What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.21%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.17%.
U.S. stock indexes today are moderately lower. Concern about global growth is weighing on stocks today after the Bank of England (BOE) raised interest rates and warned of a UK recession later this year. Also, a plunge of more than -15% in Fortinet today is leading cybersecurity stocks lower and weighing on the overall market after the company forecasted slower-than-expected Q3 revenue. A positive for stocks today is today’s -3.6 bp decline in the 10-year T-note to 2.668%.
China-Taiwan tensions are a negative for stocks after China earlier today fired 11 missiles near Taiwan as a result of House Speaker Pelosi’s visit to Taiwan. Also, Kyodo News reported today that five missiles fired by China in its live testing military drills went over Taiwan and landed inside Japan’s exclusive economic zone. In addition, China said it canceled a meeting between Foreign Minister Wang Yi and his Japanese counterpart over a G-7 statement expressing concern about China’s “threatening actions” around Taiwan.
This morning ‘s U.S. economic data was neutral for stocks. U.S. weekly initial unemployment claims rose +6,000 to 260,000, right on expectations. Also, the U.S. June trade deficit of -$79.6 billion was slightly narrower than expectations of -$80.0 billion.
The Bank of England (BOE) voted 8-1 today to raise its benchmark rate by +50 bp to 1.75% and warned the UK economy is heading for a recession that will start in Q4 this year and last for a year under the weight of soaring inflation.
Today’s stock movers…
Ceridian HCM Holding (CDAY) is up more than +10% today to lead gainers in the S&P 500 after reporting Q2 revenue of $301.2 million, better than the consensus of $294.6 million, and raising its full-year revenue forecast to $1.22 billion-$1.23 billion from an earlier forecast of $1.21 billion-$1.23 billion.
Epam Systems (EPAM) is up more than +8% today after reporting Q2 revenue rose +36% y/y to 1.19 billion and forecasting Q3 revenue of at least $1.21 billion.
McKesson (MCK) is up more than +6% today trading after reporting Q1 revenue of $67.15 billion, well above the consensus of $64.86 billion, and raised its full-year revenue growth estimate to up 3%-7% from a previous estimate of 0%-4%.
MercadoLibre (MELI) is up more than +15% today to lead gainers in the Nasdaq 100 after reporting Q2 net revenue of $2.6 billion, higher than the consensus of $2.5 billion.
U.S.-listed Chinese stocks are climbing today on positive carry-over from a +1% gain in Alibaba Group Holding (BABA) after it reported better-than-expected Q1 revenue. Pinduoduo (PDD) is up more than +4%, and JD.com (JD) is up more than +3%. Also, Baidu (BIDU) is up more than +1%.
Weakness in cybersecurity stocks today is weighing on the Nasdaq 100. Fortinet (FTNT) is down more than -15% today to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q3 revenue of $1.11 billion-$1.14 billion, with a midpoint below the consensus of $1.13 billion. Also, Palo Alto Networks (PANW) is down more than -5%, and Crowdstrike Holdings (CRWD) is down more than -4%. Zscaler (ZS) is down more than -3%, and Datadog (DDOG) is down more than -2%
Lucid Group (LCID) is down more than -8% today after reporting Q2 revenue of $97.3 million, well below the consensus of $147.5 million, and halved its 2022 production target to about 6,000-7,000 vehicles.
Eli Lilly (LLY) is down more than -3% today after reporting Q2 adjusted EPS of $1.25, weaker than the consensus of $1.69, and then cut its full-year adjusted EPS estimate to $7.90-$8.05 from a previous estimate of $8.15-$8.30.
Clorox (CLX) is down more than -3% today after reporting Q4 net sales of $1.80 billion, below the consensus of $1.86 billion, and said it sees full-year 2023 organic sales of down -3% to up +3%, weaker than the consensus of +3.1%.
Across the markets…
Sep 10-year T-notes (ZNU22) today are up +20 ticks, and the 10-year T-note yield is down -3.6 bp at 2.668%. T-notes are moving higher this morning on positive carry-over from a rally in 10-year UK gilts, which raced higher after the BOE warned of a recession late this year in the UK. Also, U.S. stock indexes this morning gave up overnight gains and turned lower, which has sparked some safe-haven buying of T-notes.
The dollar index (DXY00) today is down -0.21%. Weakness in T-note yields today is undercutting the dollar. Losses in the dollar are limited after today’s trade data showed a smaller-than-expected U.S. trade deficit in June. Also, the weakness in GBP/USD today is giving the dollar a boost after the BOE warned of a recession in the UK later this year.
EUR/USD (^EURUSD) today is up +0.22%. Hawkish ECB comments today gave the euro a boost after ECB Governing Council member Kazaks said the ECB should continue to raise interest rates in order to prevent high inflation from taking root.
Today’s Eurozone economic data was mixed for EUR/USD. On the positive side, German June factory orders fell -0.4% m/m, stronger than expectations of -0.9% m/m. Conversely, the German July S&P Global construction PMI fell -2.2 to 43.7, the steepest pace of contraction in 17 months.
USD/JPY (^USDJPY) today is down -0.28%. A decline in T-note yields today is providing support to the yen. Also, ramped-up China tensions are boosting some safe-haven demand for the yen after Kyodo News reported today that five missiles fired by China in its live testing military drills landed inside Japan’s exclusive economic zone. Also, China said today it canceled a meeting between Foreign Minister Wang Yi and his Japanese counterpart over a G-7 statement expressing concern about China’s “threatening actions” around Taiwan.
October gold (GCV22) this morning is up +21.1 (+1.19%), and September silver (SIU22) is up +0.181 (+0.91%). A weaker dollar today is giving a boost to precious metal prices. Also, lower global T-note yields are helping to push gold prices higher. Finally, ramped-up China-Taiwan tensions have sparked some safe-haven buying of precious metals after China today fired 11 missiles near Taiwan as a result of House Speaker Pelosi’s visit to Taiwan.
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