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Markets are Mixed Amid Earnings and Fed Speculation
The S&P 500 Index ($SPX) (SPY) today is down -0.47%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.98%.
US stocks today are mixed. There was positive news from Howmet Aerospace, which is up more than +11% after boosting its full-year adjusted EPS forecast. Also, PayPal Holdings is up more than +8% after reporting better-than-expected Q2 net revenue and boosting its 2024 profit forecast. In addition, Stanley Black & Decker is up more than +8% after reporting stronger-than-expected Q2 net sales.
On the negative side, Corning is down more than -10% after forecasting weaker-than-expected Q3 core sales. Also, CrowdStrike Holdings is down more than -6% on reports that Delta Air Lines is seeking compensation from the company for the IT outage it caused earlier this month. In addition, Procter & Gamble is down more than -6% after reporting Q4 net sales below consensus.
The US May S&P CoreLogic composite-20 home price index rose +6.81% y/y, stronger than expectations of +6.60% y/y.
Major central banks are meeting this week to decide on monetary policy. The Bank of Japan (BOJ) is expected to release details of plans to cut monthly bond purchases after its two-day policy meeting on Wednesday and possibly signal it will begin raising interest rates at its September meeting. The Federal Reserve is likely to signal its intention to cut interest rates in September after its two-day meeting on Wednesday. On Thursday, the Bank of England (BOE) is expected to cut its bank rate by 25 bp to 5.00% from 5.25%.
Stock investors will continue to focus on tech stocks, with key earnings reports on tap for this week. Magnificent 7 companies reporting this week include Microsoft (MSFT) today, Meta (META) on Wednesday, and Apple (AAPL) and Amazon (AMZN) on Thursday. Nvidia (NVDA) is expected to report earnings on August 28. Tesla (TSLA) and Alphabet (GOOG) were the first of the Magnificent 7 to report earnings, with their reports last Wednesday.
The market consensus is that Q2 earnings for the S&P 500 companies will rise +9% y/y. About one-third of the companies in the S&P 500 have reported thus far. According to Bloomberg, most reporting companies have beaten their earnings consensus, but only 43% have beaten revenue expectations, the lowest percentage in five years.
The markets are discounting the chances for a -25 bp rate cut at 4% for this week's FOMC meeting on Tue/Wed and 100% for the following meeting on September 17-18 if the FOMC does not cut rates next week.
Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.60%. China's Shanghai Composite fell to a 5-1/2 month low and closed down -0.43%. Japan's Nikkei Stock 225 Index closed up by +0.15%.
Interest Rates
September 10-year T-notes (ZNU24) today are up +3 ticks. The 10-year T-note yield is down -1.9 bp at 4.155%. Sep T-notes today are moving higher and have carryover support from strength in European government bond yields. Also, position squaring and short covering are boosting T-notes ahead of the results of the 2-day FOMC meeting on Wednesday.
European government bond yields today are moving lower. The 10-year German bund yield fell to a 3-1/2 month low of 2.339% and is down -1.7 bp at 2.342%. The 10-year UK gilt yield is down -2.6 bp at 4.023%.
Eurozone Q2 GDP grew +0.3% q/q and +0.6% y/y, stronger than expectations of +0.2% q/q and +0.5% y/y.
Eurozone Jul economic confidence fell -0.1 to 95.8, stronger than expectations of 95.2.
German Jul CPI (EU harmonized) rose +0.5% m/m and +2.6% y/y, stronger than expectations of +0.4% m/m and +2.5% y/y.
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 90% for the September 12 meeting.
US Stock Movers
Howmet Aerospace (HWM) is up more than +11% to lead gainers in the S&P 500 after boosting its full-year adjusted EPS forecast to $2.53-$2.57 from a previous estimate of $2.31-$2.39, well above the consensus of $2.38.
PayPal Holdings (PYPL) is up more than +9% to lead gainers in the Nasdaq 100 after reporting Q2 net revenue of $7.89 billion, above the consensus of $7.82 billion and boosted its 2024 profit forecast to an increase of “low-to-mid-teens” from a previous forecast of “mid-to-high-single digit” growth.
F5 Inc (FFIV) is up more than +9% after reporting Q3 net revenue of $695.5 million, above the consensus of $685.8 million, and forecasting Q4 revenue of $720 million-$740 million, stronger than the consensus of $715.2 million.
Stanley Black & Decker (SWK) is up more than +7% after reporting Q2 net sales of $4.02 billion, above the consensus of $4.01 billion.
Zebra Technologies (ZBRA) is up more than +6% after reporting Q2 net sales of $1.22 billion, above the consensus of $1.18 billion.
Philips 66 (PSX) is up more than +5% after reporting Q2 adjusted EPS of $2.31, stronger than the consensus of $1.98.
ASML Holding NV (ASML) is up more than +2% after Barclays upgraded the stock to overweight from equal weight.
Corning (GLW) is down more than -11% to lead losers in the S&P 500 after forecasting Q3 core sales of about $3.70 billion, weaker than the consensus of $3.81 billion.
CrowdStrike Holdings (CRWD) is down more than -6% to lead losers in the Nasdaq 100 on reports that Delta Air Lines is seeking compensation from the company for the IT outage it caused earlier this month from a failed software upgrade.
Procter & Gamble (PG) is down more than -6% to lead losers in the Dow Jones Industrials after reporting Q4 net sales of $20.53 billion, below the consensus of $20.74 billion.
Merck & Co (MRK) is down more than -5% after cutting its full-year adjusted EPS forecast to $7.94-$8.04 from a previous forecast of $8.53-$8.65.
Archer-Daniels-Midland (ADM) is down more than -5% after reporting Q2 revenue of $22.25 billion, weaker than the consensus of $23.33 billion.
Amkor Technology (AMKR) is down more than -9% after forecasting Q3 net sales of $1.79 billion-$1.89 billion, weaker than the consensus of $1.87 billion.
Symbiotic (SYM) is down more than -15% after forecasting Q4 revenue of $455 million-$475 million, well below the consensus of $516.9 million.
Earnings Reports (7/30/2024)
Advanced Micro Devices Inc (AMD), American Electric Power Co Inc (AEP), American Tower Corp (AMT), Arch Capital Group Ltd (ACGL), Archer-Daniels-Midland Co (ADM), Arista Networks Inc (ANET), BXP Inc (BXP), Caesars Entertainment Inc (CZR), CenterPoint Energy Inc (CNP), Corning Inc (GLW), Ecolab Inc (ECL), Electronic Arts Inc (EA), Essex Property Trust Inc (ESS), Extra Space Storage Inc (EXR), First Solar Inc (FSLR), FirstEnergy Corp (FE), Gartner Inc (IT), Howmet Aerospace Inc (HWM), Hubbell Inc (HUBB), Illinois Tool Works Inc (ITW), Incyte Corp (INCY), Leidos Holdings Inc (LDOS), Live Nation Entertainment Inc (LYV), Match Group Inc (MTCH), Merck & Co Inc (MRK), Microsoft Corp (MSFT), Mondelez International Inc (MDLZ), PayPal Holdings Inc (PYPL), Pfizer Inc (PFE), Phillips 66 (PSX), Procter & Gamble Co/The (PG), Public Service Enterprise Group (PEG), Public Storage (PSA), Qorvo Inc (QRVO), S&P Global Inc (SPGI), Skyworks Solutions Inc (SWKS), Smurfit WestRock PLC (SW), Stanley Black & Decker Inc (SWK), Starbucks Corp (SBUX), Stryker Corp (SYK), Sysco Corp (SYY), UDR Inc (UDR), Xylem Inc/NY (XYL), Zebra Technologies Corp (ZBRA).
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On the date of publication, Rich Asplund 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.
