adjusted Ebitda of $293.3 million, better than the consensus of $289.1 million.

Datadog (DDOG) is up more than +3% after Stifel raised its price target on the stock to $115 from $101. 

Cybersecurity stocks are sinking today after Fortinet reported Q2 billings of $1.54 billion, below the consensus of $1.59 billion, and cut its full-year billings forecast to $6.49 billion-$6.59 billion from a previous estimate of $6.75 billion-$6.81 billion, well below the consensus of $6.79 billion.  As a result, Fortinet (FTNT) is down more than -23% to lead losers in the S&P 500 and Nasdaq 100.  Also, Palo Alto Networks (PANW) is down more than -8%, and Crowdstrike Holdings (CRWD) and Zscaler (ZS) are down more than -4%

ResMed (RMD) is down more than -16% after reporting Q4 adjusted EPS of $1.60, weaker than the consensus of $1.70. 

Microchip Technology (MCHP) is down more than -7% after forecasting Q2 net sales of $2.22 billion-$2.31 billion, the midpoint below the consensus of $2.28 billion.

Apple (AAPL) is down more than -2% to lead losers in the Dow Jones Industrials after reporting Q3 iPhone revenue of $39.67 billion, below the consensus of $39.80 billion and said Q4 year-over-year performance to be similar to Q3. 

Ventas (VTR) is down more than -4% after forecasting full-year normalized FFO/share of $2.92 to $3.00, the midpoint below the consensus of $3.00.

Redfin (RDFN) is down more than -21% after reporting a Q2 Ebitda loss of -$6.93 million, a larger loss than the consensus of -$3.23 million, and forecast Q3 adjusted Ebitda of $4 million-$14 million, weaker than the consensus of $21.8 million. 

Monster Beverage (MNST) is down more than -3% after reporting Q2 net sales of $1.85 billion, weaker than the consensus of $1.87 billion.

CSX Corp (CSX) is down more than -3% after announcing that Jamie Boychuk, executive vice president of operations, is leaving the company, and a search for a successor is ongoing.

Across the markets…

September 10-year T-notes (ZNU23) today are up +20 ticks, and the 10-year T-note yield is down -7.1 bp at 4.105%.  Sep T-notes today recovered from an 8-3/4 month low and moved higher, and the 10-year T-note yield fell back from an 8-3/4 month high of 4.204% and moved lower.  T-notes are climbing today after U.S. Jul nonfarm payrolls rose more than expected. Gains accelerated after Atlanta Fed President Bostic said U.S. employment gains are slowing in an orderly manner, and there is no need to raise interest rates further to ease inflation. On the negative side, the U.S. Jul unemployment rate unexpectedly declined, and Jul average hourly earnings rose more than expected.

The dollar index (DXY00) today is down by -0.65%.  The dollar is under pressure today from falling T-note yields after U.S. Jul nonfarm payrolls rose less than expected.  Losses in the dollar accelerated after Atlanta Fed President Bostic said there is no need to raise interest rates further to ease inflation.

EUR/USD (^EURUSD) today is up by +0.70%.  A slump in the dollar today has sparked short covering in the euro. EUR/USD also rose after German Jun factory orders unexpectedly rose by the most in 3 years, bolstering optimism in the Eurozone economy.

Eurozone Jun retail sales unexpectedly fell -0.3% m/m, weaker than expectations of +0.2% m/m.

German Jun factory orders unexpectedly rose +7.0% m/m, stronger than expectations of -2.0% m/m and the biggest increase in 3 years.

The German Jul S&P construction PMI fell -0.4 to 41.0, the steepest pace of contraction in 2-1/2 years.

USD/JPY (^USDJPY) is down by -0.67%.  The yen erased overnight gains and turned lower after T-note yields tumbled on a smaller-than-expected increase in U.S. Jul nonfarm payrolls and dovish Fed comments.  The yen today initially moved lower as Japanese government bond yields fell after the BOJ on Thursday announced an unscheduled debt-purchase operation for the second time this week to push bond yields lower.

October gold (GCV3) today is up +10.5 (+0.54%), and Sep silver (SIU23) is up +0.073 (+0.31%). Precious metals prices this morning rebounded from early losses and are moderately higher.  Gold and silver recovered from 3-week lows this morning and moved higher after the dollar and T-note yields fell on a smaller-than-expected increase in U.S. Jul nonfarm payrolls.  Metals extended their gains after Atlanta Fed President Bostic said there is no need for the Fed to raise interest rates further to ease inflation.  On the bearish side, fund liquidation in gold continues after long gold holdings in ETFs fell to a new 3-year low on Thursday.  Also, a rally in stocks today has curbed the safe-haven demand for precious metals.

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