I think that as we are on the precipice of this jobs report, really what we’re seeing today is a bit of digestion of that of the recent of the two days gains,” Tom Essaye, founder of Sevens Report Research, told Barron’s on Thursday. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest last week’s big rally and following generally disappointing European economic data.
Data from Europe underwhelmed as German Retail Sales plunged –9.8% vs. (E) 7.5%, the biggest annual drop in 40 years.
The July EU and UK manufacturing PMIs were in-line with low expectations (Euro Zone manufacturing PMI 49.8 vs. (E) 49.6 and UK manufacturing PMI 52.1 vs. (E) 52.2.)
Today focus will be on the ISM Manufacturing PMI (E: 52.2) and markets will want to see a moderation in the data – a decline to show economic momentum is cooling, but no sudden drop. Practically speaking, if the ISM PMI drops to or below 50, that might scare markets that the economy is slowing too quickly.
What’s in Today’s Report:
Stock futures are solidly higher this morning as quarterly earnings results from tech giants MSFT and GOOGL were both well received by investors after the close yesterday while investor focus shifts to the Fed today.
This morning, economic data will be in focus early with Durable Goods Orders (E: -0.5%), International Trade in Goods (-$103.2B), and Pending Home Sales (-1.0%) all due out by 10:00 a.m. ET.
From there, expect price action to slow considerably as focus turns to the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET followed by the Fed Chair Press Conference at 2:30 p.m. ET.
Markets have priced in a 75% chance of a 75 basis point hike today while no changes to forward-guidance are expected so any variance from those expectations could result in sizeable moves in the market this afternoon.
Finally, earnings season remains in full swing with SHOP ($0.03), TMUS ($0.41), HLT ($1.06), SHW ($2.81) reporting ahead of the bell and META ($2.51), F ($0.43), and QCOM ($2.86) releasing results after the close. Any of those reports could lead to sector specific volatility despite the Fed today.
What’s in Today’s Report:
Stock futures are higher this morning despite soft earnings from IBM after the close yesterday as European inflation data was not as bad as feared in June.
Eurozone HICP (their CPI equivalent) met estimates with a rise of 8.6% Y/Y in June up from 8.1% in May, however, the core figure slipped to 3.7% Y/Y from 3.8% in May. The release has prompted new bets for a 50 bp hike from the ECB this week, but that is bolstering hopes that peak inflation will come sooner than later.
Looking into today’s session, there is one economic report to watch: Housing Starts (E: 1.588) and after yesterday’s terrible Housing Market Index print, investors will want to see a number more in line with expectations that does not point to such a rapid deterioration in the real estate market.
There are no Fed speakers or Treasury auctions today which will leave traders largely focused on earnings with: JNJ ($2.57), HAL ($0.45), LMT ($6.29), ALLY ($1.90), and TFC ($1.17) reporting before the bell, and NFLX ($2.90) and JBHT ($2.31) releasing results after the close.
Bottom line, the broader equity market remains at a key tipping point right now as recession fears continue to simmer, but earnings have so far been mostly upbeat suggesting there is still a path to a soft landing. And if earnings news is upbeat today, we could see the S&P 500 breakout through key downtrend resistance near 3,890 and make a run at new multi-week highs.
Since the beginning of last week, 3,800 has become a new ceiling for the S&P 500 as sellers have repeatedly stepped in and overwhelmed the tentative, weakhanded bids…said Tom Essaye, founder of Sevens Report Research, in a Thursday note. Click here to read the full article.
What’s in Today’s Report:
Futures are moderately higher thanks mostly to momentum from Thursday’s close and despite more underwhelming economic data.
Economically, UK Retail Sales met expectations but fell sharply (–4.7% yoy) while the German Ifo Business Expectations Index missed estimates (85.8 vs. (E) 87.3).
Geo-politically, Russia continues to advance in the Donbas as Ukraine has withdrawn from the city of Severodonetsk.
Today focus will be on the inflation expectations in the University of Michigan Consumer Sentiment Index, and if we see a decline below 3.3% that could further the idea that inflation is peaking (and extend the rally in stocks). Other data today includes New Home Sales (E: 587K) and one Fed speaker, Daly at 4:00 p.m. ET, but they shouldn’t move markets.
What’s in Today’s Report:
Stock futures are sharply lower with global shares as much of yesterday’s rally is being given back amid a resurgence in growth concerns ahead of Powell’s testimony today.
U.K. CPI met estimates at 9.1% but Input PPI jumped 22.1% vs. (E) 19.4% stoking fears that central banks will have to be even more aggressive to get inflation under control in the months ahead.
There are no notable economic reports today but there are multiple Fed speakers: Barkin (9:00 a.m. & 12:00 p.m. ET), Powell (9:30 a.m. ET), Evans (12:55 p.m. ET), and Harker (1:30 p.m. ET).
Then in the afternoon, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could move yields and impact equity markets.
Bottom line, the focus will be on Powell’s testimony before the House this morning as there has been a resurgence in concerns about global growth in the face of the latest broad shift to more aggressive central bank policy in response to sticky and elevated inflation pressures globally. And if Powell is seen as getting more hawkish, or the market shows signs of losing confidence in the Fed’s policy plans, we could potentially see stocks test the 2022 lows.
What’s in Today’s Report:
Stock futures are bouncing modestly with European shares and bond markets are stable this morning as inflation data met expectations in the Eurozone and the BOJ decision was viewed as dovish versus expectations.
The BOJ maintained a very easy monetary policy, sending the yen back towards recent lows while Eurozone HICP (their CPI equivalent) came in at 8.1% vs. (E) 8.1% y/y which is helping markets stabilize this morning.
Looking into today’s session, there is one economic report to watch: Industrial Production (E: 0.4%) and the market will be looking for a strong print to ease concerns surrounding this week’s soft survey-based factory data and bolster the outlook for economic growth in the face of an aggressive Fed.
Fed Chair Powell is also set to deliver a speech at 8:45 a.m. ET and any comments on the economy or future policy plans could move markets today.
Finally, today is quadruple witching options expiration so expect very heavy volumes and the potential for momentum to build in either direction as derivatives traders square their books into the end of the quarter. In the S&P 500 3,650, 3700, and 3750 will all be key levels to watch into the afternoon today.
What’s in Today’s Report:
Global stocks are trading sharply lower and bond yields rose to new multi-year highs overnight amid fears that the Fed is getting more aggressive into an economic slowdown.
In the wake of Friday’s hot CPI report, rate markets are now pricing in a 75 basis point hike by the Fed in the next three months which saw the 10s-2s spread invert overnight underscoring renewed and growing recession worries.
Looking into today’s session, there are no notable economic reports, and no Fed officials are scheduled to speak.
There are two Treasury Bill auctions at 11:30 a.m. ET (3-Month Bills and 6-Month Bills). And while they are typically lesser followed, the results could shed light on market expectations of Fed policy in the coming months and if we see rates continue to surge higher, especially those with shorter duration, then concerns about a more aggressive stance by the Fed will likely keep pressure on risk assets today.
What’s in Today’s Report:
Futures are little changed following a quiet night of news.
Economic data was mixed as final May manufacturing PMIs were in-line with expectations for the EU and UK, although German Retail Sales missed estimates (–5.4% vs. (E) -0.1%).
On the Fed front, Bostic said his comments about a “pause” on rate hikes shouldn’t be interpreted that the Fed will help rescue volatile markets.
Today focus will be on economic data and Fed speak via the ISM Manufacturing PMI (E: 54.5), JOLTS (E: 11.40M) and comments by Williams (11:30 a.m. ET) and Bullard (1:00 p.m. ET). Bottom line, the ideas of slowly moderating (but not collapsing) growth and the possibility for a Fed “pause” in rate hikes in late summer/early fall have helped stocks rally, and as long as today’s data and Fed speak don’t refute those possibilities, stocks can extend the recent rally.