“The next two months of data will be pivotal, and we see a path to a resumption of the Fed’s easing cycle in the autumn should tariff inflation prove more modest than expected or the labor market show signs of weakness,” said Ashish Shah at Goldman Sachs Asset Management.
In yesterday’s trading session, Wall Street’s three main equity benchmarks closed mixed. IDEX Corp. (IEX) plunged over -11% and was the top percentage loser on the S&P 500 after the company cut its full-year adjusted EPS guidance. Also, Old Dominion Freight Line (ODFL) slumped more than -9% and was the top percentage loser on the Nasdaq 100 after the company posted downbeat Q2 results. In addition, Seagate Technology (STX) slid over -3% after the data storage company issued soft FQ1 guidance. On the bullish side, Teradyne (TER) surged more than +18% after the maker of testing equipment for semiconductors and robotics posted better-than-expected Q2 adjusted EPS.
The U.S. Bureau of Economic Analysis, in its initial estimate of Q2 GDP growth, said on Wednesday that the economy grew at a +3.0% annualized rate, stronger than expectations of +2.5%. Also, the U.S. ADP employment change rose by 104K in July, stronger than expectations of 77K. At the same time, U.S. June pending home sales unexpectedly fell -0.8% m/m, weaker than expectations of +0.2% m/m.
“The significant beat in Q2 GDP is just a rebound from the drop in Q1. Don’t get me wrong, these GDP data are great, just not that great. The economy remains resilient and growing, and that’s the most important takeaway from this report,” said Jamie Cox at Harris Financial Group.
Meanwhile, U.S. rate futures have priced in a 59.0% chance of no rate change and a 41.0% chance of a 25 basis point rate cut at the next central bank meeting in September.
Second-quarter corporate earnings season rolls on, and market participants await reports today from high-profile companies such as Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), AbbVie (ABBV), and KLA Corp. (KLAC). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +4.5% increase in quarterly earnings for Q2 compared to the previous year, exceeding the pre-season estimate of +2.8%.
On the economic data front, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.3% m/m and +2.7% y/y in June, compared to the previous figures of +0.2% m/m and +2.7% y/y.
U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists anticipate June Personal Spending to rise +0.4% m/m and Personal Income to grow +0.2% m/m, compared to the May figures of -0.1% m/m and -0.4% m/m, respectively.
The U.S. Employment Cost Index will be reported today. Economists expect this figure to come in at +0.8% q/q in the second quarter, compared to +0.9% q/q in the first quarter.
The U.S. Chicago PMI will come in today. Economists forecast the July figure at 41.9, compared to the previous value of 40.4.
U.S. Initial Jobless Claims data will be released today as well. Economists expect this figure to be 222K, compared to last week’s number of 217K.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.358%, down -0.43%.
The Euro Stoxx 50 Index is down -0.30% this morning as investors digest a flurry of corporate earnings reports and economic data from the region, as well as the latest tariff headlines. Mining stocks led the declines on Thursday after U.S. President Donald Trump surprised the metals market by exempting the most commonly traded forms of copper from his 50% tariffs. At the same time, defense and bank stocks gained ground. Data from Eurostat released on Thursday showed that the Eurozone unemployment rate remained at historic lows in June, offering further evidence that the bloc remains resilient to the effects of the global trade war. Separately, data showed that the number of people unemployed in Germany rose by much less than expected in July, even as the labor market remains firmly under pressure from a weak economy. In addition, preliminary data showed that inflation held steady in France and Italy in July, likely prompting the European Central Bank to remain cautious about any further interest rate cuts. Investors now await preliminary inflation data from Germany due later in the session. In corporate news, Shell Plc (SHEL.LN) rose over +1% after the company posted better-than-expected Q2 net profit and kept the pace of its buybacks steady. Also, Rolls-Royce Holdings Plc (RR-.LN) climbed more than +9% after boosting its full-year guidance for operating profit and free cash flow. In addition, Societe Generale (GLE.FP) gained over +5% after the lender raised its full-year profit target.
France’s CPI (preliminary), Germany’s Unemployment Change, Germany’s Unemployment Rate, Italy’s CPI (preliminary), and Eurozone’s Unemployment Rate were released today.
The French July CPI rose +0.2% m/m and +1.0% y/y, compared to expectations of +0.3% m/m and +1.0% y/y.
The German July Unemployment Change stood at 2K, stronger than expectations of 15K.
The German July Unemployment Rate was 6.3%, stronger than expectations of 6.4%.
The Italian July CPI rose +0.4% m/m and +1.7% y/y, stronger than expectations of +0.1% m/m and +1.5% y/y.
The Eurozone June Unemployment Rate was 6.2%, stronger than expectations of 6.3%.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.18%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.02%.
China’s Shanghai Composite Index closed lower today as the absence of stimulus signals from the Politburo meeting and weak PMI data from the country dampened sentiment. Real estate and commodity-related stocks led the declines on Thursday. Data from the National Bureau of Statistics released on Thursday showed that China’s gauges of factory, services, and construction activity softened in July, pointing to a potential economic slowdown following solid growth in the first half of the year. China’s manufacturing activity contracted for a fourth consecutive month in July as both domestic and overseas demand weakened. The weak data came just a day after Chinese leaders at the much-anticipated Politburo meeting signaled they would hold off on introducing major stimulus for now, as authorities shift their focus to tackling excess capacity in the economy. China’s top policymaking body vowed on Wednesday to more effectively implement existing pro-growth measures, according to a readout by state-run Xinhua News Agency. Authorities will tackle excessive competition among enterprises and promote the regulation of overcapacity in major industries, while also tightening oversight of local government investment-attraction practices, according to the readout. Investor focus is now on whether the U.S.-China tariff truce will be extended after U.S. and Chinese officials wrapped up their latest round of trade talks in Stockholm earlier this week, with U.S. President Donald Trump set to make the final decision. In corporate news, JD.com fell about -3% in Hong Kong after it agreed to acquire Germany’s Ceconomy for 2.2 billion euros ($2.5 billion).
The Chinese July Manufacturing PMI stood at 49.3, weaker than expectations of 49.7.
The Chinese July Non-Manufacturing PMI came in at 50.1, weaker than expectations of 50.3.
Japan’s Nikkei 225 Stock Index closed higher today, tracking gains in U.S. stock futures following upbeat quarterly results from tech giants Microsoft and Meta. Technology stocks led the gains on Thursday. Bank and industrial stocks were also among the biggest gainers. The benchmark index held onto gains after the Bank of Japan kept its benchmark rate unchanged and lifted its price outlook more than expected, signaling it may be closer to its next rate hike, while keeping options open by cautioning it is still evaluating the effects of U.S. President Donald Trump’s tariffs. The BOJ maintained the overnight call rate at 0.5% at the end of a two-day policy meeting in a unanimous vote. The bank’s policy board raised its median inflation forecast for the current fiscal year to 2.7% from 2.2% in its quarterly economic outlook report, citing continued increases in food prices. The BOJ reiterated that it will continue to tighten monetary policy if the economy and inflation develop in accordance with its forecasts. Governor Kazuo Ueda at a press conference did not provide any strong hint on when the next rate hike might occur. Government data released earlier Thursday indicated Japanese businesses remain resilient despite tariff concerns, as industrial production unexpectedly rebounded in June from the prior month, and firms anticipate further recovery in July and August. Separate data showed that retail sales rose more than expected in June, indicating that consumer demand has stayed strong despite inflation. In other news, foreign investors purchased a net 743.3 billion yen worth of Japanese stocks in the week through July 26th, marking the largest weekly cross-border inflow since May 3rd, fueled by optimism surrounding a long-awaited trade deal with the U.S. In corporate news, Kyocera surged over +9% after the company posted better-than-expected Q1 operating profit. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.56% to 22.45.
The Japanese June Industrial Production (preliminary) unexpectedly rose +1.7% m/m, stronger than expectations of -0.7% m/m.
The Japanese June Retail Sales rose +2.0% y/y, stronger than expectations of +1.8% y/y.
The Japanese July Household Confidence came in at 33.7, weaker than expectations of 35.1.
Pre-Market U.S. Stock Movers
Meta Platforms (META) surged over +11% in pre-market trading after the maker of Facebook and Instagram posted upbeat Q2 results and issued strong Q3 revenue guidance.
Microsoft (MSFT) climbed more than +8% in pre-market trading after the technology behemoth reported stronger-than-expected FQ4 results and provided an upbeat FQ1 revenue growth forecast for the Azure cloud unit.
CVS Health (CVS) rose over +7% in pre-market trading after the pharmacy and healthcare giant reported better-than-expected Q2 results and raised its full-year adjusted EPS guidance.
Arm Holdings (ARM) fell more than -6% in pre-market trading after the chip designer provided soft FQ2 EPS guidance.
Qualcomm (QCOM) slumped over -5% in pre-market trading after the chipmaker reported weaker-than-expected FQ3 handsets and automotive-sector revenue.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday – July 31st
Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), AbbVie (ABBV), S&P Global (SPGI), Stryker (SYK), KKR & Co (KKR), Comcast (CMCSA), KLA Corp (KLAC), MicroStrategy (MSTR), ICE (ICE), Southern (SO), Coinbase Global (COIN), Bristol-Myers Squibb (BMY), Roblox (RBLX), Cigna (CI), CVS Health Corp (CVS), Howmet (HWM), Arthur J Gallagher (AJG), Cloudflare (NET), Air Products (APD), Quanta Services (PWR), TC Energy (TRP), Exelon (EXC), Alnylam (ALNY), Xcel Energy (XEL), Ametek (AME), ResMed (RMD), Ambev SA (ABEV), Vulcan Materials (VMC), Monolithic (MPWR), Ingersoll Rand (IR), Cameco (CCJ), Blue Owl Capital (OWL), Xylem (XYL), LPL Financial (LPLA), Rocket (RKT), PG E (PCG), Willis Towers Watson (WTW), International Paper (IP), Kellanova (K), Cenovus Energy Inc (CVE), Ameren (AEE), PPL (PPL), Reddit (RDDT), Mettler-Toledo (MTD), Eversource Energy (ES), CMS Energy (CMS), Edison (EIX), First Solar (FSLR), Natera Inc (NTRA), Biogen (BIIB), Illumina (ILMN), Ryan Specialty Group Holdings (RYAN), XPO (XPO), Clorox (CLX), AMH 4 Rent (AMH), Kimco Realty (KIM), MasTec (MTZ), Aptiv (APTV), Brookfield Infrastructure Partners (BIP), Baxter (BAX), Builders FirstSource (BLDR), Api Group Corp (APG), Masco (MAS), Carpenter Technology (CRS), Roku (ROKU), ATI Inc (ATI), Reinsurance of America (RGA), ITT (ITT), Lincoln Electrics (LECO), Camden Property (CPT), Omega Healthcare (OHI), Procore Technologies (PCOR), WESCO (WCC), Norwegian Cruise Line (NCLH), Essential Utilities (WTRG), AptarGroup (ATR), DT Midstream (DTM), Huntington Ingalls Industries (HII), CubeSmart (CUBE), Appfolio Inc (APPF), Paramount Global (PARA), Cullen/Frost Bankers (CFR), Eastman Chemical (EMN), Floor & Decor (FND), Bloom Energy (BE), HF Sinclair (DINO), SPX Corp (SPXC), Agree Realty (ADC), AGCO (AGCO), Gildan Activewear (GIL), Sirius XM (SIRI), BorgWarner (BWA), Colliers International (CIGI), Corcept (CORT), Dolby Labs (DLB), Universal Display (OLED), Casella (CWST), Janus Henderson (JHG), Bio-Rad Labs (BIO), Kirby (KEX), Arrow Electronics (ARW), Pharming Group (PHAR), Fortune Brands (FBIN), IDACORP (IDA), CCC Intelligent Solutions Holdings (CCCS), InterDigital (IDCC), Bright Horizons (BFAM), Itron (ITRI), Allegro (ALGM), TAL Education (TAL), KBR (KBR), Affiliated Managers (AMG), Shake Shack Inc (SHAK), Vontier (VNT), Lincoln National (LNC), Credit Acceptance (CACC), Healthcare RT (HR), WillScot (WSC), Boot Barn Holdings (BOOT), Belden (BDC), Teleflex (TFX), Millrose Properties (MRP).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
