What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -0.24%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.56%.
U.S. stock indexes today are moderately lower. Stock indexes are under pressure this morning as the stronger-than-expected U.S. July payroll report bolsters the outlook for the Fed to raise interest rates by another +75 bp at the September FOMC meeting. In addition, higher T-note yields are undercutting stocks as the 10-year T-note yield jumped +12.8 bp to 2.898% on strength in U.S. payrolls and continued wage pressures.
Fresh tensions with China also weighed on U.S. stocks. Today, China escalated tensions with Taiwan as it continued its provocative military drills and sent warships and aircraft across the Taiwan Strait's median line. China also cut off defense talks with the U.S. in retaliation for House Speaker Pelosi's visit to Taiwan.
Limiting losses in the indexes today is strength in solar stocks after Barclays upgraded the sector, saying the sector “is as attractive as it’s ever been.” Also, energy stocks are climbing today, with crude prices up more than +1.5%.
Today’s stock movers…
Warner Bros Discovery (WBD) is down more than -13% today to lead losers in the S&P 500 after reporting Q2 revenue of $9.83 billion, well below the consensus of $11.91 billion.
Monster Beverage (MNST) is down more than -6% today to lead losers in the Nasdaq 100 after reporting adjusted Q2 EPS of 51 cents, well below the consensus of 70 cents.
Western Digital (WDC) is down more than -4% today after reporting Q4 net revenue of $4.53 billion, weaker than the consensus of $4.57 billion, and forecast Q1 revenue of $3.6 billion-$3.8 billion, well below the consensus of $4.8 billion.
U.S.-listed Chinese stocks are under pressure today as China ramps up its provocative military drills around Taiwan. China also cut off defense talks with the U.S. in retaliation for House Speaker Pelosi's visit to Taiwan. Alibaba Group Holding (BABA) is down more than -3%, and JD.com (JD) is down more than +2%. Also, Pinduoduo (PDD) and Baidu (BIDU) are down more than -2%.
Solar stocks are climbing today after Barclays started coverage of the solar power sector with a positive view, saying the sector “is as attractive as it’s ever been.” Array Technologies (ARRY) and Sunrun (RUN) are up more than +7%, SolarEdge Technologies (SEDG) is up more than +4%, First Solar (FSLR) is up more than +2%, and Enphase Energy (ENPH) is up more than +1%.
Atlassian Corp Plc (TEAM) is up more than +5% today to lead gainers in the Nasdaq 100 after reporting Q4 revenue of $759.8 million, stronger than the consensus of $725.3 million, and forecasting Q1 revenue of $795 million-$810 million, above the consensus of $770.7 million.
Energy stocks and energy service providers are moving higher today, with crude prices up more than +1.5%. Diamondback Energy (FANG) is up more than +4%. Also, Marathon Oil (MRO), Devon Energy (DVN), Schlumberger (SLB), Haliburton (HAL), and ConocoPhillips (PSX)are up more than +2%.
Across the markets…
Sep 10-year T-notes (ZNU22) today are down -1-10/32 points, and the 10-year T-note yield is up +12.8 bp at 2.898%. T-notes tumbled this morning as the stronger-than-expected U.S. July payroll report will pressure the Fed to keep aggressively tightening monetary policy. In addition, higher European government bond yields today are also undercutting T-note prices.
The dollar index (DXY00) today is up sharply by +1.08% at a 1-week high. The dollar jumped after this morning’s better-than-expected U.S. July employment report bolstered the outlook for the Fed to keep aggressively raising interest rates. Also, a slump in stocks today has sparked some liquidity demand for the dollar.
EUR/USD (^EURUSD) today is down -0.90%. A jump in T-note yields today is boosting the dollar’s interest rate differentials and is weighing on the euro. EUR/USD is falling today even after better-than-expected Eurozone economic data on German and French industrial production.
Today’s Eurozone economic data was supportive for EUR/USD. German June industrial production unexpectedly rose +0.4% m/m, stronger than expectations of -0.3% m/m. Also, France June industrial production unexpectedly rose +1.4% m/m, stronger than expectations of -0.3% m/m and the biggest increase in 5 months.
USD/JPY (^USDJPY) today is up sharply by +1.47% at a 1-week high. The yen tumbled today after stronger-than-expected U.S. July payroll data fueled a jump in T-note yields. Divergence in government bond yields also weighs on the yen as the 10-year JGB bond yield fell to a 4-3/4 month low today at 0.166%.
October gold (GCV22) this morning is down -21.0 (-1.17%), and September silver (SIU22) is down -0.452 (-2.25%). Precious metal prices this morning are moderately lower. A stronger-than-expected U.S. July payroll report this morning has sent T-note yields and the dollar soaring, which is undercutting metals prices. Also, continued long liquidation by funds in gold is weighing on gold prices after long gold positions in ETF’s fell to a 5-month low Thursday.
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