Stock Market Update

The S&P 500 futures are up five points and are trading 0.1% above fair value; the Nasdaq 100 futures are up 26 points and are trading 0.2% above fair value; and the Dow Jones Industrial Average futures are down 61 points and are trading 0.1% below fair value.

Early action is mixed, perhaps because there is a lot of mixed up action around the globe following a flawed CrowdStrike (CRWD) technical update that impacted Microsoft's operating system and caused a load of system outages that has affected airlines, banks, exchanges, and many other businesses.

CrowdStrike said the bug was identified and that it rolled back its update; accordingly, system recovery efforts are underway around the globe but not yet fully restored in all cases.

This is the headline news this morning and it has overshadowed the earnings reporting by Netflix (NFLX), American Express (AXP), Travelers (TRV), SLB Corp (SLB), and others. Those reports might be overshadowed but they won't be (and haven't been) overlooked.

There is no U.S. economic data of note today.

In corporate news:

• Netflix (NFLX 645.10, +2.06, +0.3%): beats by $0.14, reports revs in-line; guides Q3 EPS above consensus, revs below consensus
• American Express (AXP 244.23, -4.97, -2.0%): beats by $0.23, misses on revs; raises FY24 EPS above consensus, reaffirms FY24 revs guidance
• Travelers (TRV 221.84, +1.24, +0.6%): beats by $0.50, reports revs in-line
• Microsoft (MSFT 433.91, -6.46, -1.5%)/Crowdstrike (CRWD 304.29, -38.76, -11.3%): Microsoft 365 suffers outage that impacts airlines, banks, and other firms worldwide; MSFT 365 services have been restored; Crowdstrike update cause of outage 
• SLB (SLB 49.66, +0.94, +1.9%): beats by $0.02, reports revs in-line
• Fifth Third (FITB 39.50, -0.73, -1.8%): misses by $0.04
• Intuitive Surgical (ISRG 438.00, +21.86, +5.3%): beats by $0.24, beats on revs, da Vinci procedures grew approximately 17%
• PPG Industries (PPG 126.06, -5.65, -4.3%): beats by $0.02, misses on revs; guides Q3 EPS below consensus; guides FY24 EPS below consensus

Reviewing overnight developments:

• Equity indices ended the week on a mostly lower note. Japan's Nikkei -0.2%; Hong Kong's Hang Seng -2.0%; China's Shanghai Composite +0.2%; India's Sensex -0.9%; South Korea's Kospi -1.0%; and Australia's ASX All Ordinaries -0.8%.
  • In economic data:
    • Japan's June National CPI 0.3% m/m (last 0.5%); 2.8% yr/yr (last 2.8%). June National Core CPI 2.6% yr/yr (expected 2.7%; last 2.5%)
    • New Zealand's June Credit Card Spending -3.1% yr/yr (last -0.2%)
  • In news:
    • China's Communist Party released a summary of the Third Plenum, but details were limited. However, the market expects more specific reform plans to emerge from the Politburo meeting at the end of this month.
    • The Japanese government lowered its domestic growth forecast for FY24 to 0.9% from 1.3%. Japan's Prime Minister Kishida said that there needs to be caution about the effects of rising prices stemming from yen weakness.
    • Samsung's unionized employees are expected to resume wage talks with the company after eleven days on strike.
• Major European indices are on track for a lower finish to the week. STOXX Europe 600 -0.5%; Germany's DAX -0.6%; UK's FTSE 100 -0.5%; France's CAC 40 -0.6%; Italy's FTSE MIB -0.7%; and Spain's IBEX 35 - 0.5%.
  • In economic data:
    • Eurozone's May Current Account surplus EUR37.0 bln (expected surplus of EUR34.6 bln; last surplus of EUR38.6 bln)
    • Germany's June PPI 0.2% m/m (expected 0.1%; last 0.0%); -1.6% yr/yr, as expected (last -2.2%)
    • U.K.'s June Retail Sales -1.2% m/m (expected -0.6%; last 2.9%); -0.2% yr/yr (expected 0.2%; last 1.7%). Core Retail Sales -1.5% m/m (expected -0.5%; last 2.9%); -0.8% yr/yr (expected 0.2%; last 1.6%). June Public Sector Net Borrowing GBP13.59 bln (expected GBP10.80 bln; last GBP15.57 bln)
    • Spain's May trade deficit EUR2.30 bln (last deficit of EUR4.70 bln)
  • In news:
    • Appliance manufacturer Electrolux said that market conditions did not change much in Q2 with demand in North America remaining stable thanks to an aggressive pricing environment.
    • A disappointing June Retail Sales report from the U.K. has boosted expectations for an August rate cut from the Bank of England.