September S&P 500 E-Mini futures (ESU24) are down -0.46%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.69% this morning as trading resumed after the Labor Day holiday, with investors looking ahead to a new batch of U.S. labor market data, particularly Friday’s nonfarm payrolls report.
In Friday’s trading session, Wall Street’s major averages ended in the green, with the blue-chip Dow notching a new all-time high. Intel (INTC) climbed over +9% and was the top percentage gainer on the S&P 500 and Dow after Bloomberg News reported the company was considering various scenarios, including a split of its product design and manufacturing businesses. Also, MongoDB (MDB) soared more than +18% and was the top percentage gainer on the Nasdaq 100 after the company reported stronger-than-expected Q2 results and raised its FY25 guidance. In addition, Marvell Technology (MRVL) advanced over +9% after the semiconductor infrastructure company reported upbeat Q2 results and provided above-consensus Q3 revenue guidance. On the bearish side, Ulta Beauty (ULTA) fell about -4% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q2 results and cutting its FY24 forecast.
Data from the U.S. Department of Commerce on Friday showed that the core PCE price index, a key inflation gauge monitored by the Federal Reserve, came in at +0.2% m/m and +2.6% y/y in July, compared to expectations of +0.2% m/m and +2.7% y/y. Also, U.S. July personal spending climbed +0.5% m/m, in line with expectations, while July personal income grew +0.3% m/m, stronger than expectations of +0.2% m/m. In addition, the U.S. Chicago PMI unexpectedly rose to 46.1 in August, stronger than expectations of 45.0. Finally, the University of Michigan U.S. consumer sentiment index was revised upward to 67.9 in August, stronger than expectations of 67.8.
“Investors are seeing another sign of being in a soft landing,” said Cameron Dawson, chief investment officer at Newedge Wealth. “It’s another one of those Goldilocks kind of reports really threading a needle right down the center. The market is really getting exactly what it wanted.”
Meanwhile, U.S. rate futures have priced in a 69.0% probability of a 25 basis point rate cut and a 31.0% chance of a 50 basis point rate cut at the Fed’s monetary policy committee meeting later this month.
The highlight of this holiday-shortened week will be the U.S. Nonfarm Payrolls report for August. Also, market participants will be eyeing a spate of other economic data releases, including U.S. JOLTs Job Openings, Factory Orders, Trade Balance, Exports, Imports, ADP Nonfarm Employment Change, Initial Jobless Claims, Nonfarm Productivity, Unit Labor Costs, S&P Global Composite PMI, S&P Global Services PMI, ISM Non-Manufacturing PMI, Crude Oil Inventories, Average Hourly Earnings, and Unemployment Rate.
Several notable companies like Broadcom (AVGO), Hewlett Packard Enterprise (HPE), Zscaler (ZS), DocuSign (DOCU), Dollar Tree (DLTR), and Dick’s Sporting Goods (DKS) are slated to release their quarterly results this week.
In addition, the Federal Reserve will release its Beige Book survey of regional business contacts this week, which includes anecdotes and commentary on business conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.
New York Fed President John Williams and Fed Governor Christopher Waller will be making appearances this week.
Today, all eyes are focused on the U.S. ISM Manufacturing PMI, set to be released in a couple of hours. Economists, on average, forecast that the August ISM manufacturing PMI will come in at 47.5, compared to July’s value of 46.8.
Also, investors will focus on the U.S. S&P Global Manufacturing PMI, which stood at 49.6 in July. Economists foresee the August figure to be 48.0.
U.S. Construction Spending data will be reported today as well. Economists foresee this figure to stand at +0.1% m/m in July, compared to the previous number of -0.3% m/m.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.912%, up +0.08%.
The Euro Stoxx 50 futures are down -0.12% this morning as investors cautiously awaited a series of key economic data releases this week that will provide further insight into the monetary policy direction for the Eurozone and the United States. Energy and mining stocks led the declines on Tuesday, while industrial stocks gained ground. Meanwhile, market participants will closely monitor remarks from European Central Bank policymakers Claudia Buch, Jose Manuel Campa, and Kerstin af Jochnick throughout the day. Money markets currently price in a 100% chance of a 25 basis point rate cut by the ECB in September, while projecting a total easing of 57 bps by the end of 2024. The U.S. ISM manufacturing survey scheduled for later today and nonfarm payrolls data set for release on Friday will also be closely watched by investors. In corporate news, Rolls-Royce Holdings Plc (RR-.LN) gained over +3% after Hong Kong airline Cathay Pacific announced that issues found in the British manufacturer’s Trent XWB-97 engines could be resolved by September 7th.
The European economic data slate is mainly empty on Tuesday.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.29%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.04%.
China’s Shanghai Composite Index closed lower today as sentiment continued to be dampened by the nation’s weak economic performance. Data released on Saturday showed that Chinese factory activity contracted for the fourth consecutive month in August, another sign that the world’s second-largest economy might find it challenging to achieve this year’s growth target. Energy and bank stocks led the declines on Tuesday. Four out of China’s five largest banks reported a drop in second-quarter profit after heeding a government prompt to reduce lending rates to boost sluggish loan demand amid a slowing economy and faltering property sector. Meanwhile, Nomura analysts Jizhou Dong and Riley Jin said in a research note that China’s property sector might continue to encounter challenges as any potential mortgage-related policies, whether interest rate cuts on existing mortgages or increased refinancing flexibility for homebuyers, are likely to have minimal impact on home sales sentiment. In other news, China’s commerce ministry announced on Tuesday that it would initiate anti-dumping investigations into Canadian imports of rapeseed, which is used to make oil for cooking and industrial processes, and certain chemicals to determine if they are being unfairly priced in China. In corporate news, China CSSC Holdings and China Shipbuilding were halted for trading on Tuesday as the two state-backed shipbuilding behemoths announced plans to merge via a share-swap deal.
Japan’s Nikkei 225 Stock Index closed just below the flatline today as investors adopted a cautious stance in anticipation of key U.S. economic data this week that could influence the magnitude of an expected Fed rate cut. A strengthening of the yen and rising Japanese government bond yields also exerted pressure on equities. Technology stocks mostly dropped on Tuesday. At the same time, heavyweight bank stocks gained ground on higher domestic yields. The yield on 10-year Japanese government bonds climbed to its highest level in nearly a month. Meanwhile, Pimco Japan Ltd. anticipates that the Bank of Japan could raise rates as soon as January, yet further hikes may not result in a stronger yen, according to Julius Baer, which is bracing for continued weakness in the currency. In other news, Shigeru Ishiba, the former Japanese defense minister and current candidate in the ruling party’s leadership race, intends to increase the country’s financial income taxation if he becomes the next prime minister, according to reports from local media on Monday. In corporate news, Toda Kogyo dropped more than -1% after reporting a sharp 95.7% decline in Q1 attributable profit to 28 million yen, down from 666 million yen the previous year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -3.11% to 20.86.
Pre-Market U.S. Stock Movers
U.S. Steel (X) slumped over -5% in pre-market trading after Democratic presidential candidate Kamala Harris expressed opposition to the $14.1 billion sale of the steelmaker to Japan’s Nippon Steel, stating that the company should stay domestically owned.
Boeing (BA) slid over -2% in pre-market trading after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $119.
Tesla (TSLA) gained about +1% in pre-market trading after data from the China Passenger Car Association revealed on Monday that sales of the company’s China-made electric vehicles increased by 17% in August compared to July and 3% compared to a year earlier.
Caleres (CAL) fell more than -1% in pre-market trading after Loop Capital downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - September 3rd
Zscaler (ZS), Ascendis Pharma AS (ASND), Gitlab (GTLB), Healthequity Inc (HQY), Pagerduty (PD), Hello Group (MOMO).
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