Stock Market Update

The S&P 500 futures are down 42 points and are trading 0.7% below fair value, the Nasdaq 100 futures are down 230 points and are trading 1.1% below fair value, and the Dow Jones Industrial Average futures are down 158 points and are trading 0.4% below fair value.

Stock futures indicate a lower open following solid gains this week in the major indices. Tesla (TSLA) and Alphabet (GOOG) show sizable pre-open declines in response to earnings results, contributing to the negative bias in early trading. Other big tech names are lower ahead of the open in sympathy. 

Names that reported earnings since yesterday's close are mostly lower. Seagate Tech (STX), AT&T (T), and Texas Instruments (TXN) are exceptions.

The weekly MBA Mortgage Applications Index dropped 2.2% following a 3.9% jump last week. 

The 2-yr note yield is down six basis points to 4.42% and the 10-yr note yield is down one basis point to 4.23%. 

In corporate news:

• Tesla (TSLA 226.88, -19.49, -7.9%): misses by $0.09, beats on revs, gross margins down 23 bps yr/yr; reiterates that in 2024, vehicle volume may be notably lower than the growth rate achieved in 2023;
• Alphabet (GOOG 176.75, -6.85, -3.7%): beats by $0.05, reports revs in-line; CFO tells CNBC that company will continue to invest in Capex at roughly at or above Q1 levels; Generative AI for Cloud customers already generated billions in revenues in 2024
• Visa (V 255.49, -9.30, -3.5%): reports EPS in-line, revs in-line
• Texas Instruments (TXN 201.50, +3.21, +1.6%): beats by $0.01, reports revs in-line; guides Q3 EPS in-line, revs in-line
• Seagate Tech (STX 110.72, +5.42, +5.2%): beats by $0.29, reports revs in-line; guides Q1 EPS above consensus, revs in-line
• AT&T (T 18.75, +0.54, +3.0%): reports EPS in-line, revs in-line; reaffirms FY24 EPS guidance; CFO tells CNBC that he is not convinced that AI iPhones will convince consumers to trade up; customers are holding onto phones longer
• Boeing (BA 185.48, -1.00, -0.5%): resumes delivering 737 Max jets to China, according to Aviation Week
• Rivian (RIVN 16.87, -0.63, -3.6%): Judge says Rivian will face trial in case related to Tesla (TSLA) trade secrets, according to Reuters
• Capital One (COF 143.42, -2.08, -1.4%): misses by $0.25, reports revs in-line; reports June card metrics

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note. Japan's Nikkei: -1.1%, Hong Kong's Hang Seng: -0.9%, China's Shanghai Composite: -0.5%, India's Sensex: -0.4%, South Korea's Kospi: -0.6%, Australia's ASX All Ordinaries: UNCH.
  • In economic data:
    • Japan's flash July Manufacturing PMI 49.2 (expected 50.5; last 50.0) and flash Services PMI 53.9 (last 49.4)
    • South Korea's July Consumer Confidence 103.6 (last 100.9)
    • India's flash July Manufacturing PMI 58.5 (last 58.3) and flash Services PMI 61.1 (last 60.5)
    • Australia's flash July Manufacturing PMI 47.4 (last 47.2) and flash Services PMI 50.8 (last 51.2)
  • In news:
    • Overall sentiment was weakened by a poor response to quarterly results from Tesla (TSLA) and Alphabet (GOOG) after the close of the Wall Street session.
    • Japan's Manufacturing PMI fell into contraction in the flash reading for July while Services PMI pointed to renewed expansion.
    • The Japanese yen has continued its bounce against the dollar, which began two weeks ago, reaching its best level since early June.
• Major European indices trade on a mostly lower note. STOXX Europe 600: -0.4%, Germany's DAX: -0.6%, U.K.'s FTSE 100: -0.1%, France's CAC 40: -1.0%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: UNCH.
  • In economic data:
    • Eurozone's flash July Manufacturing PMI 45.6 (expected 46.0; last 45.8) and flash Services PMI 51.9 (expected 52.9; last 52.8)
    • Germany's flash July Manufacturing PMI 42.6 (expected 44.1; last 43.5) and flash Services PMI 52.0 (expected 53.2; last 53.1). August GfK Consumer Climate -18.4 (expected -21.1; last -21.6)
    • U.K.'s flash July Manufacturing PMI 51.8 (expected 51.1; last 50.9) and flash Services PMI 52.4 (expected 52.5; last 52.1)
    • France's flash July Manufacturing PMI 44.1 (expected 45.8; last 45.4) and flash Services PMI 50.7 (expected 49.7; last 49.6)
    • Spain's June PPI -3.5% yr/yr (last -4.5%) and June Consumer Confidence 88.4 (last 83.8)
  • In news:
    • Flash July Manufacturing and Services PMI readings for the eurozone weakened unexpectedly from their June levels, largely due to a deepening contraction in economic activity in Germany.
    • French President Macron ruled out resigning before the end of his term in 2027.
    • Deutsche Bank reported its first quarterly loss in four years.
    • Hungary's central bank lowered its base rate by 25 bps to 6.75%.