What you need to know…
The S&P 500 Index ($SPX) (SPY) on Friday closed up +1.42%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.97%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.81%.
U.S. stock indexes Friday rallied for the third consecutive session, with the S&P 500 and Dow Jones Industrials posting 7-week highs and the Nasdaq 100 posting a 2-1/2 month high. Stocks rallied Friday after better-than-expected quarterly earnings results from the big tech companies of Amazon.com and Apple boosted market sentiment. Amazon.com rose more than +10% after reporting stronger than expected Q2 net sales and forecasting better-than-expected Q3 net sales. Apple rose more than +3% after reporting better-than-expected Q3 revenue. Also, positive comments Friday from Atlanta Fed President Bostic gave stocks a boost when he said the U.S. economy was "a ways" from entering a recession.
Q2 earnings season has been supportive thus far for equities, with 75% of the S&P 500 companies reporting earnings beating expectations. That has bolstered speculation that corporate America can withstand rising inflation, aggressive Fed tightening, and slowing growth.
On the negative side for stocks was the more than -8% plunge in Intel after it reported weaker-than-expected Q2 adjusted EPS and cut guidance on its full-year earnings. Also, Friday’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) closed up more than +10% Friday 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 moved higher Friday after Chevron and Exxon Mobil posted record profits and after crude oil jumped more than +2% to a 3-week high. Chevron (CVX) closed 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, Exxon Mobil (XOM) closed up more than +4% after reporting Q2 adjusted EPS of $4.14, stronger than the consensus of $3.98. In addition, Occidental Petroleum (OXY) and Devon Energy (DVN) closed up more than +4%.
Apple (AAPL) closed up more than +3% Friday after reporting Q3 revenue of $82.96 billion, stronger than the consensus of $82.76 billion.
WW Grainger (GWW) closed up more than +8% Friday 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) closed down more than -8% Friday 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) closed down more than -8% Friday 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) closed down more than -6% Friday after forecasting 2023 organic revenue up +3% to +5%, weaker than the consensus of +5.19%.
Edward Lifesciences (EW) closed down more than -6% Friday 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.
Dexcom (DXCM) closed down more than -5% Friday after reporting Q2 revenue of $696.2 million, weaker than the consensus of $700.8 million.
Across the markets…
Sep 10-year T-notes (ZNU22) on Friday closed up +5 ticks, and the 10-year T-note yield fell -2.2 bp to 2.654%. Sep T-notes Friday recovered from early losses and rallied to a new 3-1/2 month high, and the 10-year T-note yield dropped to a new 3-1/2 month low of 2.616%. Month-end buying by bond fund managers who bought longer-term government securities Friday to extend the duration of their bond portfolios was a bullish factor for T-notes Friday.
T-note prices Friday initially moved lower on inflation concerns after Friday’s data showed the U.S Q2 employment cost index and the U.S. June core PCE deflator rose more than expected. Also, an increase in inflation expectations was bearish for T-notes as the 10-year breakeven inflation rate rose Friday to a 1-month high of 2.572%.
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