The S&P 500 Index ($SPX) (SPY) today is down -0.24%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.75%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.25%.
U.S. manufacturing continued its decline in July, with the Institute for Supply Management's index dropping to 46.8%. This marks the fourth consecutive month of contraction. Additionally, construction spending unexpectedly decreased in June, indicating broader economic weakness.
Moderating the market's down move is positive earnings results from Meta Platforms up more than +7% after reporting stronger-than-expected Q2 revenue. Also, CH Robinson Worldwide is up more than +15% after reporting better-than-expected Q2 EPS. And the 10-year T-note yield fell to a 6-month low when weekly jobless claims rose to a nearly 1-year high, and Q2 nonfarm productivity rose more than expected, dovish factors for Fed policy.
Also, Fed Chair Powell said yesterday upside risks to inflation have come down as the labor market has cooled and a Fed rate cut "could be" on the table at the September FOMC meeting.
US weekly initial unemployment claims rose +14,000 to a nearly 1-year high of 249,000, showing a weaker labor market than expectations of 236,000. Weekly continuing claims rose +33,000 to a 2-1/2 year high of 1.877 million, showing a weaker labor market than expectations of 1.855 million.
US Q2 nonfarm productivity rose +2.3%, stronger than expectations of +1.8%. Q2 unit labor costs rose +0.9%, weaker than expectations of +1.7%.
Stock investors will continue to focus on tech stocks, with key earnings reports on tap. Magnificent 7 companies reporting this week include Apple (AAPL) and Amazon (AMZN) after today’s close. Nvidia (NVDA) is expected to report earnings on August 28.
The market consensus is that Q2 earnings for the S&P 500 companies will rise +9% y/y. About one-third of the companies in the S&P 500 have reported thus far. According to Bloomberg, most reporting companies have beaten their earnings consensus, but only 43% have beaten revenue expectations, the lowest percentage in five years.
The markets are discounting the chances for a -25 bp rate cut at 100% for the September 17-18 FOMC meeting.
Overseas stock markets today are lower. The Euro Stoxx 50 is down -0.92%. China's Shanghai Composite fell back from a 1-week high and closed down -0.22%. Japan's Nikkei Stock 225 closed down sharply by -2.49%.
Interest Rates
September 10-year T-notes (ZNU24) today are up +18 ticks. The 10-year T-note yield is down -1.4 bp to 4.016%. Sep T-notes today rallied to a fresh 6-month nearest-futures high, and the 10-year T-note yield fell to a 6-month low of 4.014%. T-note prices are underpinned by Wednesday’s comments from Fed Chair Powell, who said a Fed rate cut "could be" on the table at the September FOMC meeting. Also, an increase in safe-haven demand for T-notes due to rising geopolitical tensions in the Middle East is boosting prices after Iran was reported to have ordered a retaliatory strike against Israel for killing a Hamas leader in Iran. In addition, falling inflation expectations are bullish for T-notes after the US 10-year breakeven inflation rate fell to a 6-week low today at 2.207%. T-notes raced to their highs after US weekly jobless claims rose to a nearly 1-year high and Q2 nonfarm productivity rose more than expected, dovish factors for Fed policy.
European government bond yields today are moving lower. The 10-year German bund yield fell to a 4-1/2 month low of 2.272% and is down -2.0 bp at 2.284%. The 10-year UK gilt yield fell to a 4-1/2 month low of 3.900% and is down -5.8 bp at 3.912%.
The Bank of England (BOE), in a 5-4 vote, cut its main benchmark interest rate by -25 bp to 5.00% from 5.25%, and BOE Governor Baily said the decision was "finely balanced" as "inflationary persistence had not yet conclusively dissipated, and there remained some upside risks to the outlook."
The Eurozone Jun unemployment rate unexpectedly rose +0.1 to 6.5%, showing a weaker labor market than expectations of no change at 6.4%.
The Eurozone Jul S&P manufacturing PMI was revised upward by +0.2 to 45.8 from the previously reported 45.6.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 94% for the September 12 meeting.
US Stock Movers
CH Robinson Worldwide (CHRW) is up more than +15% to lead gainers in the S&P 500 after reporting Q2 EPS of $1.05, above the consensus of 96 cents.
Meta Platforms (META) is up more than +8% to lead gainers in the Nasdaq 100 after reporting Q2 revenue of $39.07 billion, stronger than the consensus of $38.34 billion.
Aptiv Plc (APTV) is up more than +13% after reporting Q2 adjusted EPS of $1.58, stronger than the consensus of $1.42, and announcing a $5 billion share buyback authorizations and $3 billion accelerated share repurchase authorization.
Air Products & Chemicals (APD) is up more than +11% after reporting Q3 adjusted EPS from continuing operations of $3.20, better than the consensus of $3.03.
Cognizant Technology Solutions (CTSH) is up more than +5% after boosting its full-year adjusted EPS estimate to $4.62-$4.70 from a previous estimate of $4.50-$4.68.
Allstate (ALL) is up more than +5% after reporting Q2 net premiums written of $14.28 billion, more than the consensus of $13.92 billion.
Nvidia (NVDA) is up more than +1%, adding to Wednesday’s +12% surge after Morgan Stanley named the stock a top US chip stock pick.
Carvana (CVNA) is up more than +8% after reporting Q2 retail vehicle unit sales of 101.440, stronger than the consensus of 94,001.
Exact Sciences (EXAS) is up more than +16% after reporting Q2 adjusted Ebitda of $110.1 million, well above the consensus of $69.9 million, and raising its full-year adjusted Ebitda forecast to $335 million-$355 million from a previous forecast of $325 million-$350 million.
Moderna (MRNA) is down more than -16% to lead losers in the S&P 500 and Nasdaq 100 after cutting its full-year revenue forecast to $3.0 billion-$3.5 billion from a prior forecast of about $4 billion, weaker than the consensus of $4.14 billion.
ARM Holdings Plc (ARM) is down more than -8% after forecasting Q2 revenue of $780 million-$830 million, the midpoint below the consensus of $806.2 million.
Etsy (ETSY) is down more than -5% after reporting Q2 EPS of 41 cents, weaker than the consensus of 45 cents, and forecasting a Q3 adjusted Ebitda margin of about 27%, weaker than the consensus of 28.9%.
Western Digital (WDC) is down more than -6% after forecasting Q1 revenue of $4.00 billion-$4.20 billion, weaker than the consensus of $4.24 billion.
Lam Research (LRCX) is down more than -5% after forecasting Q1 adjusted EPS of $7.25-$8.75, the midpoint below the consensus of $8.10.
WESCO International (WCC) is down more than -5% after reporting Q2 net sales of $5.48 billion, weaker than the consensus of $5.55 billion, and cutting its full-year sale forecast to -1.5% to +0.5% from a previous forecast of +1% to +4%.
Host Hotels & Resorts (HST) is down more than -4% after cutting its AFFO/share guidance for the full year to $1.90-$1.98 from a previous view of $1.97-$2.05, weaker than the consensus of $2.02.
Hershey (HSY) is down more than -1% after reporting Q2 net sales of $2.07 billion, below the consensus of $2.31 billion.
Earnings Reports (8/1/2024)
AES Corp/The (AES), Air Products and Chemicals Inc (APD), Alliant Energy Corp (LNT), Amazon.com Inc (AMZN), Ameren Corp (AEE), AMETEK Inc (AME), Apple Inc (AAPL), Aptiv PLC (APTV), Ball Corp (BALL), Becton Dickinson & Co (BDX), Biogen Inc (BIIB), Bio-Rad Laboratories Inc (BIO), Booking Holdings Inc (BKNG), Camden Property Trust (CPT), Celanese Corp (CE), Cigna Group/The (CI), Clorox Co/The (CLX), ConocoPhillips (COP), Consolidated Edison Inc (ED), Coterra Energy Inc (CTRA), Cummins Inc (CMI), Dominion Energy Inc (D), Eaton Corp PLC (ETN), Entergy Corp (ETR), EOG Resources Inc (EOG), Exelon Corp (EXC), Federal Realty Investment Trust (FRT), Gen Digital Inc (GEN), GoDaddy Inc (GDDY), Hershey Co/The (HSY), Huntington Ingalls Industries (HII), Intel Corp (INTC), Intercontinental Exchange Inc (ICE), Iron Mountain Inc (IRM), Kellanova (K), Kimco Realty Corp (KIM), Labcorp Holdings Inc (LH), Mettler-Toledo International Inc (MTD), Microchip Technology Inc (MCHP), Moderna Inc (MRNA), Monolithic Power Systems Inc (MPWR), Motorola Solutions Inc (MSI), Pinnacle West Capital Corp (PNW), Prudential Financial Inc (PRU), Quanta Services Inc (PWR), Regency Centers Corp (REG), Regeneron Pharmaceuticals Inc (REGN), ResMed Inc (RMD), Southern Co/The (SO), Targa Resources Corp (TRGP), Teleflex Inc (TFX),
Ventas Inc (VTR), Vertex Pharmaceuticals Inc (VRTX), 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.
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