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Updated: 24-Jul-24 08:59 ET
Tesla and Alphabet help sink the equity futures market

Looking at the equity futures market, there is little doubt as to how the cash market will begin today's trading session. There will be losses for the major indices.

Currently, the S&P 500 futures are down 55 points and are trading 1.0% below fair value, the Nasdaq 100 futures are down 304 points and are trading 1.6% below fair value, and the Dow Jones Industrial Average futures are down 183 points and are trading 0.6% below fair value.

The reasons for the weakness are pretty clear cut, too.

  • Tesla (TSLA) is down 8.8% after its relatively disappointing earnings report, which featured an earnings miss and a sharp drop in its adjusted operating margin to 14.4% from 18.7% a year ago.
  • Alphabet (GOOG) is down 4.3% with reports attributing the negative response largely to YouTube advertising revenue coming in below expectations.
  • Growth concerns are percolating with Visa (V) calling attention to a slowdown in spending by lower-income consumers, LVMH posting weaker-than-expected sales due in large part to luxury shoppers in China reining in their spending, and a batch of preliminary July PMI readings out of the eurozone coming in weaker than expected.

Political uncertainty can be thrown into the mix (where it will remain for months to come) as some polls show Vice President Harris tied with former President Trump while others have her trailing, but within the margin of error.

A reason for today's weakness that some might think is clear cut, yet others would view as more vague, is consolidation interest stemming from valuation angst (in general) and concentration angst (specifically for the mega-cap stocks).

The overarching point is that market participants have their pick of reasons to start today's session with a more risk-averse mindset. Of course, what matters more is how things look at the close of today's session.

Navigation points between now and then will include the preliminary July S&P Global U.S. Manufacturing and Services PMIs at 9:45 a.m. ET, the June New Home Sales Report (Briefing.com consensus 640,000; prior 619,000) at 10:00 a.m. ET, the $70 billion 5-yr Treasury note auction results at 1:00 p.m. ET, and Israeli Prime Minister Netanyahu's address to Congress at 1:30 p.m. ET.

The Treasury market for its part has steered its way to some early gains with the front end of the curve outperforming. That makes sense in light of the growth concerns percolating and the assumption that weaker growth would spur the Fed to cut rates.

The 2-yr note yield is down eight basis points to 4.40% and the 10-yr note yield is down two basis points to 4.22%.

After today's close, Chipotle Mexican Grill (CMG), Ford Motor (F), IBM (IBM), Las Vegas Sands (LVS), ServiceNow (NOW), Waste Management (WM), and Whirlpool (WHR) will be among the featured earnings reporters.

--Patrick J. O'Hare, Briefing.com

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