Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.4%), Nasdaq Composite (+0.5%), and DJIA (+0.5%) are maintaining their modest early gains.

The financials sector (+0.8%) holds a solid gain this morning, with several notable corporate news items.

PayPal (PYPL 55.37, +8.00, +16.89%) is the best-performing S&P 500 stock so far after Reuters reported that Stripe and Advert International offered to acquire the company for $53 billion.

Meanwhile, Morgan Stanley (MS 230.62, +2.95, +1.30%) is up solidly after delivering a clear Q2 beat, with EPS of $3.46 that topped the FactSet consensus by $0.53 and revenue of $21.35 billion that exceeded expectations by $1.67 billion. The report was strong across both sides of the model, with Institutional Securities revenue up about 44% year-over-year to $11.04 billion, Investment Banking revenue up 58% to $2.44 billion, and Wealth Management revenue up 14.1% to $8.86 billion. The quarter combined high-beta upside from Institutional Securities with durable wealth asset gathering, showing that the firm can participate in a capital-markets recovery while still compounding fee-based client assets.

[BRIEFING.COM] The S&P 500 (+0.3%), Nasdaq Composite (+0.5%), and DJIA (+0.4%) are modestly higher this morning on relatively broad strength.

Nine S&P 500 sectors hold gains, with the consumer discretionary sector (+1.1%) leading the advance with support from its largest components, Amazon (AMZN 251.91, +4.42, +1.78%) and Tesla (TSLA 398.17, +1.99, +0.50%).

Alphabet (GOOG 362.26, +4.93, +1.38%) helps the communication services sector (+0.8%) move higher amid a solid early showing for "magnificent seven" names.

Within the information technology sector (+0.1%), Apple (AAPL 320.73, +5.87, +1.86%) and Microsoft (MSFT 390.99, +6.06, +1.57%) are helping offset some weakness across semiconductor stocks, which are facing some modest profit-taking after a strong showing yesterday. The PHLX Semiconductor Index is down 0.5%.

The energy sector (-0.3%) is this morning's laggard, despite WTI crude oil creeping back above the $80 per barrel mark, while the industrials sector (-0.1%) also holds a modest gain.

The stock market is now on track for a higher open as chipmaker names look to extend yesterday's bounce after another encouraging inflation reading.

Total PPI decreased 0.3% month-over-month in June (Briefing.com consensus: 0.1%) following a downwardly revised 0.6% increase (from 1.1%) in May. The June drop was driven by a 1.4% decline in prices for final demand goods, which was paced by a 6.4% decline in prices for final demand energy. Core PPI, which excludes food and energy, was up 0.2% month-over-month (Briefing.com consensus: 0.4%) following a downwardly revised 0.1% increase (from 0.4%) in May.

On a year-over-year basis, total PPI was up 5.5% versus 6.0% in May, and core PPI was up 4.7% versus 4.6% in May.

The key takeaway from the report is that it is an encouraging monthly marker of how the inflation data can improve with a decline in energy prices; however, it also reveals on a year-over-year basis that wholesalers are still dealing with high prices. Net-net, this report conveys the need for more improvement in bringing down wholesale prices, but it was better-than-feared when also factoring in the downward revisions to the prior month.

The S&P 500 futures currently trade 16 points above fair value. 

Equity indices in the Asia-Pacific region finished mostly higher Tuesday, with South Korea's Kospi continuing its wild swings on the volatility of its leading semiconductor components, Samsung Electronics and SK Hynix. Today's move featured upside volatility as the Kospi surged 6.2%. Notably, South Korean President Lee remarked that the stock market is "quite unstable." That move and that comment precede a BOK rate decision on Thursday that is expected to produce a rate hike to help quell inflation. Elsewhere, China had a data dump that featured stronger-than-expected retail sales and industrial production for June.

• In economic data:
  • China's June Retail Sales 1.0% yr/yr (-0.1% expected; prior -0.6%); June Industrial Production 5.3% yr/yr (4.7% expected; prior 4.5%); June Fixed Asset Investment -5.7% yr/yr (-5.0% expected; prior -4.1%); Q2 GDP 0.9% qtr/qtr (0.9% expected; prior 1.3%) and 4.7% year-to-date (4.5% expected; prior 5.0%); June House Prices -3.3% yr/yr (prior -3.5%); June Unemployment Rate 5.0% (5.1% expected; prior 5.1%); June New Loans CNY1610.0 bln (CNY1950.0 bln expected; prior CNY520.0 bln)
  • Japan's July Reuters Tankan Index 13 (prior 13); May Core Machinery Orders -12.4% m/m (-4.2% expected; prior 8.7%) and -1.9% yr/yr (12.9% expected; prior 15.6%); May Tertiary Industry Activity Index -1.4 (prior -11.1)
  • South Korea's June Imports 30.0% yr/yr (30.1% expected; prior 20.7%) and Exports 70.7% yr/yr (70.9% expected; prior 53.4%); June Unemployment Rate 2.7% (prior 2.8%)

---Equity Markets---

• Japan's Nikkei: +1.5%
• Hong Kong's Hang Seng: +1.4%
• China's Shanghai Composite: -0.3%
• India's Sensex: +0.2%
• South Korea's Kospi: +6.2%
• Australia's ASX All Ordinaries: +0.4%

Major European indices are mostly lower, taking stock of increased hostilities between the U.S. and Iran that have led to the restoration of the U.S. blockade of Iranian vessels and supply worries that have pushed up oil prices. Brent crude futures are up 1.1% to $85.67/bbl, feeding inflation worries that are driving up sovereign bond yields that have acted as a headwind for stocks. Conversely, ASML (ASML) made it clear with its Q3 and full-year guidance that AI and the demand for semiconductors are acting as a big tailwind for its business.

• In economic data:
  • Eurozone's May Industrial Production -0.2% m/m (0.3% expected; prior 0.3%) and -1.2% yr/yr (-0.5% expected; prior 0.4%)
  • Spain's June CPI 0.6% m/m (0.6% expected; prior 0.1%) and 3.2% yr/yr (3.2% expected; prior 3.2%) and core CPI 2.9% yr/yr (2.9% expected; prior 3.0%)

---Equity Markets---

• STOXX Europe 600: +0.2%
• Germany's DAX: -0.5%
• U.K.'s FTSE 100: -0.1%
• France's CAC 40: +0.1%
• Italy's FTSE MIB: -0.4%
• Spain's IBEX 35: -0.5%

The S&P 500 futures currently trade nine points above fair value.

Just released, the Producer Price Index for final demand decreased 0.3% month-over-month in June (Briefing.com consensus: 0.1%) following a downwardly revised 0.6% increase (from 1.1%) in May.

Core PPI, which excludes food and energy, rose 0.2% month-over-month (Briefing.com consensus: 0.4%) following a downwardly revised 0.1% increase (from 0.4%) in May.

The Empire State Manufacturing Index expanded to 15.6 in July (Briefing.com consensus 8.5), up from the previous reading of 5.7.