Stocks Climb on Blowout Earnings from Amazon

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is up +0.86%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.20%. 

U.S. stock indexes this morning are moderately higher, with the S&P 500and Dow Jones Industrials at 7-week highs and the Nasdaq 100 at a 2-1/2 month high.  Stocks are climbing today on better-than-expected quarterly earnings results from Amazon.com and Apple.  Amazon.com is up more than +12% after reporting stronger than expected Q2 net sales and forecasting better-than-expected Q3 net sales.  Apple is up more than +3% after reporting better-than-expected Q3 revenue.   Also, upbeat comments today from Atlanta Fed President Bostic gave stocks a boost when he said the U.S. economy was "a ways" from entering a recession.

On the negative side is the more than -10% plunge in Intel after it reported weaker-than-expected Q2 adjusted EPS and cut guidance on its full-year earnings.  Also, this morning’s U.S. economic data raised inflation concerns.  The U.S. Q2 employment cost index rose more than expected, and the U.S. June core PCE deflator rose at a faster pace than was expected.

The U.S. Q2 employment cost index eased to +1.3% from +1.4% in Q1, still stronger than expectations of +1.2%.

U.S. June personal spending rose +1.1% m/m, slightly stronger than expectations of +1.0% m/m. U.S. personal income rose +0.6% m/m, stronger than expectations of +0.5% m/m.

The U.S. June core PCE deflator rose +0.6% m/m and +4.8% y/y, stronger than expectations of +0.5% m/m and +4.7% y/y.

The U.S. July MNI Chicago PMI fell -3.9 to a nearly 2-year low of 52.1, weaker than expectations of 55.0.

The University of Michigan U.S. July consumer sentiment was revised upward by 0.4 to 51.5, stronger than expectations of no change at 51.1.

Atlanta Fed President Bostic said the U.S. economy was "a ways" from entering a recession and that the Fed has further to go in raising interest rates to get inflation under control.

Today’s stock movers…

Amazon.com (AMZN) is up more than +12% today to lead gainers in the S&P 500 and  Nasdaq 100 after reporting Q2 net sales of $121.23 billion, better than the consensus of $119.53 billion, and forecasting Q3 net sales of $125 billion-$130 billion, the midpoint above the consensus of $126.97 billion. 

Energy stocks and energy service producers are climbing today after Chevron and Exxon Mobil posted record profits and as crude oil jumped more than +3% to a 1-week high.  Chevron (CVX) is up more than +8% to lead gainers in the Dow Jones Industrials after reporting Q2 adjusted EPS of $5.82, well above the consensus of $4.96.  Also, Occidental Petroleum (OXY) and Exxon Mobil (XOM) are up more than +4%.  Exxon reported Q2 adjusted EPS of $4.14, stronger than the consensus of $3.98. 

Apple (AAPL) is up more than +3% today after reporting Q3 revenue of $82.96 billion, stronger than the consensus of $82.76 billion. 

WW Grainger (GWW) is up more than +6% today after reporting Q2 net sales of $3.80 billion, above the consensus of $3.71 billion, and raising guidance on full-year net sales to $15.0 billion-$15.2 billion from a prior estimate of $14.5 billion-$14.9 billion.

Intel (INTC) is down more than -10% to lead losers in the S&P 500, Dow Jones Industrials, and Nasdaq 100 after reporting Q2 adjusted EPS of 29 cents, well below the consensus of 69 cents, and cutting guidance on its full-year adjusted EPS estimate to $2.30 from a prior view of $3.60, much weaker than the consensus of $3.39.

Church & Dwight (CHD) is down more than -8% today after reporting Q2 net sales of $1.33 billion, below the consensus of $1.34 billion, and cut its full-year organic sales estimate to +3% to +4% from an April forecast of +3% to +6%. 

Procter & Gamble (PG) is down more than -5% today after forecasting 2023 organic revenue up +3% to +5%, weaker than the consensus of +5.19%. 

Edward Lifesciences (EW) is down more than -5% today after reporting Q2 sales of $1.37 billion, below the consensus of $1.40 billion, and forecasted Q3 sales of $130 billion-$1.37 billion, weaker than the consensus of $1.44 billion. 

Across the markets…

Sep 10-year T-notes (ZNU22) this morning are down -10 ticks, and the 10-year T-note yield is up +4.0 bp at 2.716%.  Sep T-notes are under pressure on inflation concerns after today’s data showed the U.S Q2 employment cost index and the U.S. June core PCE deflator rose more than expected. Also, strong economic data today from the Eurozone weigh on German bunds and is undercutting T-note prices.  In addition, an increase in inflation expectations is bearish for T-notes as the 10-year breakeven inflation rate rose to a 1-month high today at 2.547%.

The dollar index (DXY00) this morning is up by +0.27%.  The dollar index this morning recovered from a 3-1/2 week low and is moderately higher.  Stronger-than-expected U.S. inflation measures on the Q2 employment cost index and the June core PCE deflator are pushing T-note yields higher today and boosting the dollar. 

EUR/USD (^EURUSD) is down by -0.46% today.  EUR/USD today gave up an early advance and is moderately lower. Record inflation pressures are weighing on EUR/USD today after Eurozone July consumer prices rose more than -expected at a record pace.  That may push the Eurozone economy into recession as rising price pressure keep the ECB aggressive in tightening monetary policy.  The euro initially moved higher today on hawkish comments from ECB Vice President Guindos and after data showed that Eurozone Q2 GDP expanded more than expected.

ECB Vice President Guindos said the ECB doesn't target the exchange rate, "but it is a very important macroeconomic indicator that we take into account."

Eurozone July CPI rose a record +8.9% y/y, stronger than expectations of +8.7% y/y.  Eurozone July core CPI rose a record +4.0% y/y, stronger than expectations of +3.9% y/y. 

Eurozone Q2 GDP rose +0.7% q/q and +4.0% y/y, stronger than expectations of +0.2% q/q and +3.4% y/y.

USD/JPY (^USDJPY) today is up +0.17%.  USD/JPY rebounded from a 6-week low today and is slightly higher. A jump in T-note yields today is weighing on the yen.  Also, weaker than expected Japanese economic data on June retail sales and July consumer confidence undercut the yen.  Losses in the yen were limited after Japan June industrial production rose at a record pace.

The Japan July consumer confidence index fell -1.9 to a 1-1/2 year low of 30.2, weaker than expectations of 31.5. 

Japan June industrial production rose a record +8.9% m/m, stronger than expectations of +4.2% m/m.

Japan Jun retail sales unexpectedly fell -1.4% m/m, weaker than expectations of +0.2% m/m and the biggest decline in 14 months.

August gold (GCQ22) this morning is up +3.4 (+0.19%), and September silver (SIU22) is up +0.052 (+0.26%.)  Precious metals this morning are moving higher, with gold posting a 3-week high and silver posting a 4-week high.  Signs of rising global price pressures have sparked increased demand for precious metals as a hedge against inflation.  Eurozone July CPI rose a record +8.9% y/y, and the U.S. Q2 employment cost index rose +1.3%, stronger than expectations of +1.2%.

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