September S&P 500 E-Mini futures (ESU24) are down -0.12%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.18% this morning as market participants adopted a cautious stance ahead of a fresh batch of U.S. economic data and corporate earnings reports.
In yesterday’s trading session, Wall Street’s major indices ended lower, with the tech-heavy Nasdaq 100 suffering its largest single-day percentage drop since October 2022. Tesla (TSLA) plunged over -12% and was the top percentage loser on the Nasdaq 100 after the electric vehicle giant reported weaker-than-expected Q2 adjusted EPS and postponed its Robotaxi event to October. Also, Alphabet (GOOGL) slumped more than -5% after the Google parent reported higher-than-expected Q2 capital spending, and its chief indicated that patience would be required to see concrete results from artificial intelligence investments. In addition, Lamb Weston (LW) plummeted over -28% and was the top percentage loser on the S&P 500 after reporting downbeat Q4 results and providing below-consensus FY25 guidance. On the bullish side, Enphase Energy (ENPH) surged more than +12% and was the top percentage gainer on the S&P 500 after the company reported strong Q3 bookings. Also, AT&T (T) rose over +5% after the telecommunications company reported better-than-expected wireless subscriber additions in Q2.
“The market is not impressed with the start of earnings season for the mega tech stocks,” said Kathleen Brooks, research director at XTB. “There was a lot resting on these results and we don’t think that they give clear answers to questions about the effectiveness and profit potential for AI right now.”
Economic data on Wednesday showed that the U.S. S&P Global manufacturing PMI unexpectedly fell to 49.5 in July, weaker than expectations of 51.7. Also, U.S. June new home sales unexpectedly fell -0.6% m/m to 617K, weaker than expectations of 639K. At the same time, the U.S. S&P Global services PMI rose to 56.0 in July, stronger than expectations of 54.7.
Meanwhile, U.S. rate futures have priced in a 10.9% chance of a 25 basis point rate cut at next week’s monetary policy meeting and a 98.7% probability of at least a 25 basis point rate cut at September’s policy meeting.
On the earnings front, notable companies such as AbbVie (ABBV), Union Pacific (UNP), Northrop Grumman (NOC), Rtx Corp. (RTX), Honeywell (HON), Keurig Dr Pepper (KDP), Deckers Outdoor (DECK), and Southwest Airlines (LUV) are slated to release their quarterly results today.
On the economic data front, all eyes are focused on the first estimate of U.S. second-quarter gross domestic product, due later in the day. Economists, on average, forecast that U.S. GDP will stand at +2.0% q/q in the second quarter, compared to the first-quarter figure of +1.4% q/q.
Also, investors will focus on U.S. Durable Goods Orders data, which came in at +0.1% m/m in May. Economists foresee the June figure to be +0.3% m/m.
U.S. Core Durable Goods Orders data will be reported today. Economists foresee this figure to come in at +0.2% m/m in June, compared to the previous number of -0.1% m/m.
U.S. Initial Jobless Claims data will come in today as well. Economists estimate this figure to be 237K, compared to last week’s value of 243K.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.224%, down -1.48%.
The Euro Stoxx 50 futures are down -1.19% this morning, extending losses from the previous session, as investors digested a series of underwhelming corporate earnings reports, while a selloff in global tech stocks also dampened sentiment. Media and technology stocks led the declines on Thursday. A survey revealed on Thursday that German business sentiment unexpectedly worsened in July due to rising pessimism about the national economy. Separately, data from the European Central Bank released Thursday indicated that annual adjusted loans to nonfinancial corporations grew by 0.7% in June, up from a 0.3% increase in May. In corporate news, Stellantis NV (STLAM.M.DX) slumped over -7% after the carmaker posted weaker-than-anticipated H1 results and announced plans to bring back old models and consider price cuts. Also, Kering (KER.FP) plunged more than -6% after the luxury group reported a larger-than-anticipated decline in H1 sales and provided a weak forecast for the second half of the year. In addition, Nestle Sa (NESN.Z.IX) slid over -4% after reporting weaker-than-expected half-year sales growth and cutting its annual organic sales growth forecast.
Germany’s Ifo Business Climate Index, Germany’s Business Expectations, and Germany’s Current Assessment data were released today.
The German July Ifo Business Climate Index has been reported at 87.0, weaker than expectations of 88.9.
The German July Business Expectations arrived at 86.9, weaker than expectations of 89.0.
The German July Current Assessment came in at 87.1, weaker than expectations of 88.5.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.52% and Japan’s Nikkei 225 Stock Index (NIK) closed down -3.28%.
China’s Shanghai Composite Index closed lower today, hitting a new five-month low as investor sentiment remained weak even after an unexpected rate cut from the nation’s central bank. Oil and technology stocks underperformed on Thursday. China’s central bank surprised markets for a second time this week by lowering the rate on its medium-term loans to banks. The People’s Bank of China unexpectedly slashed the one-year medium-term lending facility rate by 20 basis points to 2.3% from 2.5%, marking the largest cut since April 2020, according to an official statement released Thursday. It also provided 200 billion yuan ($27.54 billion) of liquidity to the market through the facility. The PBOC on Monday reduced the 7-day reverse repo rate to 1.70% from 1.80%, stating that it aimed to “step up financial support for the real economy.” Meanwhile, HSBC economists said in a note that the central bank’s earlier-than-anticipated cut to the MLF rate likely indicates the authorities’ emphasis on bolstering the economy to achieve this year’s growth target. Investor attention is now centered on the official June data for Chinese companies’ industrial profits, set to be released on Saturday, which is expected to offer insights into second-quarter earnings for Chinese-listed companies.
Japan’s Nikkei 225 Stock Index closed at a 3-month low and posted its sharpest daily drop in over three years today, tracking an overnight selloff on Wall Street. Japan’s benchmark index has entered correction territory after closing more than 10% below its recent high on July 11th. Technology and internet-related stocks led the declines on Thursday. Data released on Thursday showed that the prices Japanese companies charge each other for services surged at their fastest rate in over nine years in June compared to the previous year, indicating increasing inflationary pressures. Meanwhile, the yen surged to a nearly 3-month high against the dollar on Thursday, driven by rising expectations for an imminent interest rate hike by the Bank of Japan. In other news, Japan’s government on Thursday maintained its view on the economy from last month but downgraded its outlook on exports due to the impact of slowing Chinese demand. In corporate news, Renesas Electronics plunged over -13% after the chip maker posted a 29% drop in net profit for the six months ending June. Also, Nissan Motor slumped about -7% after the automaker reported a sharp drop in first-quarter net profit and cut its full-year forecast. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +15.83% to 22.02.
The Japanese June Corporate Services Price Index stood at +3.0% y/y, stronger than expectations of +2.6% y/y.
Pre-Market U.S. Stock Movers
Edwards Lifesciences (EW) tumbled more than -21% in pre-market trading after the company reported weaker-than-anticipated Q2 revenue, issued lackluster Q3 guidance, and cut annual guidance for sales of some heart valve replacements.
Ford Motor (F) plunged over -12% in pre-market trading after the carmaker reported weaker-than-expected Q2 results.
International Business Machines (IBM) climbed more than +3% in pre-market trading after the IT giant posted upbeat Q2 results and raised its full-year free cash flow forecast.
Chipotle Mexican Grill (CMG) gained over +4% in pre-market trading after reporting better-than-expected Q2 total comparable sales growth.
ServiceNow (NOW) rose more than +6% in pre-market trading after the company reported stronger-than-expected Q2 results and raised its FY24 subscription revenue guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - July 25th
AbbVie (ABBV), Union Pacific (UNP), Honeywell (HON), Rtx Corp (RTX), Northrop Grumman (NOC), Arthur J Gallagher (AJG), Digital (DLR), Valero Energy (VLO), L3Harris Technologies (LHX), DexCom (DXCM), Keurig Dr Pepper (KDP), Royal Caribbean Cruises (RCL), Dow (DOW), Nasdaq Inc (NDAQ), Baker Hughes (BKR), Hartford (HIG), Edison (EIX), Tractor Supply (TSCO), Willis Towers Watson (WTW), Tradeweb Markets (TW), Veralto (VLTO), Dover (DOV), DTE Energy (DTE), West Pharmaceutical Services (WST), Weyerhaeuser (WY), Deckers Outdoor (DECK), Erie Indemnity (ERIE), Principal Financial (PFG), Cincinnati Financial (CINF), VeriSign (VRSN), LPL Financial (LPLA), Reliance Steel&Aluminum (RS), SS&Cs (SSNC), Southwest Airlines (LUV), Masco (MAS), TransUnion (TRU), Healthpeak Properties (DOC), RPM (RPM), Gaming & Leisure Properties (GLPI), Pool (POOL), Juniper (JNPR), TechnipFMC (FTI), LKQ (LKQ), Eastman Chemical (EMN), Texas Roadhouse (TXRH), Comfort Systems (FIX), Skechers (SKX), AptarGroup (ATR), Appfolio Inc (APPF), Fortune Brands (FBIN), Kinsale Capital (KNSL), Old Republic (ORI), Hasbro (HAS), Mohawk Industries (MHK), FTI Consulting (FCN), The Ensign (ENSG), SPS Commerce (SPSC), Wex (WEX), FirstService (FSV), Cullen/Frost Bankers (CFR), Allison Transmission (ALSN), Nov (NOV), American Airlines (AAL), Lear (LEA), Carpenter Technology (CRS), Darling Ingredients (DAR), Federal Signal (FSS), Ryder System (R), Olin (OLN), Boyd Gaming (BYD), Exponent (EXPO), Brunswick (BC), Columbia Banking (COLB), Veren (VRN), Phillips Edison Co (PECO), Harley-Davidson (HOG), Columbia Sportswear (COLM), TRI Pointe Homes (TPH), Integer Hld (ITGR), Ameris (ABCB), Valley National (VLY), Lazard (LAZ), CNX Resources (CNX), Cousins Properties (CUZ), Associated Banc-Corp (ASB), WSFS (WSFS), Eldorado Gold (EGO), TFI Intl (TFII), SkyWest (SKYW), First Interstate BancSystem (FIBK), Eastern Bankshares (EBC), Boston Beer (SAM), Atlantic Union (AUB), Visteon (VC), Baytex Energy Corp (BTE), Minerals Technologies (MTX), McGrath (MGRC), Arch Resources (ARCH), The Bancorp (TBBK), First Financial Bancorp (FFBC), Bread Financial Holdings (BFH), Seacoast Banking Florida (SBCF), First Merchants (FRME), Rogers (ROG), HNI (HNI), Hilltop (HTH), Ardagh Metal Packaging (AMBP), Ultra Cleans (UCTT), Garrett Motion (GTX), Novocure Ltd (NVCR), WesBanco (WSBC), Customers Bancorp (CUBI), World Fuel Services (WKC), Ladder Capital A (LADR), 1st Source (SRCE), LiveWire Group (LVWR), Xerox (XRX), Indivior (INDV), Provident (PFS), Alexander&Baldwin (ALEX), NetScout (NTCT), Byline Bancorp (BY), RPC (RES), Universal Logistics (ULH), Preferred Bank (PFBC), Coursera (COUR), Amalgamated Bank (AMAL).
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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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