September S&P 500 E-Mini futures (ESU24) are up +0.39%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.52% this morning as investors increased their bets on Donald Trump winning the U.S. presidential election following an assassination attempt, with the focus shifting to Wall Street’s earnings season, key economic data releases, as well as comments from Federal Reserve Chair Jerome Powell and other Fed officials.
Donald Trump was shot in the ear during a Saturday campaign rally, an attack that left the Republican presidential candidate’s face streaked with blood. His security agents swiftly surrounded him, but he soon emerged, pumping his fist in the air and mouthing the words “Fight! Fight! Fight!” The Republican National Convention begins on Monday and continues through Thursday when presidential candidate Donald Trump will give remarks, marking his first public appearance since the attempted assassination. The dollar rose while longer-maturity bonds fell on Monday as investors anticipated that Trump’s return to the White House would lead to relaxed fiscal policy and increased trade tariffs.
In Friday’s trading session, Wall Street’s major averages ended in the green, with the benchmark S&P 500 and blue-chip Dow notching new record highs. Bank of New York Mellon (BK) climbed over +5% after reporting better-than-expected Q2 net interest income. Also, chip stocks gained ground, with ARM Holdings (ARM) rising more than +4% to lead gainers in the Nasdaq 100 and Intel (INTC) advancing nearly +3% to lead gainers in the Dow. In addition, Carvana (CVNA) closed up over +4% after BTIG initiated coverage of the stock with a Buy rating and a $155 price target. On the bearish side, Wells Fargo (WFC) slumped about -6% and was the top percentage loser on the S&P 500 as the lender’s Q2 results were impacted by higher-than-expected costs.
Economic data on Friday showed the U.S. June producer price index for final demand rose +0.2% m/m and +2.6% y/y, stronger than expectations of +0.1% m/m and +2.3% y/y. Also, the U.S. core PPI, which excludes food and energy, increased +3.0% y/y in June, higher than the +2.5% y/y consensus and accelerating from the +2.6% y/y pace in May (revised from +2.3% y/y). However, categories used in calculating the Fed’s preferred inflation measure, the core personal consumption expenditures price index, were not so dire. Finally, the University of Michigan’s U.S. consumer sentiment index unexpectedly fell to an 8-month low of 66.0 in July, weaker than expectations of 68.5. At the same time, the University of Michigan’s July year-ahead inflation expectations eased to 2.9% from 3.0% in June, in line with expectations, while 5-year implied inflation expectations eased to 2.9%, better than expectations of no change at 3.0%.
“We continue to expect the Fed to join the global rate-cutting cycle in September, with 50 basis points of easing this year,” said Mark Haefele at UBS Global Wealth Management.
U.S. rate futures have priced in a 4.7% probability of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month and a 91.7% chance of a 25 basis point rate cut at September’s policy meeting.
Earnings season picks up steam this week, with results expected from several more big banks, including Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS). Also, notable companies, including Netflix (NFLX), UnitedHealth (UNH), Johnson & Johnson (JNJ), Blackrock (BLK), Progressive (PGR), Kinder Morgan (KMI), Alcoa (AA), U.S. Bancorp (USB), United Airlines (UAL), Ally Financial (ALLY), Abbott Laboratories (ABT), Domino’s Pizza (DPZ), Schlumberger (SLB), American Express (AXP), Halliburton (HAL), and Travelers (TRV), are slated to post quarterly updates this week.
In addition, investors will be monitoring a spate of economic data releases this week, including U.S. Retail Sales, Core Retail Sales, Export Price Index, Import Price Index, Business Inventories, Building Permits (preliminary), Housing Starts, Industrial Production, Manufacturing Production, Crude Oil Inventories, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, and Leading Index.
Meanwhile, Fed Chair Jerome Powell is scheduled to participate in an interview hosted by the Economic Club of Washington later in the day. A host of other Fed officials will also be making appearances throughout the week, including Daly, Kugler, Barkin, Waller, Logan, Bowman, Williams, and Bostic.
Today, investors will likely focus on the U.S. NY Empire State manufacturing index, set to be released in a couple of hours. Economists, on average, forecast that the July NY Empire State manufacturing index will arrive at -5.50, compared to the previous value of -6.00.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.206%, up +0.50%.
The Euro Stoxx 50 futures are down -0.49% this morning, retreating from a one-month high hit on Friday, as sentiment turned cautious following disappointing economic data from China and the assassination attempt on Donald Trump, which allegedly boosted his chances in the U.S. presidential election. Luxury stocks led the declines on Monday, with Burberry Group Plc (BRBY.LN) plunging over -15% after the company warned on profit and suspended its dividend. Mining stocks also retreated. The European Union’s data agency Eurostat reported Monday that monthly industrial production in the Eurozone fell less than expected in May. Meanwhile, the European Central Bank is set to announce its interest rate decision on Thursday. The central bank is anticipated to keep interest rates unchanged after announcing its first rate cut in this cycle last month. Attention will be focused on any remarks regarding the outlook for interest rates beyond July, specifically concerning the timing of the next anticipated cut and the pace of subsequent rate reductions. In other corporate news, Swatch Group Ag/The (UHR.Z.IX) slumped over -10% after the world’s biggest watchmaker posted a sharp decline in first-half sales and earnings. Also, Nordea Bank Abp (NDA.S.DX) fell over -3% after reporting weaker-than-expected Q2 operating earnings.
Eurozone’s Industrial Production data was released today.
Eurozone May Industrial Production came in at -0.6% m/m, stronger than expectations of -0.9% m/m.
China’s Shanghai Composite Index (SHCOMP) closed up +0.09%, while the Japanese markets were closed for a holiday.
China’s Shanghai Composite Index closed slightly higher today as investors bet on more stimulus following the latest batch of economic data from the country, which showed signs of a broad-based slowdown. Semiconductor stocks led the gains on Monday, while energy and property stocks underperformed. Data from the National Bureau of Statistics released Monday showed that China’s gross domestic product growth decelerated in the second quarter to its slowest pace since the first quarter of 2023, increasing pressure on Beijing to boost confidence at a twice-a-decade policy meeting scheduled for this week. Separately, official data showed that retail sales rose at the slowest pace since December 2022, while industrial production growth slowed from the previous month but still exceeded economists’ forecasts. In addition, data indicated that new-home prices in major Chinese cities dropped for the 13th consecutive month in June, further suggesting that a rescue package introduced in May has had limited impact on boosting sentiment. Meanwhile, the People’s Bank of China left its one-year policy rate unchanged, as anticipated. The PBOC stated it was maintaining the rate on 100 billion yuan ($13.8 billion) in one-year medium-term lending facility loans to some financial institutions at 2.50%. In corporate news, Weichai Power rose over +2% after projecting significant gains in its first-half net profit. Investor attention is now squarely on the Third Plenum, a meeting of China’s top leadership starting Monday, seeking any stimulus or policy signals after recent data indicated weakening momentum in the world’s second-largest economy.
“The disappointing second-quarter economic growth in China, which is the first set of quarterly data that is free of distortions by the pandemic, will add pressure on the Chinese government to boost confidence,” Vasu Menon, managing director of investment strategy at OCBC.
The Chinese GDP has been reported at +0.7% q/q and +4.7% y/y in the second quarter, weaker than expectations of +1.1% q/q and +5.1% y/y.
The Chinese June Industrial Production stood at +5.3% y/y, stronger than expectations of +4.9% y/y.
The Chinese June Retail Sales arrived at +2.0% y/y, weaker than expectations of +3.3% y/y.
The Chinese January-June Fixed Asset Investment came in at +3.9% y/y, in line with expectations.
The Chinese June Unemployment Rate was at 5.0%, in line with expectations.
Japan’s Nikkei Stock Index was closed today for the Marine Day holiday. The markets will reopen on Tuesday.
Pre-Market U.S. Stock Movers
Trump Media & Technology Group (DJT) soared about +67% in pre-market trading following the attempted assassination of former U.S. President Donald Trump on Saturday evening during his rally in Butler, Pennsylvania.
Apple (AAPL) rose over +2% in pre-market trading after Bloomberg reported that the company achieved a record of nearly $8 billion in sales in India over the 12 months through March. Also, Loop Capital upgraded the stock to Buy from Hold with a price target of $300.
UDR (UDR) gained about +1% in pre-market trading after BMO Capital upgraded the stock to Outperform from Market Perform with a price target of $45.
Rocket Lab (RKLB) fell more than -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $6.
Caesars (CZR) slid over -1% in pre-market trading after Susquehanna downgraded the stock to Negative from Neutral with a $33 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - July 15th
Goldman Sachs (GS), BlackRock (BLK), ServisFirst Bancshares (SFBS), FB Financial (FBK), CrossFirst Bankshares (CFB), Guaranty Bancshares (GNTY).
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