Stock Market Update

The S&P 500 futures are down ten points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 32 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 70 points and are trading 0.2% below fair value.

Stock futures indicate a lower open, pressured by losses in the semiconductor space. NVIDIA (NVDA) is a standout in that respect, down nearly 2% ahead of the open. This price action follows better-than-expected earnings and revenue from Micron (MU), which is down nearly 6% in premarket action. MU also issued in-line Q4 EPS and revenue guidance.  

Walgreens Boots Alliance (WBA) is another standout this morning. Shares are down 15% in pre-open action following disappointing earnings and guidance. 

Treasury yields are slightly higher than yesterday, which has contributed to the downside bias in equities. The 10-yr note yield is up one basis point to 4.33% and the 2-yr note yield is up one basis point to 4.76%.

In corporate news:

• The Financial Select Sector SPDR Fund (XLF 40.97, -0.05, -0.1%): Fed Stress Test showed that the 31 large banks subject to the test this year have sufficient capital
• Levi Strauss (LEVI 19.57, -3.55, -15.4%): beats by $0.05, reports revs in-line; reaffirms FY24 EPS guidance, revs guidance; increases dividend
• Micron (MU 134.25, -8.11, -5.7%): beats by $0.14, beats on revs; guides Q4 EPS in-line, revs in-line
• Walgreens Boots Alliance (WBA 13.35, -2.31, -14.6%): misses by $0.05, beats on revs; lowers FY24 EPS guidance below consensus, reflecting challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment
• AeroVironment (AVAV 179.06, -13.75, -7.1%): beats by $0.21, beats on revs; guides FY25 EPS in-line, revs in-line
• Int'l Paper (IP 39.82, -6.79, -14.6%): Suzano (SUZ) formalizes that it will not pursue a transaction involving the acquisition of International Paper
• Apogee Enterprises (APOG 63.42, +4.17, +7.0%): beats by $0.40, reports revs in-line; guides FY25 EPS above consensus, reaffirms FY25 revs guidance
• McCormick (MKC 68.81, +1.14, +1.7%): beats by $0.10, reports revs in-line; reaffirms FY24 EPS guidance, revs guidance
• Concentrix (CNXC 59.27, +1.25, +2.2%): beats by $0.06, beats on revs; guides Q3 EPS below consensus, revs in-line; guides FY24 EPS in-line, revs in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: -0.8%, Hong Kong's Hang Seng: -2.1%, China's Shanghai Composite: -0.9%, India's Sensex: +0.7%, South Korea's Kospi: -0.3%, Australia's ASX All Ordinaries: -0.3%.
  • In economic data:
    • China's May Industrial Profit 3.4% YTD (last 4.3%)
    • Japan's May Retail Sales 3.0% yr/yr (expected 2.0%; last 2.0%)
    • South Korea's July Manufacturing BSI Index 78 (last 74)
    • Australia's MI Inflation Expectations 4.4% (last 4.1%)
    • New Zealand's June ANZ Business Confidence 6.1 (last 11.2)
  • In news:
    • China's cabinet is looking to attract more foreign investment.
    • Down payments for first-time homebuyers in Beijing have been lowered to 20% from 30%.
    • Toyota's global output was down 4.1% in May, representing the fourth consecutive monthly decrease.
    • The U.S., Japan, and South Korea have agreed to closer cooperation on key technologies, export controls, and supply chains.
• Major European indices trade on a mostly lower note. STOXX Europe 600: -0.3%, Germany's DAX: +0.1%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.7%, Italy's FTSE MIB: -0.6%, Spain's IBEX 35: -0.7%.
  • In economic data:
    • Eurozone's May M3 Money Supply 1.6% yr/yr (expected 1.5%; last 1.3%). May loans to nonfinancials 0.3% yr/yr (last 0.3%) and Private Sector Loans 0.3% yr/yr, as expected (last 0.2%). June Business and Consumer Survey 95.9 (expected 96.2; last 96.1)
    • Italy's June Business Confidence 86.8 (expected 88.7; last 88.2) and Consumer Confidence 98.3 (expected 97.0; last 96.4). May PPI 0.3% m/m (last -0.7%); -3.5% yr/yr (last -1.4%)
    • Spain's May Retail Sales 0.2% yr/yr (last 0.3%)
  • In news:
    • The EU made a slight reduction to tariffs on imports of Chinese electric vehicles.
    • Sweden's Riksbank left its policy rate at 3.75% and hinted at as many as three rate cuts during the second half.
    • Retailer H&M said that June sales are expected to be down about 6% yr/yr while German engineering firm Manz lowered its outlook due to weak investment spending.