What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.78%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.33%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.37%.
U.S. stock indexes this morning are trading lower on concern that higher inflation is curbing consumer spending. Walmart plunged more than -8% today to lead retailer stocks lower after it cut its profit outlook. Also, United Parcel Service is down more than -3% after it said package deliveries worldwide fell more than expected. Stocks maintained moderate losses after the International Monetary Fund cut its global 2022 GDP forecast and on today’s weaker than expected U.S. economic data.
Losses in stock indexes were limited today as McDonald’s climbed more than +2% after reporting stronger-than-expected quarterly sales. Also, General Electric jumped +5% today after reporting stronger-than-expected Q2 revenue. In addition, a decline in T-note yields is supportive for stocks after the 10-year T-note yield fell to a 2-month low today at 2.705%.
The Conference Board’s U.S. July consumer confidence index fell -2.7 to a 17-month low of 95.7, weaker than expectations of 97.0.
U.S. June new home sales fell -8.1% m/m to a 2-year low of 590,000, weaker than expectations of 655,000.
The International Monetary Fund (IMF) cut its global 2022 GDP forecast to 3.2%, down from a 3.6% estimate in April.
Today’s stock movers…
Weakness in retailer stocks today is weighing on the overall market. Walmart (WMT) is down more than -8% today to lead losers in the S&P 500 and Dow Jones Industrials after it said it sees Q2 adjusted EPS down -8% to -9%, and sees full-year adjusted EPS down about -11% to 13%. Other retailers are also weaker, with Etsy (ETSY) and Ross Stores (ROST) down more than -5%. Also, Best Buy (BBY) is down more than -4%, and Target (TGT) and TJX (TJX) are down more than -3%. In addition, Costco Wholesale (COST) is down more than -2%.
Amazon.com (AMZN) is down more than -3% today after Morgan Stanley said Walmart’s cut in earnings is a “potential warning sign” for Amazon’s merchandise margins.
Zscaler (ZS) is down more than -7% today to lead losers in the Nasdaq 100 after Truist Securities cut its price target on the stock to $250 from $275.
General Motors (GM) is down more than -3% today after reporting Q2 adjusted EPS of $1.14, below the consensus of $1.31.
United Parcel Service (UPS) is down more than -3% today after reporting Q2 average daily package volume fell more than -4% in the U.S. and more than -13% in its international business.
3M Co (MMM) is up more than +5% today to lead gainers in the S&P 500 and Dow Jones Industrials after announcing that it will spin off its healthcare business.
Fiserv (FISV) is up more than +5% today to lead gainers in the Nasdaq 100 after reporting Q2 adjusted EPS of $1.56, better than the consensus of $1.55, and raising its full-year adjusted EPS estimate to $6.45-$6.55 from a prior estimate of $6.40-$6.55.
General Electric (GE) is up more than +5% today after reporting Q2 revenue of $18.65 billion, stronger than the consensus of $17.70 billion.
McDonald’s (MCD) is up more than +2% today after reporting Q2 comparable same-store sales rose +9.7%, better than the consensus of +7.5%.
Archer-Daniels-Midland (ADM) is up more than +3% today after reporting Q2 adjusted EPS of $2.15, well above the consensus of $1.72.
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are up +12 ticks, and the 10-year T-note yield is down -4.6 bp at 2.750%. Sep T-notes this morning rallied to a 2-1/2 week high, and the 10-year T-note yield dropped to a 2-month low of 2.705%. Positive carry-over from today’s rally in 10-year German bunds to a 2-month high is supporting T-note prices. Also, a slide in stocks today has boosted the safe-haven demand for T-notes.
The dollar index (DXY00) this morning is up by +0.56%. The dollar is moving higher today as a slump in stocks has boosted the liquidity demand for the dollar. Also, concern that an energy crisis in Europe will cause a recession in the Eurozone is weighing on the euro.
EUR/USD (^EURUSD) is down by -0.73% today and fell to a 1-week low. EUR/USD is under pressure today on concern that an energy crisis in Europe could spark a recession after Russia’s Gazprom PJSC said it would further curb gas flows to Europe through the Nord Stream pipeline to only around 20% of normal capacity from Wednesday.
USD/JPY (^USDJPY) today is down -0.19%. USD/JPY is moderately lower today as a decline in the 10-year T-note yield to a 2-month low has strengthened the yen. The yen also found support today after the Japanese government raised its monthly economic assessment in July for the first time in three months.
The BOJ’s June policy meeting minutes said monetary easing must be in place until wages rise and that they won’t hesitate to add easing if needed. Also, BOJ also said a rapidly weakening yen has a negative impact on the economy, and that upward interest-rate pressure from abroad is expected to continue.
The Japanese government today raised its monthly economic assessment in July for the first time in three months, saying the economy is picking up moderately as consumption picked up despite a surge in Covid cases.
Japan Jun PPI services prices rose +2.0% y/y, right on expectations and the biggest increase in more than 2 years.
August gold (GCQ22) this morning is down -1.0 (-0.06%), and September silver (SIU22) is up +0.252 (+1.37%.) Precious metals this morning are mixed. A stronger dollar today is bearish for metals prices. Expectations for the Fed to raise interest rates by +75 bp at the Tue/Wed FOMC meeting are negative for metals prices. Ongoing fund liquidation of long gold positions continues to bearish for gold prices as long gold positions in ETFs have dropped for 19 consecutive days to a 4-1/2 month low Monday. Losses in gold are limited today due to a slide in stocks that have boosted some safe-haven demand for precious metals. Also, lower global bond yields today are supportive of gold.
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