Stock Index Futures Climb Ahead of Key U.S. Payrolls Data

September S&P 500 futures (ESU23) are up +0.35%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.17% this morning as investors looked ahead to the crucial U.S. nonfarm payrolls report for clues on the outlook for Federal Reserve policy.

In Thursday’s trading session, Wall Street’s major indices closed mixed. Salesforce Inc (CRM) climbed about +3% after the cloud-computing giant posted stronger-than-expected Q2 results and raised its FY24 guidance. Also, Crowdstrike Holdings Inc (CRWD) soared over +9% after the cybersecurity company reported upbeat Q2 results and issued better-than-expected Q3 guidance. On the bearish side, Dollar General (DG) tumbled more than -12% and was the top percentage loser on the benchmark S&P 500 after the discount retailer posted downbeat Q2 results and lowered its FY23 guidance. In addition, Palantir Technologies Inc (PLTR) fell over -8% after Morgan Stanley downgraded the stock to Underweight from Equal Weight.

Data from the U.S. Department of Commerce on Thursday showed that the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, stood at +0.2% m/m and +4.2% y/y in July, in line with expectations. Also, U.S. July Personal Spending came in at +0.8% m/m, stronger than expectations of +0.7% m/m. In addition, the number of Americans filing for jobless claims the past week fell -4K to 228K, stronger than expectations of 235K.

“Given the continued strength in the labor market and the fact that the economy is still growing above trend, the Fed will view inflation as cooling, but not sufficiently cool,” said George Mateyo, chief investment officer at Key Private Bank.

Atlanta Fed President Raphael Bostic said Thursday that U.S. monetary policy is “already restrictive enough” to bring inflation back down to 2% over a “reasonable” period. “That does not mean I am for easing policy any time soon. Inflation in the United States is still too high,” he added.

Meanwhile, U.S. rate futures have priced in an 11.0% probability of a 25 basis point rate increase at September’s policy meeting and a 41.3% chance of a 25 basis point rate hike at November’s monetary policy meeting.

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that August Nonfarm Payrolls will come in at 170K, compared to the previous value of 187K.

Also, investors will likely focus on U.S. Private Nonfarm Payrolls data, which stood at 172K in July. Economists foresee the new figure to be 150K.

U.S. ISM Manufacturing PMI will be reported today. Economists foresee this figure to stand at 47.0 in August, compared to the previous number of 46.4.

U.S. S&P Global Manufacturing PMI will come in today. Economists estimate that S&P Global Manufacturing PMI will come in at 47.0 in August, compared to 49.0 in July.

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect August figures to be +0.3% m/m and +4.4% y/y, compared to the previous numbers of +0.4% m/m and +4.4% y/y.

U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to remain steady at 3.5% in August.

In the bond markets, United States 10-year rates are at 4.114%, up +0.57%.

The Euro Stoxx 50 futures are down -0.02% this morning as investors digested the Eurozone’s factory activity data while awaiting key U.S. jobs data. Energy stocks outperformed on Friday after Morgan Stanley double-upgraded the sector. Data on Friday showed that the downturn in Eurozone manufacturing eased last month. Meanwhile, ECB Vice President Luis de Guindos stated on Thursday that new forecasts will reveal that the European Central Bank’s inflation outlook has remained relatively stable over the summer despite deteriorating economic prospects. In corporate news, Aurubis Ag (NDA.D.DX) plunged over -15% after Europe’s largest copper producer said it faces substantial losses attributable to a massive metal theft incident. Also, Volkswagen Ag (VOW3.D.DX) fell more than -3% after UBS downgraded the stock to Sell from Neutral.

Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone’s Manufacturing PMI, and U.K.’s Manufacturing PMI were released today.

The Spanish August Manufacturing PMI came in at 46.5, weaker than expectations of 48.8.

The Italian August Manufacturing PMI stood at 45.4, weaker than expectations of 46.0.

The French August Manufacturing PMI was at 46.0, weaker than expectations of 46.4.

The German August Manufacturing PMI has been reported at 39.1, in line with expectations.

Eurozone August Manufacturing PMI came in at 43.5, weaker than expectations of 43.7.

U.K. August Manufacturing PMI arrived at 43.0, stronger than expectations of 42.5.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.43%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.28%.

China’s Shanghai Composite today closed higher as unexpectedly positive factory activity data and more stimulus measures in the country boosted investor sentiment. A private-sector survey showed on Friday that China’s factory activity unexpectedly returned to expansion in August, with supply, domestic demand, and employment improving. Meanwhile, China’s central bank and financial regulator issued notices to relax some borrowing rules to aid homebuyers, which includes reducing the current mortgage rates for first-time homebuyers and lowering down payment requirements in some cities. As a result, property stocks listed in mainland China soared on Friday, with China Vanke gaining about +3% and Poly Developments & Holdings Group rising more than +1%. The yuan also strengthened following China’s central bank’s decision to lower the foreign exchange reserve requirement ratio for financial institutions, a move aimed at supporting the currency. In other news, five of China’s largest banks lowered interest rates on a range of deposits.

The Chinese August Caixin Manufacturing PMI stood at 51.0, stronger than expectations of 49.3.

Japan’s Nikkei 225 Stock Index closed higher today as investors scooped up undervalued stocks, shrugging off weaker-than-expected capital spending and manufacturing activity data. According to a survey released on Friday, Japan’s factory activity contracted for a third consecutive month in August, with manufacturers facing cost pressures due to inflation in raw material prices and increasing wages. Also, the Ministry of Finance said Friday that Japanese firms increased spending on plants and equipment from April to June, but the annual growth rate slowed to its lowest level in five quarters. Meanwhile, bank stocks gained ground on Friday, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group rising over +1%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.18% to 16.86.

The Japanese August Manufacturing PMI came in at 49.6, weaker than expectations of 49.7. 

The Japanese Capital Spending stood at +4.5% y/y in the second quarter, weaker than expectations of +5.4% y/y.

“Investors bought shares broadly. Particularly individual investors scooped up stocks with high dividend payouts on dips,” Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

Pre-Market U.S. Stock Movers

Nutanix Inc (NTNX) surged over +17% in pre-market trading after the company reported upbeat Q4 results and provided above-consensus Q1 and FY24 revenue guidance.

Eos Energy Enterprises Inc (EOSE) spiked about +39% in pre-market trading after announcing Project AMAZE, a $500 million planned expansion to build 8 GWh of clean energy storage production capacity.

Broadcom Inc (AVGO) fell more than -4% in pre-market trading after the semiconductor company’s Q3 results and Q4 guidance was roughly in line with expectations.

MongoDB (MDB) climbed over +6% in pre-market trading after the developer and database company posted better-than-expected Q2 results and boosted its full-year guidance.

Dell Technologies Inc (DELL) soared more than +9% in pre-market trading after the company reported stronger-than-expected Q2 results.

MercadoLibre Inc (MELI) rose over +1% in pre-market trading after New Street upgraded the stock to Buy from Neutral.

Aramark Holdings (ARMK) gained more than +2% in pre-market trading after Citi upgraded the stock to Buy from Neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Friday - September 1st

Dingdong (DDL), Daktronics (DAKT), Deswell Industries (DSWL).

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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. For more information please view the Barchart Disclosure Policy here.