What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.22%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.90%.
U.S. stock indexes this morning are mixed, with the S&P 500 and Nasdaq 100 posting 1-1/4 month highs. Strength in technology stocks is leading the overall market higher as cloud software stocks rallied when Bernstein upgraded stocks in the sector. Also, streaming service stocks rose after Netflix reported it lost fewer streaming customers in Q2 than feared.
A bearish factor for stocks is concern that an energy crisis in Europe could send the region into recession and undercut global growth prospects. Russian President Putin warned that if a pipeline part for the Nord Steam link that was caught up in sanctions isn’t returned to Russia, then gas flows to Europe will be cut to 20% of capacity as early as next week. Also weighing on stocks was today’s data that showed U.S. June existing home sales fell more than expected to a 2-year low.
U.S. June existing home sales fell -5.4% m/m to a 2-year low of 5.12 million, weaker than expectations of 5.35 million.
Citigroup, in a report to clients today, warned that a global recession is a “clear and present danger,” estimating a 50% probability of a recession over the next 12 to 18 months.
Today’s stock movers…
Strength in cloud software stocks is leading gains in technology stocks today and is bullish for the overall market. Datadog (DDOG) is up more than +8% today to lead gainers in the Nasdaq 100 after Bernstein initiated coverage of the stock with an outperform rating and a price target of $172. Also, Atlassian Corp Plc (TEAM) is up +7% after Bernstein rated the stock outperform, and Okta (OKTA) is up +6% after Bernstein rated the stock market perform. In addition, Nvidia (NVDA), Amazon.com (AMZN), Lam Research (LRCX), and Align Technology (ALGN) are up more than +3%.
Cruise line operators are moving higher today on reduced pandemic concerns after the Centers for Disease Control (CDC) said that the agency’s Covid-19 Program for cruise ships is “no longer in effect.” Royal Caribbean Cruises (RCL) is up more than +4%. Also, Carnival (CCL) is up more than +3%, and Norwegian Cruise Line Holdings (NCLH) is up more than +2%.
Nasdaq (NDAQ) is up more than +4% to lead gainers in the S&P 500 after it reported Q2 adjusted EPS of $2.07, above the consensus of $1.91, and then announced a 3 for 1 stock split.
Netflix (NFLX) is up more than +3% today after reporting it lost 970,000 paid streaming customers in Q2, less than the consensus of 2 million. Other streaming stocks are also gaining on the news, with Walt Disney (DIS) up more than +3% to lead gainers in the Dow Jones Industrials and Paramount Global (PARA) up more than +1%.
Baker Hughes (BKR) is down more than -12% to lead losers in the S&P 500 after reporting Q2 revenue of 5.00 billion, below the consensus of $5.35 billion.
Northern Trust (NTRS) is down more than -4% after reporting Q2 EPS of $1.86, below the consensus of $1.93.
UnitedHealth Group (UNH) is down more than -3% today to lead losers on the Dow Jones Industrials on signs of insider selling after a filing with the SEC showed CEO Witty sold $6.01 million of shares.
Bath & Body Works (BBWI) is down more than -3% today after cutting its Q2 EPS from continuing operations to 40 cents-42 cents from a prior view of 60 cents-65 cents, weaker than the consensus of 60 cents.
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are up +13 ticks, and the 10-year T-note yield is down -4.7 bp at 2.974%. Strength in German bunds today is providing carry-over support to T-note prices after German June producer prices rose less than expected. Further gains in T-notes may be limited by supply pressures ahead of the Treasury’s $14 billion auction of 20-year T-bonds later today.
The dollar index (DXY00) this morning is up by +0.15%. The dollar index today recovered from a 2-week low and is moderately higher. Weakness in EUR/USD is supportive for the dollar. Lower T-note yields today are limiting gains in the dollar. Also, long liquidation pressures are weighing on the dollar ahead of the results of Thursday's ECB and BOJ policy meetings.
EUR/USD (^EURUSD) is down by -0.015% today. EUR/USD fell back from a 2-week high today and is moderately lower. The euro retreated on concerns a European energy crisis could push the European economy into recession. EU President Von Der Leyen said a full cutoff of Russian gas to Europe is a “likely scenario.” Also weighing on EUR/USD was the larger-than-expected decline in Eurozone July consumer confidence to a record low.
EUR/USD today initially rose to a 2-week high after Italian political risks eased when Prime Minister Draghi told the Italian Senate that his coalition could be rebuilt, dampening concerns he’ll quit the government and throw the country into chaos.
An easing of price pressures in Germany is supportive for EUR/USD after German Jun PPI rose +0.6% m/m and +32.7% y/y, weaker than expectations of +1.5% m/m and +33.7% y/y.
The Eurozone July consumer confidence indicator fell -3.2 to a record low -27.0 (data from 1985), weaker than expectations of -24.9.
USD/JPY (^USDJPY) today is down -0.09%. Lower T-Note yields today are strengthening the yen. Also, short-covering is underpinning the yen ahead of the results of the BOJ’s policy meeting on Thursday. Gains in the yen were limited after the Nikkei Stock Index rose +2.67% today to a 1-1/4 month high, which reduced the safe-haven demand for the yen.
August gold (GCQ22) this morning is down -3.9 (-0.23%), and September silver (SIU22) is up +0.132 (+0.71%.) Precious metals this morning are mixed. Ongoing fund liquidation of long gold positions continues to weigh on gold prices as long gold positions in ETFs have dropped for 15 consecutive days to a 4-1/2 month low Tuesday. Lower global bond yields today are limiting losses in gold prices. Silver prices rose after China set up a fund to help cash-strapped developers complete housing projects, which should support demand for industrial metals.
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