Five things you need to know before the market opens on Monday July 31:
1. -- Stock Futures Mixed Amid 'Soft Landing' Hopes For U.S. Economy
U.S. equity futures traded mixed on Monday, with investors looking to extend Wall Street's longest monthly winning streak in more than two years, amid hopes of a so-called 'soft landing' for the world's biggest economy.
The S&P 500, which has gained around 3% since the start of July, is on pace for a fifth consecutive monthly gain, the longest since 2021, following a better-than-expected start to the second quarter earnings season and solid growth and inflation data that suggest the Federal Reserve will be able to tame inflation with higher interest rates without inducing recession.
Minneapolis Fed President Neel Kashkari, in fact, told CBS's 'Face The Nation' this weekend that "the economy continues to surprise how resilient it is (and) that’s a really good thing", adding that the odds of the fabled 'soft landing' have increased over the past month.
GDP data last week showed the economy grew at 2.4% clip over the three months ending in July, with softening wage and employment cost pressures, while the Fed's preferred inflation gauge, the PCE Price Index, fell to the slowest pace in more than two years over the month of July.
The CME Group's FedWatch tool now suggests less than a 30% chance the Fed will raise its benchmark rate by another quarter point at any of the three policy meetings between now and the end of the year.
Bond yields have remained elevated, however, despite the softer inflation figures with 2-year notes trading at 4.891% in overnight dealing and 10-year paper pegged at just under 4%, at 3.983%, heading into the start of the U.S. trading session.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.08% higher at 101.707.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a modest 2 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 26 point advance. Nasdaq futures were down 15 points.
In Europe, a modestly better-than-expected reading for second quarter GDP, which showed the region's economy expanded at a 0.6% pace, helped lift the region-wide Stoxx 600 0.13% higher in early Frankfurt trading, while Britain's FTSE 100 was marked 0.05% higher in London. Germany's DAX index, meanwhile, hit a fresh record high of 16,528.97 points.
In overnight trading, the MSCI ex-Japan index was marked 0.36% higher heading into the close of trading while Japan's Nikkei 225 jumped 1.26% to close at 33,172.22 points following last week's change in market interest rate policy from the Bank of Japan.
2. -- Week Ahead: Jobs Data In Focus, Earnings Reports Accelerate
Labor market data will take center-stage on Wall Street this week amid a series of reading linked to the strength of what have become the lynchpin of the surprisingly resilient U.S. economy.
With unemployment holding near a five-decade low of 3.6%, and weekly jobless claims trending only in the low 200,000 range, analysts expect Friday's non-farm payroll report will show another 200,000 new jobs were added to the economy last month.
That would take the 12-month gain to around 1.45 million, an extraordinary achievement given that the Fed has raised interest rates by 5% over the same period of time and the unemployment rate has remained unchanged.
The Bureau of Labor Statistics will also publish Jolts jobs data for the month of June, which is expected to show around 9.62 million positions remain outstanding. ADP will also publish its National Employment report at 8:15 am Eastern time on Wednesday.
It will also be the busiest week of the second quarter earnings season, with updates from 169 S&P 500 companies including Apple (AAPL) -) and Amazon (AMZN) -) after the close of trading on Thursday.
With just over half of the S&P 500 reporting June quater earnings so far, corporate earnings have surprised to the upside with 78.7% of companies topping Wall Street forecasts compared to the four-quarter average of 73.4%.
That said, collective S&P 500 profits are still forecast to fall 6.4% from last year to a share-weighted $437.1 billion, before rebounding modestly with a 1.1% gain over the three months ending in September.
3. -- Johnson & Johnson Slides As Talc Bankruptcy Plan Rejected By Judge
Johnson & Johnson (JNJ) -) shares moved lower in pre-market trading after a judge ruled against the consumer healthcare group's plans to include talc liabilities in a bankruptcy proceeding.
U.S. Bankruptcy Judge Michael Kaplan said Johnson & Johnson's LTL Management subsidiary, created to include the billions in liabilities linked to allegations that its talc-based products caused cancer, was not in financial distress and therefore should not be subject to a Chapter 11 bankruptcy filing.
The ruling, the second of its kind since 2021, puts Johnson & Johnson's plans to settle around $8.9 billion in litigation at risk, and could lead to individual or class-action suits against it over the coming years. The group said it's already paid out around $4.5 billion in court-based settlements, and said resolving the dispute through the bankruptcy courts is fairer and faster than the "lottery' of individual states and juries.
Johnson & Johnson shares were marked 1.1% lower in pre-market trading to indicate an opening bell price of $172.60 each.
4. -- Walmart Buys Out Tiger Global, Expands Flipkart Stake
Walmart WMT shares edged lower in pre-market trading after the world's biggest retailer reportedly boosted its investment in India's e-commerce powerhouse Flipkart.
Walmart paid $1.4 billion to buy out Asia-based hedge fund Tiger Global's Flipkart stake, as well as a 1% holding from private equity firm Accel, according to multiple media reports.
The price tag for Tiger Global's stake values Flipkart, an e-commerce and consumer retailing powerhouse in India, at around $35 billion. That's down from the $38 billion valuation pegged in 2021 but well north of the $21 billion value implied when Walmart purchased its original stake of 77%, for around $16 billion, in 2018.
Walmart will publish its second quarter earnings on August 17, with investors looking for a bottom line of $1.67 per share on revenues of $151.5 billion.
Walmart shares were marked 0.3% lower in pre-market trading to indicate an opening bell price of $159.44 each.
5. -- Yellow Slides As Teamsters Say Trucking Giant Preparing For Bankruptcy
Yellow Corp. (YELL) -) shares moved lower in pre-market trading amid speculation that the giant U.S. trucking company will file for bankruptcy protection later today.
The Teamsters Union, which has been locked in salary negotiations with the group, said Sunday that Yellow ceased operations over the weekend after failing to find refinancing for its $1.3 billion in debts, including a $700 million pandemic relief loan with the U.S. government.
"Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government," said Teamsters General President Sean M O'Brien.
Nashville-based Yellow has around 30,000 employees and specializes in what is known as 'less-than freight' transport, where goods from multiple customers -- including Walmart and Home Depot -- are placed in single truckloads.
Yellow shares were marked 2.2% lower in pre-market trading, indicating an opening bell price of 69 cents each
