After Hours Report

The major indices all registered losses ranging from 0.2% to 1.3%. Several catalysts drove market participants to take some money off the table today amid a lingering sense that the market is due for a pullback following its big run in the first half of the year. 

Those catalysts included geopolitical angst and concerns about global growth following the news that Services PMI readings for June out of China and the eurozone were weaker than expected, that the U.S. is looking to restrict China's access to cloud computing, and that China said foreign entities will have to request permission to export gallium and germanium.

There was also some knee-jerk selling in the wake of the release of the FOMC Minutes for the June 13-14 meeting at 2:00 p.m. ET. The minutes didn't contain anything surprising, though, and the major indices quickly bounced back from the spate of selling interest. Ultimately, the stock and bond markets finished their sessions in close proximity to where they were trading when the minutes were released.

Expectations for future rate hikes were also little changed. The CME FedWatch Tool shows an 88.7% probability of a 25-basis points rate hike at the July FOMC meeting (versus 86.8% on July 3) and a 17.7% probability of a second rate hike at the September FOMC meeting (versus 20.8% on July 3).

Relative strength from the mega cap space helped to limit index losses while the Russell 2000 lagged, declining 1.3%. The Vanguard Mega Cap Growth ETF (MGK) rose 0.1% while the Invesco S&P 500 Equal Weight ETF (RSP) fell 0.4%. 

Most of the S&P 500 sectors registered a loss, but the materials sector (-2.5%) saw the biggest loss by a wide margin. The industrials (-0.6%) and information technology (-0.6%) sectors were also notable underperformers. 

The communication services (+1.2%) and utilities (+1.1%) sectors, meanwhile, rose to the top of the leaderboard. 

Decliners led advancers by a better than 2-to-1 margin at the NYSE and a nearly 2-to-1 margin at the Nasdaq. 

Treasuries settled with losses across the curve. The 2-yr note yield rose two basis points to 4.94% and the 10-yr note yield rose nine basis points to 3.95%. 

• Nasdaq Composite: +31.8% YTD
• S&P 500: +15.8% YTD
• S&P Midcap 400: +7.3% YTD
• Russell 2000: +6.3% YTD
• Dow Jones Industrial Average: +3.4% YTD

Reviewing today's economic data:

• Factory orders increased 0.3% month-over-month in May (Briefing.com consensus 0.6%) following a downwardly revised 0.3% increase (from 0.4%) in April. Excluding transportation, factory orders declined 0.5% month-over-month on the heels of a 0.6% decline in April. Shipments of manufactured goods also increased 0.3% month-over-month after declining 0.6% in April.
  • The key takeaway from the report is that new order activity for manufactured goods remained weak, excluding transportation.

Looking ahead to Thursday, market participants will receive the following economic data:

• 7:00 ET: Weekly MBA Mortgage Index (prior 3.0%)
• 8:15 ET: June ADP Employment Change (Briefing.com consensus 245,000; prior 278,000)
• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 250,000; prior 239,000), Continuing Claims (prior 1.742 mln), May Trade Balance (Briefing.com consensus -$69.0 bln; prior -$74.6 bln)
• 9:45 ET: June IHS Markit Services PMI - Final (prior 54.9) 
• 10:00 ET: June ISM Non-Manufacturing Index (Briefing.com consensus 51.1%; prior 50.3%) and May job openings (prior 10.103 mln)
• 10:30 ET: Weekly natural gas inventories (prior +76 bcf)
• 11:00 ET: Weekly crude oil inventories (prior -9.60 mln)

Overseas:

• Europe: DAX -0.6%, FTSE -1.0%, CAC -0.8%
• Asia: Nikkei -0.3%, Hang Seng -1.6%, Shanghai -0.7%

Commodities:

• Crude Oil +1.94 @ 71.82
• Nat Gas -0.05 @ 2.64
• Gold -1.80 @ 1927.10
• Silver +0.41 @ 23.43
• Copper +0.01 @ 3.77

After-Hours Spotlight:

• Bank of America (BAC) to increase its quarterly dividend 9% to $0.24/share beginning in 3Q23... BAC up 0.4%
• Exxon Mobil (XOM) details items that will impact Q2 results; changes in gas prices negatively impacting Q2 upstream earnings by $1.8-2.2 bln... XOM down 1.3%
• JetBlue Airways (JBLU) issues statement regarding its Northeast Alliance, or NEA, with American Airlines (AAL): strongly disagree with court ruling against the NEA, but will not appeal... JBLU down 0.6%
• Magnite (MGNI) chosen by Foxtel Media to enable programmatic advertising on BINGE’s ad-supported tier BINGE Basic... MGNI up 1.7%
• Nikola Corporation (NKLA) awarded $41.9 mln grant by the California Transportation Commission to build six heavy-duty hydrogen refueling stations across Southern California... NKLA down 0.7%

Fair Value for Thursday, July 6:

• S&P 500: 4,484
• Nasdaq 100: 15,355
• DJIA: 34,516

For a full rundown of today's market and after hours developments, see Live In Play

• Earnings/Guidance (Full Earnings Calendar):
  • Knight-Swift (KNX) closed on the previously-announced acquisition of U.S. Xpress Enterprises (USX); anticipates Q2 results will be lower than previously expect
  • Light & Wonder (LNW) reaffirms outlook
  • Niu Technologies (NIU) reports Q2 sales volumes increased 1.5% yr/yr
  • Scilex Holding Company (SCLX) Generates Record Monthly Revenue In June 2023 And Provides Certain Preliminary Unaudited Financial Results For Gross And Net Sales For The One Month Ended June 2023, Quarter Ended June 2023
  • TETRA Tech (TTI) sees Q2 revs at high of prior guidance
  • Volkswagen (VWAGY) of America reports Q2 sales +1.1% yr/yr to 144,787 units
• General News
  • US wants to restrict Chinese access to cloud computing, according to The Wall Street Journal
  • China's Ministry of Commerce announced that foreign entities will have to request permission to export gallium and germanium from China
  • Federal judge limits Biden administration's contact with social media sites amid freedom of speech concerns, according to New York Times
  • Treasury Secretary Janet Yellen will try to ease China tensions with visit this week, according to New York Times
  • Secret Service found cocaine in the West Wing of the White House, according to Washington Post
  • Japan's Labor Confederation noted that the average wage increase in 2023 was the largest in 30 years
  • China's Caixin Services PMI returned to its lowest level since January, though at 53.9, it remained in expansionary territory
  • Services PMI readings from Germany, U.K., France, Italy, and Spain decelerated from their May levels, but only France's reading fell into contraction
  • NYC has 70.3 mln square feet of available office space, the highest in history, according to MarketWatch
  • BioNTech (BNTX): UK Government signs agreement with BioNTech SE to provide up to 10,000 patients with precision cancer immunotherapies by 2030
  • Boeing (BA): Germany aiming to purchase 60 Chinooks for EUR 8 bln, according to Reuters
  • Bud Light (BUD) sales haven't improved leading up to July 4, according to Newsweek
  • Cipher Mining (CIFR) announces June 2023 operational update
  • Dexcom (DXCM) reports that Dexcom G7 receives Health Canada approval
  • Digital World Acquisition Corp (DWAC) disclosed agreement in principle with the staff of the SEC’s Division of Enforcement
  • EMCOR Group (EME) announces agreement to acquire ECM in an all-cash transaction; financial terms were not disclosed
  • Extra Space Storage (EXR) announces dividend of $1.01 per share
  • Exxon Mobil (XOM) is hiring traders and support staff for its new trading division, but below average performance bonuses are making it difficult to attract talent, according to Bloomberg
  • General Motors (GM) reports Q2 US deliveries of 691,978 vehicles, up 19% yr/yr
  • Life Storage (LSI) announces dividend of $0.90 per share
  • Light & Wonder (LNW) CFO to step down; Oliver Chow to serve as Interim CFO
  • Meta (META) plans to release microblogging application on Thursday, according to The Wall Street Journal
  • Meta Platforms (META): Canada stops META advertising amid dispute over new law, according to Bloomberg
  • PHINIA (PHIN) completes separation from BorgWarner (BWA), starts trading on New York Stock Exchange
  • Rivian Automotive (RIVN): Amazon (AMZN) rolls out first electric delivery vans from Rivian in Europe
  • RTX (RTX): Pratt & Whitney announces that Viva Aerobus has selected GTF engines to power an additional 90 Airbus (EADSY) A321neo firm aircraft orders, the first of which is expected to be delivered in 2027
  • RTX (RTX) was awarded a $117.5 mln contract by the U.S. Army for low-rate initial production of 3rd Generation Forward Looking Infrared B-Kit sensors
  • Sanofi (SNY), Lifera, and Arabio sign MOU to manufacture and supply vaccines in Saudi Arabia, boosting local production with a new state-of-the-art manufacturing facility
  • Stellantis (STLA) unveiled STLA Medium, a global BEV-by-design platform with features including range of 700 kilometers (435 miles), energy efficiency, embedded power and charging power
  • Teva Pharma (TEVA) weighing sale of $2 bln active ingredients business, according to Bloomberg
  • Toyota Motor (TM) North America reports U.S. sales in June 2023 of 195,448 vehicles, up 14.9% on a volume and daily selling rate basis versus June 2022
  • TSMC (TSM) seeing strong AI chip demand, according to Digitimes
  • UPS (UPS): Teamsters union tweets "Around 4AM, UPS walked away from the bargaining table after presenting an unacceptable offer to the Teamsters that did not address members’ needs. The UPS Teamsters Nat’l Negotiating Committee unanimously rejected the package"
  • Vertex Pharma (VRTX) receives approval for ORKAMBI by European Commission
  • Volkswagen AG (VWAGY) brand invests one billion euros for growth in South America
  • World Wrestling (WWE) reports Money In The Bank Sets Record for Highest-Grossing Arena Event in WWE History

(see Upgrades/Downgrades calendar for full list):

• Upgrades:
  • Advanced Micro (AMD) upgraded to Outperform from Market Perform at Northland Capital; tgt raised to $150
  • BioMarin Pharmaceutical (BMRN) upgraded to Outperform from Market Perform at BMO Capital Markets; tgt $102
  • Coherent (COHR) upgraded to Equal Weight from Underweight at Barclays; tgt raised to $45
  • Netflix (NFLX) upgraded to Neutral from Sell at Goldman; tgt raised to $400
  • Nucor (NUE) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $191
  • Pearson Plc (PSO) upgraded to Buy from Neutral at UBS
  • Pegasystems (PEGA) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt raised to $65
  • Transocean (RIG) upgraded to Buy from Neutral at Citigroup; tgt raised to $9.50
• Downgrades:
  • Braskem SA (BAK) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $11
  • aTyr Pharma (LIFE) downgraded to Perform from Outperform at Oppenheimer
  • Coinbase Global (COIN) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $60
  • Conagra (CAG) downgraded to Hold from Buy at Jefferies; tgt lowered to $38
  • Ecolab (ECL) downgraded to Neutral from Buy at Northcoast
  • Gaming and Leisure Properties (GLPI) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $52
  • Lumentum (LITE) downgraded to Underweight from Equal Weight at Barclays; tgt raised to $42
  • Ryerson (RYI) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $45
  • SPX Corp (SPXC) downgraded to Neutral from Buy at UBS; tgt raised to $90
  • Steel Dynamics (STLD) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $102
  • U.S. Steel (X) downgraded to Neutral from Outperform at Exane BNP Paribas; tgt $26
  • VICI Properties (VICI) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $34
  • Wabash Natl (WNC) downgraded to Mkt Perform from Strong Buy at Raymond James
• Others:
  • 10x Genomics (TXG) assumed with an Overweight at JP Morgan; tgt $65
  • Adaptive Biotechnologies (ADPT) assumed with an Overweight at JP Morgan; tgt $15
  • Akoya Biosciences (AKYA) assumed with an Overweight at JP Morgan; tgt $18
  • Alarm.com (ALRM) assumed with a Neutral at JP Morgan; tgt $55
  • Axon (AXON) assumed with an Overweight at JP Morgan; tgt $236
  • Catalent (CTLT) assumed with a Neutral at JP Morgan; tgt $45
  • Clear Secure (YOU) assumed with a Neutral at JP Morgan; tgt $30
  • Flex (FLEX) assumed with an Overweight at JP Morgan; tgt $30
  • Garmin (GRMN) assumed with an Overweight at JP Morgan; tgt $115
  • Hertz Global (HTZ) initiated with a Buy at Jefferies; tgt $24
  • Jabil (JBL) assumed with an Overweight at JP Morgan; tgt $110
  • Illumina (ILMN) assumed with a Neutral at JP Morgan; tgt $235
  • Invitae (NVTA) assumed with an Underweight at JP Morgan
  • Logitech Int'l SA (LOGI) assumed with an Overweight at JP Morgan; tgt $70
  • Materion (MTRN) initiated with a Buy at Seaport Research Partners; tgt $135
  • Motorola Solutions (MSI) assumed with an Overweight at JP Morgan; tgt $320
  • Myriad Genetics (MYGN) assumed with an Underweight at JP Morgan; tgt $18
  • NanoString Technologies (NSTG) assumed with an Overweight at JP Morgan; tgt $18
  • Pacific Biosciences (PACB) assumed with an Overweight at JP Morgan; tgt $13
  • Repligen (RGEN) assumed with an Overweight at JP Morgan; tgt $220
  • Resideo (REZI) assumed with an Overweight at JP Morgan; tgt $22
  • Seer (SEER) assumed with a Neutral at JP Morgan; tgt $10
  • Snap One (SNPO) assumed with an Overweight at JP Morgan; tgt $13
  • SOPHiA GENETICS SA (SOPH) assumed with an Overweight at JP Morgan; tgt $10

• Econ Data (Thursday):
  • 7:00 ET: Weekly MBA Mortgage Index (prior 3.0%)
  • 8:15 ET: June ADP Employment Change (Briefing.com consensus 245,000; prior 278,000)
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 250,000; prior 239,000), Continuing Claims (prior 1.742 mln), May Trade Balance (Briefing.com consensus -$69.0 bln; prior -$74.6 bln)
  • 10:00 ET: June ISM Non-Manufacturing Index (Briefing.com consensus 51.1%; prior 50.3%) and May job openings (prior 10.103 mln)
  • 10:30 ET: Weekly natural gas inventories (prior +76 bcf)
  • 11:00 ET: Weekly crude oil inventories (prior -9.60 mln)
• Earnings:
  • Monday (July 3)
    • Pre-Market: None
    • After-Hours: None
  • Tuesday (July 4)
    • Pre-Market: Closed for holiday
    • After-Hours: Closed for holiday
  • Wednesday (July 5)
    • Pre-Market: None
    • After-Hours: None
  • Thursday (July 6)
    • Pre-Market: None
    • After-Hours:  LEVI
  • Friday (July 7 )
    • Pre-Market: None
    • After-Hours: AZZ