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Briefing.com Summary:
*Amazon is carrying the market load to begin the day, offsetting weakness in Apple after its disappointing fiscal Q4 revenue guidance.
*South Korea's Kospi Index soared 17.9% in Friday's trade.
*Oil prices and bond yields are up, creating a headwind of sorts for stocks
The return of the AI momentum trade seen yesterday after earnings reports from Microsoft (MSFT) and Lam Research (LRCX) is still in play today.
To begin, we'll direct your attention to South Korea's Kospi Index, which soared 17.9%, riding the coattails of SK Hynix (SKHY) and Samsung Electronics. Beyond that, Amazon (AMZN) is up 11% after its earnings report, which featured 36.7% year-over-year growth for AWS, which was the fastest growth in 18 quarters.
Separately, Japan's Nikkei surged 4.0%, getting in on the semiconductor rebound action and also expressing a sigh of relief that the Bank of Japan left its official rate unchanged at around 1.00%, as expected, presumably skirting the risk of a disorderly unwinding of carry-trade positions had the central bank surprised with a rate hike on the heels of yesterday's intervention effort by Japan to strengthen the yen.
The upside action isn't universal, however. Apple (AAPL), which is no small company, is down 8% after issuing disappointing fiscal Q4 revenue guidance that it attributed to supply constraints and negative FX effects.
The fallout from Apple's warning hasn't been more pronounced, partly because the market recognizes that its issues have more to do with supply than demand. Still, Apple has the market-cap weight to hang a bit like a wet blanket on the major indices.
Currently, the S&P 500 futures are up 10 points and are trading 0.1% below fair value, the Nasdaq 100 futures are up 226 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 153 points and are trading 0.2% above fair value.
In a parallel universe, we also spy oil prices (WTI +1.9% to $85.22/bbl) and Treasury yields moving higher. The 10-yr note yield is up four basis points to 4.70%. These moves, should they persist, have the potential to kill the momentum trade or, certainly, to slow it, so they will be watched carefully by market participants.
The bulk of the losses for the 10-yr note yield were logged ahead of the 8:30 a.m. ET release of the Q2 Employment Cost Index, and that report invited some additional selling interest.
The Q2 Employment Cost Index increased 0.9% (Briefing.com consensus: 0.8%) on the heels of a 0.9% increase in Q1, with wages and salaries up 0.9% and benefit costs up 1.0%.
The key takeaway from the report is that wages and salaries for civilian workers, up 3.2% year-over-year, are not keeping up with inflation. That could eventually lead to reduced discretionary spending activity.
The Chicago PMI for July (Briefing.com consensus: 56.5; prior 56.7) will be released at 9:45 a.m. ET and will be followed by the final reading for the July University of Michigan Consumer Sentiment Index (Briefing.com consensus: 54.4; prior 54.4) at 10:00 a.m. ET.
