September S&P 500 futures (ESU23) are up +0.59%, and September Nasdaq 100 E-Mini futures (NQU23) are up +1.20% this morning after three major U.S. benchmark indices ended the regular session mixed as market participants digested Federal Reserve Chair Jerome Powell’s comments following the Fed’s widely expected 25 basis point rate hike, while also bracing for a flurry of U.S. economic data and more corporate earnings results.
Meta Platforms Inc (META) surged over +7% in pre-market trading after the company reported better-than-expected Q2 results and issued upbeat Q3 revenue guidance.
The Federal Reserve raised interest rates by a quarter-point to a range of 5.25% to 5.50% on Wednesday, the highest level in 22 years. Also, the central bank’s statement hinted at the possibility of further rate hikes, but it did not suggest that more increases were imminent. “The Committee will continue to assess additional information and its implications for monetary policy,” the statement said. During his post-monetary policy meeting press conference, Federal Reserve Chairman Jerome Powell remarked that the process of bringing inflation down to 2% “has a long way to go.” Powell stated that it is possible for the central bank to raise rates again at the September meeting if the data warrant it. The Fed chief also said that rate cuts are not expected to happen this year.
“In our opinion, the rate hiking cycle is done, and the Fed will now pause for the rest of the year. The latest market reaction also supports this thesis with yields dipping slightly across the front end of the yield curve,” said Rajeev Sharma, a managing director of fixed income at Key Private Bank.
In Wednesday’s trading session, the blue-chip Dow outperformed major benchmarks, underpinned by an over +8% gain in Boeing Co (BA) after the plane maker reported a better-than-expected Q2 adjusted free cash flow. Also, Alphabet Inc (GOOGL) climbed more than +5% after the company reported upbeat Q2 results. In addition, Union Pacific Corporation (UNP) soared over +10% after appointing Jim Vena as its new chief executive officer. On the bearish side, Microsoft Corporation (MSFT) fell more than -3% after the tech giant posted tepid sales growth in Q4. Chip stocks also retreated after Texas Instruments Incorporated (TXN) issued weaker-than-expected Q3 revenue guidance.
Economic data on Wednesday showed that U.S. New Home Sales stood at 697K in June, weaker than expectations of 725K. At the same time, U.S. June Building Permits came in at 1.441M, stronger than expectations of 1.440M.
On the earnings front, major global companies like Mastercard (MA), AbbVie (ABBV), McDonald’s (MCD), Intel (INTC), and Bristol-Myers Squibb (BMY) are set to report their quarterly figures today.
Today, all eyes are focused on the U.S. GDP preliminary reading in a couple of hours. Economists, on average, forecast that U.S. GDP will stand at +1.8% q/q in the second quarter, compared to the first-quarter value of +2.0% q/q.
Also, investors will likely focus on U.S. Core Durable Goods Orders data, which came in at +0.6% m/m in May. Economists foresee the new figure to be 0.0% m/m.
U.S. Durable Goods Orders data will be reported today. Economists foresee this figure to stand at +1.0% m/m in June, compared to the previous value of +1.7% m/m.
U.S. Pending Home Sales data will also be closely watched today. Economists expect June’s figure to be -0.5% m/m, compared to the previous number of -2.7% m/m.
U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 235K, compared to last week’s value of 228K.
In the bond markets, United States 10-Year rates are at 3.872%, up +0.49%.
The Euro Stoxx 50 futures are up +1.44% this morning as market participants digested comments from Fed Chair Jerome Powell while awaiting the European Central Bank’s interest rate decision. Media and technology stocks gained ground on Thursday, while energy stocks underperformed. Meanwhile, the European Central Bank is widely expected to raise interest rates by another quarter of a percentage point later in the session. In addition, investors will be closely watching ECB President Christine Lagarde’s press conference for any indication of whether the hike is the final one in this tightening cycle. In corporate news, French lender Bnp Paribas Sa (BNP.P.DX) rose over +3%, consumer goods giant Nestle Sa (NESN.Z.IX) gained about +2%, and retailer Carrefour Sa (CA.P.DX) advanced more than +2% after reporting upbeat results. At the same time, Barclays Plc (BARC.LN) plunged more than -4% after the company’s trading revenue dropped 41% in Q2.
Germany’s GfK Consumer Climate, Spain’s Retail Sales, and Italy’s Consumer Confidence data were released today.
The German August GfK Consumer Climate Index has been reported at -24.4, stronger than expectations of -24.7.
The Spanish June Retail Sales stood at +6.4% y/y, stronger than expectations of +0.6% y/y.
The Italian July Consumer Confidence came in at 106.7, weaker than expectations of 107.8.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.20%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.68%.
China’s Shanghai Composite today closed lower as investors continued to closely monitor the potential timing of economically supportive measures from the Chinese government. Data on Thursday showed that China’s industrial profits continued to decline at a double-digit pace for the sixth consecutive month this year, as weakening demand impacted companies’ profit margins, highlighting the need for more supportive policy to aid the economy. Meanwhile, shares of Chinese automakers advanced on Thursday, with XPeng Inc surging more than +33% on news of a $700 million investment from Volkswagen AG. Hong Kong-listed tech stocks also gained ground.
“While structural growth concerns abound, the July Politburo meeting reaffirms the view that the policy easing bias has been activated, and the window for a tactical bounce for Chinese stocks is now open,” Goldman Sachs analysts wrote in a note.
Japan’s Nikkei 225 Stock Index closed higher today as investors eagerly awaited the outcome of a closely watched Bank of Japan policy meeting and an acceleration of the domestic corporate earnings season. Meanwhile, Advantest fell more than -1% after the chip-testing equipment maker reported a 68% drop in operating profit for the April-June quarter, reflecting weak demand in the smartphone market and a slowdown in data center investments. Also, Nissan Motor Co Ltd slid over -2% despite overall favorable earnings, as the automaker forecasted ongoing challenges in the Chinese market. On the positive side, Sharp Corp climbed more than +5% after the Nikkei newspaper reported that its top shareholder, Foxconn, has requested the company to present an improvement plan within the next three months. Investor attention is now centered on the Bank of Japan’s policy meeting scheduled to begin later in the day, with speculation rising about the central bank’s potential preparations for a shift away from its aggressive monetary easing policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.98% to 18.83.
Pre-Market U.S. Stock Movers
Align Technology Inc (ALGN) climbed over +13% in pre-market trading after the company reported upbeat Q2 results and provided strong 2023 revenue guidance.
eBay Inc (EBAY) slid more than -5% in pre-market trading after issuing uninspiring Q3 guidance.
Chipotle Mexican Grill Inc (CMG) plunged over -8% in pre-market trading after the fast-casual restaurant operator’s Q2 comparable sales fell short of expectations.
National Vision Holdings Inc (EYE) tumbled about -17% in pre-market trading after announcing the end of its partnership with Walmart in 2024.
Bilibili Inc (BILI) fell more than -2% in pre-market trading after JPMorgan downgraded the stock to Underweight from Overweight.
Ingevity Corp (NGVT) rose over +1% in pre-market trading after Loop Capital upgraded the stock to Buy from Hold.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - July 27th
Mastercard (MA), AbbVie (ABBV), McDonald’s (MCD), Linde PLC (LIN), Comcast (CMCSA), T-Mobile US (TMUS), Intel (INTC), Honeywell (HON), S&P Global (SPGI), Bristol-Myers Squibb (BMY), Mondelez (MDLZ), American Tower (AMT), HCA (HCA), Boston Scientific (BSX), Northrop Grumman (NOC), KLA Corp (KLAC), Ford Motor (F), Norfolk Southern (NSC), DexCom (DXCM), Hershey Co (HSY), Arthur J Gallagher (AJG), Keurig Dr Pepper (KDP), Valero Energy (VLO), American Electric Power (AEP), Carrier Global (CARR), Fomento Economico Mexicano (FMX), WW Grainger (GWW), Xcel Energy (XEL), PG E (PCG), Digital (DLR), Cenovus Energy Inc (CVE), Mobileye Global (MBLY), Mettler-Toledo (MTD), Martin Marietta Materials (MLM), West Pharmaceutical Services (WST), Edison (EIX), Equity Residential (EQR), Royal Caribbean Cruises (RCL), Weyerhaeuser (WY), Willis Towers Watson (WTW), Baxter (BAX), Enphase (ENPH), DTE Energy (DTE), Tractor Supply (TSCO), Hartford (HIG), Live Nation Entertainment (LYV), VeriSign (VRSN), Southwest Airlines (LUV), First Solar (FSLR), Principal Financial (PFG), Westinghouse Air Brake (WAB), CenterPoint Energy (CNP), Laboratory America (LH), LPL Financial (LPLA), CMS Energy (CMS), Tradeweb Markets (TW), Reliance Steel&Aluminum (RS), Cincinnati Financial (CINF), Essex Property (ESS), SS&Cs (SSNC), LKQ (LKQ), AMH 4 Rent (AMH), Deckers Outdoor (DECK), Masco (MAS),Gaming & Leisure Properties (GLPI), Kimco Realty (KIM), Healthpeak Properties (PEAK), Ovintiv (OVV), Lennox (LII), Lincoln Electrics (LECO), International Paper (IP), AO Smith (AOS), Erie Indemnity (ERIE), Pentair (PNR), Eastman Chemical (EMN), AGCO (AGCO), Roku (ROKU), Fortune Brands (FBIN), Juniper (JNPR), NewYork Community Bancorp (NYCB), EMCOR (EME), Kinsale Capital (KNSL), KBR (KBR), Wex (WEX), TechnipFMC (FTI), Skechers (SKX), AptarGroup (ATR), National Instruments (NATI), Old Republic (ORI), Texas Roadhouse (TXRH), Cullen/Frost Bankers (CFR), Houlihan Lokey Inc (HLI), Crocs (CROX), Boyd Gaming (BYD), Olin (OLN), FirstService (FSV), Acadia Healthcare (ACHC), Eagle Materials (EXP), Appfolio Inc (APPF), FTI Consulting (FCN), SPS Commerce (SPSC), Brunswick (BC), First American (FAF), South State (SSB), Option Care Health (OPCH), Apartment (AIRC), Chemours Co (CC), United States Steel (X), Hertz Global Holdings (HTZ), ExlServices (EXLS), Harley-Davidson (HOG), Allison Transmission (ALSN), Valley National (VLY), Meritage (MTH), Casella (CWST), Neogen (NEOG), Exponent (EXPO), Kirby (KEX), Helmerich Payne (HP), Stericycle (SRCL), Novocure Ltd (NVCR), TAL Education (TAL), PennyMac Financial (PFSI), AllianceBernstein Holding LP (AB), Avient Corp (AVNT), Boston Beer (SAM), Federal Signal (FSS), Integra (IART), InMode (INMD), Cousins Properties (CUZ), MDC (MDC), CNX Resources (CNX), TRI Pointe Homes (TPH), Baytex Energy Corp (BTE), Perficient (PRFT), Lazard (LAZ), California Water Service (CWT), Hub Group (HUBG), Ameris (ABCB), Millicom (TIGO), Axos Financial (AX), Carpenter Technology (CRS), Axonics Modulation Technologies (AXNX), First Bancorp (FBP), Expro Holdings NV (XPRO), Pacific Premier (PPBI), Materion (MTRN), Eastern Bankshares (EBC), Ardagh Metal Packaging (AMBP), Seacoast Banking Florida (SBCF), McGrath (MGRC), Arch Resources (ARCH), The Bancorp (TBBK), Eldorado Gold (EGO), NetScout (NTCT), Coursera (COUR), Garrett Motion (GTX), Minerals Technologies (MTX), Granite Construction (GVA), Patrick (PATK), Bread Financial Holdings (BFH), Sonic Automotive (SAH), SkyWest (SKYW), Pebblebrook Hotel (PEB), Sweetgreen (SG), Silicon Motion (SIMO), Strategic Education (STRA), H&E Equipment (HEES), Procept Biorobotics (PRCT), Ultra Cleans (UCTT).
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