September S&P 500 E-Mini futures (ESU24) are trending up +0.91% this morning, extending the rebound from Monday’s dramatic selloff, supported by remarks from a senior Bank of Japan official ruling out further rate hikes during periods of market instability, while investors awaited a new batch of earnings reports.
In yesterday’s trading session, Wall Street’s major indexes ended in the green. Kenvue (KVUE) surged over +14% and was the top percentage gainer on the S&P 500 after the company reported better-than-expected Q2 results. Also, Nvidia (NVDA) gained more than +3% after New Street Research upgraded the stock to Buy from Neutral with a price target of $120. In addition, Caterpillar (CAT) rose about +3% and was the top percentage gainer on the Dow after the construction equipment company posted upbeat Q2 results and said it expects an annual adjusted operating profit margin above the top end of its targets. On the bearish side, Henry Schein (HSIC) slumped more than -8% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q2 revenue and cutting its full-year guidance.
“We would characterize the recent market pullback as a textbook correction, after months of low volatility so far in 2024,” said Carol Schleif at BMO Family Office. “The lack of volatility before the past few weeks is unusual, and our current correction is actually quite normal, especially during August, which historically is a volatile time for markets given lighter trading volumes and the summer doldrums.”
Economic data on Tuesday showed that the U.S. trade deficit widened to -$73.10B in June, compared with the -$72.50B consensus and -$75.00B in May (revised from -$75.10B).
Meanwhile, U.S. rate futures have priced in a 36.5% chance of a 25 basis point rate cut and a 63.5% chance of a 50 basis point rate cut at the next central bank meeting in September.
Second-quarter earnings season continues, and market participants anticipate new reports from notable companies today, including Disney (DIS), McKesson (MCK), Equinix (EQIX), CVS Health (CVS), Shopify (SHOP), Energy Transfer (ET), Monster Beverage (MNST), Hilton Worldwide (HLT), Occidental Petroleum (OXY), Warner Bros. Discovery (WBD), and Robinhood Markets (HOOD).
On the economic data front, investors will focus on U.S. Consumer Credit data, set to be released in a couple of hours. Economists, on average, forecast that June Consumer Credit will stand at $9.80B, compared to the previous figure of $11.35B.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.600M, compared to last week’s value of -3.436M.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.928%, up +1.02%.
The Euro Stoxx 50 futures are up +1.59% this morning, buoyed by improved investor sentiment as concerns about the global economy diminished. Confidence was also strengthened by Bank of Japan Deputy Governor Uchida’s assurance that the central bank would refrain from hiking interest rates amid market instability. Automobile, construction, and material stocks led the gains on Wednesday. Data from the Federal Statistical Office revealed on Wednesday that Germany’s monthly industrial production picked up pace in June, marking the sharpest increase since February, primarily driven by strong output from the automotive industry and the manufacture of electrical equipment. Separately, data indicated that German exports declined more than expected in June, reaching the lowest level in six months. Meanwhile, investors will closely watch comments from European Central Bank member Olli Rehn and board member Elizabeth McCaul later in the day for indications of the central bank’s next move. In corporate news, Puma Se (PUM.D.DX) tumbled over -12% after the German sportswear maker narrowed its full-year EBIT forecast. Also, Novo Nordisk A/S (NOVOB.C.DX) fell more than -3% after the obesity drugmaker reported weaker-than-expected Q2 net profit and cut its annual operating profit guidance.
U.K.’s Halifax House Price Index, Germany’s Exports, Germany’s Imports, and Germany’s Industrial Production data were released today.
U.K. July Halifax House Price Index has been reported at +0.8% m/m, stronger than expectations of +0.2% m/m.
The German June Exports came in at -3.4% m/m, weaker than expectations of -1.5% m/m.
The German June Imports stood at +0.3% m/m, weaker than expectations of +2.8% m/m.
The German June Industrial Production arrived at +1.4% m/m, stronger than expectations of +1.0% m/m.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.09%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.19%.
China’s Shanghai Composite Index closed slightly higher today as investors digested a mixed bag of trade data. Energy and automobile stocks outperformed on Wednesday. Customs data revealed on Wednesday that China’s export growth unexpectedly slowed in July, indicating a slowdown in global demand. This jeopardizes growth prospects for the remainder of the year, following the economy’s expansion at its slowest rate in five quarters during the April-June period. At the same time, imports increased at a faster-than-expected rate in July, indicating some improvement in domestic demand. Meanwhile, HSBC Global Research analysts wrote in a note that A-shares have been resilient amid this week’s global equities market selloff influenced by the yen carry trade. Potential Fed rate cuts could positively impact Chinese equities as this creates additional scope for the nation’s central bank to implement monetary easing, they added. In other news, an investor has submitted a petition to a Chinese court to liquidate a major unit of the heavily indebted property developer China Evergrande, according to a stock filing by the petitioner on Wednesday. In corporate news, Techtronic Industries gained more than +3% after the machine tool maker reported a 16% rise in its first-half earnings. Investor focus is now on Chinese inflation data for July, set for release on Friday, which is expected to provide valuable insights into China’s economic health.
The Chinese July Trade Balance came in at $84.65B, weaker than expectations of $97.50B.
The Chinese July Exports stood at +7.0% y/y, weaker than expectations of +9.7% y/y.
The Chinese July Imports arrived at +7.2% y/y, stronger than expectations of +3.5% y/y.
Japan’s Nikkei 225 Stock Index closed higher today, rebounding from earlier losses due to dovish remarks from a Bank of Japan official and the yen’s weakness. Financial stocks led the gains on Wednesday. BOJ Deputy Governor Shinichi Uchida stated on Wednesday that the Japanese central bank will not hike interest rates when markets are unstable. Uchida noted that the intense market volatility observed over the past week could “obviously” alter the BOJ’s rate hike trajectory if it impacts the central bank’s economic and price forecasts and the probability of Japan sustainably reaching the 2% inflation target. The comments from Uchida lifted Japan’s benchmark index and drove the yen sharply lower. Meanwhile, although Uchida’s comments diminished expectations of a near-term increase in borrowing costs, market participants still expected further rate hikes from the BOJ later in the year as rising local wages drive inflation higher. In economic updates, preliminary data from the Cabinet Office showed that Japan’s leading economic index for gauging the economic outlook dropped in June, marking the lowest reading since April 2023. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -12.05% to 45.02.
The Japanese June Leading Index was at 108.6, weaker than expectations of 109.0.
Pre-Market U.S. Stock Movers
Super Micro Computer (SMCI) plunged over -11% in pre-market trading after the artificial intelligence server company reported weaker-than-expected Q4 adjusted EPS.
Airbnb (ABNB) tumbled more than -15% in pre-market trading after the company reported mixed Q2 results and provided below-consensus Q3 revenue guidance.
Lumen Technologies (LUMN) soared about +44% in pre-market trading after significantly raising its full-year free cash flow guidance and stating that its future earnings will benefit from its capability to support artificial intelligence initiatives.
Upstart Holdings (UPST) surged over +23% in pre-market trading after the company posted upbeat Q2 results and issued strong Q3 guidance.
Arm (ARM) gained more than +1% in pre-market trading after Bernstein upgraded the stock to Market Perform from Underperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - August 7th
Walt Disney (DIS), McKesson (MCK), Equinix (EQIX), CVS Health Corp (CVS), Shopify Inc (SHOP), Emerson (EMR), Energy Transfer (ET), Monster Beverage (MNST), Hilton Worldwide (HLT), Occidental (OXY), Manulife Financial (MFC), Wheaton Precious Metals (WPM), Global Payments (GPN), HubSpot Inc (HUBS), Nutrien (NTR), Applovin (APP), Zimmer Biomet (ZBH), Atmos Energy (ATO), Corpay (CPAY), Warner Bros Discovery (WBD), Texas Pacific (TPL), Robinhood Markets (HOOD), Marathon Oil (MRO), Western Midstream Partners (WES), Warner Music (WMG), NiSource (NI), Sarepta (SRPT), CF Industries (CF), U-Haul Holding (UHAL), Bio-Techne (TECH), Dynatrace Inc (DT), Charles River Laboratories (CRL), Ralph Lauren (RL), Curtiss-Wright (CW), Zillow (Z), CACI (CACI), Zillow Group Inc (ZG), Stantec (STN), Amdocs (DOX), Light Wonder (LNW), Wix.Com Ltd (WIX), NewYork Times (NYT), Royal Gold (RGLD), Primerica (PRI), Intracellular Th (ITCI), OGE Energy (OGE), Icahn Enterprises (IEP), Revolution Med (RVMD), Duolingo (DUOL), Dolby Labs (DLB), MKS Instruments (MKSI), Louisiana-Pacific (LPX), Watts Water Technologies (WTS), Chord Energy (CHRD), Kinetik Holdings (KNTK), Klaviyo (KVYO), Azek Company (AZEK), Reynolds (REYN), R1 RCM (RCM), Owl Rock Capital (OBDC), Madrigal Pharma (MDGL), Vertex (VERX), Blackstone Secured Lending Fund (BXSL), Valvoline (VVV), Dutch Bros (BROS), Maximus (MMS), Jackson Financial (JXN), UGI (UGI), Rayonier (RYN), Brinks (BCO), SM Energy (SM), Ultrapar Participacoes (UGP), LYFT (LYFT), Assured Guaranty (AGO), Oscar Health (OSCR), Enersys (ENS), Guardant Health (GH), Sabra (SBRA), Boot Barn Holdings (BOOT), Joby Aviation (JOBY), Copa (CPA), Sitio Royalties (STR), Griffon (GFF), Crane NXT (CXT), NexGen Energy (NXE), Kratos Defense&Security (KTOS), ICU Medical (ICUI), Nomad Foods (NOMD), Avista (AVA), Vishay Intertechnology (VSH), United Parks Resorts (PRKS), ESCO Technologies (ESE), Envista Holdings (NVST), Brighthouse Financial (BHF), Inter and Co A (INTR), Hillenbrand (HI), Playtika (PLTK), Callaway Golf (MODG), Central Garden&Pet (CENT), Sitime Corp (SITM), Fluence Energy (FLNC), International Seaways (INSW), Kymera (KYMR), ACV Auctions (ACVA), SpringWorks (SWTX), Tegna (TGNA), Star Bulk Carriers (SBLK), Digitalbridge Group (DBRG), Enovis (ENOV), Maravai Lifesciences (MRVI), Braskem A (BAK), Kulicke&Soffa (KLIC), ViaSat (VSAT), Vizio Holding (VZIO), Astrana Health (ASTH), Oddity Tech (ODD), Equinox Gold (EQX), Coeur Mining (CDE), Jamf (JAMF).
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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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