September Nasdaq 100 E-Mini futures (NQU24) are trending down -1.81% this morning as fears of a U.S. slowdown and disappointing quarterly results from industry heavyweights such as Intel and Amazon weighed on sentiment, with the focus now shifting to the highly anticipated U.S. payrolls reading due later in the day.
Amazon (AMZN) slumped over -9% in pre-market trading after the e-commerce and cloud giant reported weaker-than-expected Q2 revenue and issued disappointing Q3 guidance. Also, Intel (INTC) plummeted more than -21% in pre-market trading after the semiconductor giant reported downbeat Q2 results, provided below-consensus Q3 guidance, and said it would cut over 15% of its workforce as well as suspend its dividend starting in the fourth quarter.
In yesterday’s trading session, Wall Street’s major indexes closed lower. Moderna (MRNA) plummeted over -21% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the biotech firm slashed its full-year net product sales guidance. Also, Western Digital (WDC) plunged more than -9% after the company provided below-consensus Q1 revenue guidance. In addition, Arm (ARM) slumped over -15% after the chip designer issued soft Q2 revenue guidance. On the bullish side, C.H. Robinson Worldwide (CHRW) climbed more than +14% and was the top percentage gainer on the S&P 500 after reporting better-than-expected Q2 adjusted EPS. Also, Meta Platforms (META) advanced over +4% and was the top percentage gainer on the Nasdaq 100 after the social media heavyweight posted upbeat Q2 results and issued a solid Q3 revenue forecast.
Economic data on Thursday showed that the U.S. ISM manufacturing index unexpectedly fell to 46.8 in July, weaker than expectations of 48.8 and the steepest pace of contraction in 8 months. Also, U.S. Q2 nonfarm productivity advanced +2.3% q/q, stronger than expectations of +1.7% q/q, while U.S. Q2 unit labor costs rose +0.9% q/q, weaker than expectations of +1.8% q/q. In addition, U.S. construction spending unexpectedly fell -0.3% m/m in June, weaker than expectations of +0.2% m/m. Finally, the number of Americans filing for initial jobless claims in the past week rose +14K to a nearly 1-year high of 249K, compared with the 236K expected.
“The labor market has been flashing warning signals over the past several months,” said Chris Senyek at Wolfe Research. “History suggests Powell is walking a very fine line on potentially waiting too long to start cutting rates before it’s too late.”
Meanwhile, U.S. rate futures have priced in a 100% probability of at least a 25 basis point rate cut at the next FOMC meeting in September.
On the earnings front, notable companies like Exxon Mobil (XOM), Chevron (CVX), Enbridge (ENB), and Church & Dwight (CHD) are set to report their quarterly figures today.
Today, all eyes are focused on U.S. Nonfarm Payrolls data, set to be released in a couple of hours. Economists, on average, forecast that July Nonfarm Payrolls will come in at 176K, compared to last month’s figure of 206K.
A survey conducted by 22V Research revealed that 42% of investors believe the market reaction to the jobs report will be “risk-off,” 36% said “negligible/mixed,” and only 22% anticipate “risk-on.”
U.S. Average Hourly Earnings data will also be closely watched today. Economists expect July’s figures to be +0.3% m/m and +3.7% y/y, compared to the previous numbers of +0.3% m/m and +3.9% y/y.
U.S. Factory Orders data will come in today. Economists foresee this figure to stand at -2.7% m/m in June, compared to the previous number of -0.5% m/m.
The U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to remain steady at 4.1% in July.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.951%, down -0.61%.
The Euro Stoxx 50 futures are down -0.94% this morning, tracking a global equity selloff amid mounting concerns about the health of the U.S. economy. Technology and financial stocks led the declines on Friday. Data released on Friday indicated that France’s monthly industrial production increased by 0.8% in June, following a revised decline of 2.2% in May. Separately, statistics agency Istat reported on Friday that Italy’s monthly industrial production grew 0.5% in June, maintaining the same rate as the previous month. Meanwhile, the Bank of England on Thursday voted 5-4 to reduce its main benchmark interest rate by 25 basis points to 5.00%, and BoE Governor Andrew Baily stated the decision was “finely balanced” as “inflationary persistence had not yet conclusively dissipated, and there remained some upside risks to the outlook.” In corporate news, Engie (ENGI.FP) rose over +3% after the French energy company reported better-than-expected first-half results and raised its profit forecast.
France’s Industrial Production and Italy’s Industrial Production data were released today.
The French June Industrial Production stood at +0.8% m/m, weaker than expectations of +1.0% m/m.
The Italian June Industrial Production came in at +0.5% m/m, stronger than expectations of 0.0% m/m.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.92% and Japan’s Nikkei 225 Stock Index (NIK) closed down -5.81%.
China’s Shanghai Composite Index closed lower today, extending losses from the previous session and tracking global markets lower as soft U.S. economic data fueled fears of a recession. Automobile and energy stocks led the declines on Friday. Property stocks also slumped after Hongkong Land, the largest landlord in Hong Kong’s Central business district, reported a 150% increase in net loss for the first half of this year. Meanwhile, investors continued to be concerned about the nation’s economic troubles and the lack of additional stimulus from the Chinese authorities. A private sector survey revealed Thursday that China’s manufacturing activity contracted in July for the first time in nine months due to a decline in new orders. In other news, Huang Yiping, a policy adviser to the People’s Bank of China, stated in an article published by Peking University’s National School of Development on its WeChat account that China should increase its fiscal stimulus to boost economic growth and establish a firm inflation target to avoid falling into a “low inflation trap.” In corporate news, Zhejiang RIFA Precision Machinery slid over -6% after the company revealed that its New Zealand-based unit, Airwork, has an overdue debt amounting to 596 million yuan.
Japan’s Nikkei 225 Stock Index closed sharply lower today, posting its largest percentage decline since March 2020, dragged down by overnight losses on Wall Street, a strengthening yen, and expectations of additional rate hikes by the Bank of Japan. A stronger yen and indications of a cooling U.S. economy particularly weighed on chip-related and financial stocks. Meanwhile, the Bank of Japan’s major policy shift this week makes another interest rate hike highly likely in October and heightens the potential for quarterly increases, former director Kazuo Momma told Bloomberg on Thursday. The yen continued its rally for the fourth consecutive day on Friday as fears of a U.S. economic slowdown prompted safe-haven buying of the currency. Japanese Finance Minister Shunichi Suzuki stated Friday that the country is closely watching foreign exchange movements with the expectation that the recent rebound in the yen could help reduce the costs of imports. In corporate news, Mitsubishi UFJ Financial Group tumbled over -12% after its Q1 net profit fell 0.4% from a year earlier, partly due to increased credit costs. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +34.92% to 29.44.
Pre-Market U.S. Stock Movers
Amazon (AMZN) slumped over -9% in pre-market trading after the e-commerce and cloud giant reported weaker-than-expected Q2 revenue and issued disappointing Q3 guidance.
Intel (INTC) plummeted more than -22% in pre-market trading after the semiconductor giant reported downbeat Q2 results, provided below-consensus Q3 guidance, and said it would cut over 15% of its workforce as well as suspend its dividend starting in the fourth quarter.
Snap (SNAP) plunged over -17% in pre-market trading after the company reported weaker-than-expected Q2 revenue and offered a light Q3 EBITDA forecast.
DoorDash (DASH) climbed more than +8% in pre-market trading after the company reported better-than-expected Q2 revenue and gave above-consensus Q3 adjusted EBITDA guidance.
Cloudflare (NET) gained over +7% in pre-market trading after posting upbeat Q2 results and providing strong Q3 guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - August 2nd
Exxon Mobil (XOM), Chevron (CVX), Enbridge (ENB), Ares Management (ARES), Church&Dwight (CHD), TELUS (TU), PPL (PPL), Cboe Global (CBOE), Plains All American Pipeline (PAA), Magna Intl (MGA), Brookfield Renewable (BEP), RBC Bearings (RBC), Fluor (FLR), Berry Global (BERY), Frontier Communications Parent (FYBR), Healthcare RT (HR), Essent Group Ltd (ESNT), ESAB Corp (ESAB), Squarespace (SQSP), Chart Industries (GTLS), Asbury Automotive (ABG), United States Cellular (USM), Brookfield Business (BBU), Plains GP Holdings (PAGP), Millicom (TIGO), Piper Sandler (PIPR), Perrigo (PRGO), Newmark Group (NMRK), Twist Bioscience (TWST), ArcBest Corp (ARCB), Cinemark (CNK), Arbor (ABR), Atmus Filtration Tech (ATMU), Telephone&Data Systems (TDS), Brightspring Health Services (BTSG), AMC Entertainment (AMC), TELUS International (TIXT), Perella Weinberg Partners (PWP), Northwest Natural Gas (NWN), Owens&Minor (OMI), Interface (TILE), Capital Product (CPLP), AdvanSix (ASIX), Fulgent Genetics (FLGT).
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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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