“Looking into today’s session, focus will be on the U.S. credit downgrade as investors digest the potential implications on fixed income markets and re-assess valuations of risk assets,” wrote Tom Essaye, founder of the Sevens Report.
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Wednesday’s market action is a reminder to investors that stocks can still go down, Tom Essaye, founder of the Sevens Report, said in an interview with Barron’s.
“When you have a market that is essentially pricing in nothing bad happening and all of a sudden you get kind of a surprise – then it’s a reason to sell and I think that’s what we’re seeing today,” Essaye said.
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Sevens Report analyst Tom Essaye explained in a Wednesday note that the credit downgrade by Fitch “should have a limited near-term impact”. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly lower following Wednesday’s selloff on more disappointing earnings and mixed economic data.
Economically, the EU Composite PMI slightly missed estimates (48.6 vs. (E) 48.9) as recession worries creep higher.
Tech earnings underwhelmed again, with disappointing results from QCOM and PYPL (both stocks down 7%-ish).
Today will be a busy day of data and earnings. First, the BOE is set to hike rates 50 bps, but markets will want to see if they signal this is the last hike of the cycle.
Turning to the U.S., there are several important economic reports today including: Jobless Claims (E: 225K), ISM Services PMI (E: 53.0) and Unit Labor Costs (E: 2.6%). Investors need Goldilocks economic data to help stabilize stocks, and if these reports are stronger than expected, look for Treasury yields to rise and for stocks to fall (like what happened yesterday).
Finally, on earnings, we get results from two of the biggest stocks in the market after the close: AAPL ($1.19) and AMZN ($0.34).