Stock Market Update

The S&P 500 futures are up 53 points and are trading 1.0% above fair value, the Nasdaq 100 futures are up 300 points and are trading 1.7% above fair value, and the Dow Jones Industrial Average futures are up 40 points and are trading 0.1% above fair value.

There's a positive bias in early trading driven by pre-open gains in semiconductor-related names. AMD (AMD) is a standout in that respect, showing an 8% gain after reporting earnings. NVIDIA (NVDA) shares are 7% higher in response. Semiconductor shares garnered added support from a Reuters report that the chip equipment export rule will have key exemptions for allies.

Participants are waiting on the Fed's latest policy move today at 2:00 ET, but the market expects the FOMC to leave rates unchanged. There is some hopeful anticipation related to the Fed signaling that the first rate cut will be at the September meeting. 

The Bank of Japan raised its policy rate by 15 basis points to 0.25% and Governor Ueda left the door open for another hike this year. The central bank also announced that its asset purchases will be reduced by JPY400 bln each quarter.

Today's US economic lineup features the weekly MBA Mortgage Applications Index, which dropped 3.9% after last week's 2.2% drop. Other data include:

• 8:15 ET: July ADP Employment Change (Briefing.com consensus 160,000; prior 152,000)
• 8:30 ET: Q2 Employment Cost Index (Briefing.com consensus 1.0%; prior 1.2%)
• 10:00 ET: June Pending Home Sales (Briefing.com consensus 1.5%; prior -2.1%)
• 10:30 ET: Weekly crude oil inventories (prior (-3.74 mln)
• 14:00 ET: July FOMC Rate Decision (Briefing.com consensus 5.25-5.50%; prior 5.25-5.50%)

In corporate news:

• Microsoft (MSFT 408.77, -14.15, -3.4%): beats by $0.01, reports revs in-line; Azure +30% CC vs +30-31% CC prior guidance; provides SepQ guidance on the call, guides SepQ revs below consensus; co plans to scale its infrastructure investments in FY25
• Advanced Micro (AMD 150.01, +11.57, +8.4%): beats by $0.01, beats on revs; guides Q3 revs in-line
• Starbucks (SBUX 79.02, +3.08, +4.1%): reports EPS in-line, misses on revs, global comparable store sales decreased by 3%; Reiterates all of its FY24 financial targets
• Arista Networks (ANET 328.99, +17.57, +5.6%): beats by $0.16, beats on revs; guides Q3 revs in-line; expects FY24 revenue growth of at least +14%
• Mondelez Int'l (MDLZ 67.69, +0.64, +1.0%): beats by $0.07, misses on revs; expects FY24 organic revenue growth at higher end of +3-5%
• Pinterest (PINS 33.37, -3.98, -10.7%): beats by $0.01, reports revs in-line; guides Q3 revs below consensus
• NVIDIA (NVDA 110.87, +7.13, +6.9%): up in sympathy with AMD results, providing boost to broader market
• ASML (ASML 921.33, +61.09, +7.1%): Foreign chip equipment export rule to have key exemption for allies, according to Reuters
• Intel (INTC 30.85, +0.72, +2.4%): up after planning to cut thousands of jobs to reduce costs and fund a rebound, according to Bloomberg
• Skyworks (SWKS 116.40, -1.29, -1.1%): reports EPS in-line, revs in-line; guides Q4 EPS above consensus, revs in-line; increases dividend
• T-Mobile US (TMUS 180.44, +5.08, +2.9%): beats by $0.21, reports revs in-line
• Live Nation (LYV 94.80, +0.18, +0.2%): misses by $0.03, reports revs in-line
• Boeing (BA 193.25, +6.39, +3.4%): misses by $1.00, misses on revs; 737 program gradually increased production during Q2; appoints Kelly Ortberg as President and CEO, effective August 8

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Wednesday on a higher note. Japan's Nikkei: +1.5%, Hong Kong's Hang Seng: +2.0%, China's Shanghai Composite: +2.1%, India's Sensex: +0.4%, South Korea's Kospi: +1.2%, Australia's ASX All Ordinaries: +1.8.
  • In economic data:
    • China's July Manufacturing PMI 49.4, as expected (last 49.5) and Non-Manufacturing PMI 50.2 (expected 50.3; last 50.5)
    • Japan's June Industrial Production -3.6% m/m (expected -4.2%; last 3.6%) and June Retail Sales 3.7% yr/yr (expected 3.3%; last 2.8%). June Housing Starts -6.7% yr/yr (expected -2.3%; last -5.2%) and July Household Confidence 36.7 (expected 36.5; last 36.4)
    • South Korea's June Industrial Production 0.5% m/m (expected -0.7%; last -0.6%); 3.8% yr/yr (expected 2.3%; last 4.3%). June Retail Sales 1.0% m/m (last -0.2%) and Service Sector Output 0.2% m/m (last -0.8%)
    • Singapore's Q2 Unemployment Rate 2.0% (last 2.1%) and Q2 Business Expectations 23.0 (last 22.0)
    • Hong Kong's Q2 GDP -0.4% qtr/qtr (expected 0.3%; last 2.3%); 3.3% yr/yr (expected 2.7%; last 2.7%)
    • Australia's June Retail Sales 0.5% m/m (expected 0.2%; last 0.6%); -0.3% qtr/qtr (last -0.4%). June Monthly CPI Indicator 3.8% yr/yr, as expected (last 4.0%)
    • New Zealand's Q2 CPI 1.0% qtr/qtr, as expected (last 1.0%); 3.8% yr/yr, as expected (last 3.6%). June Private Sector Credit 0.6% m/m (expected 0.4%; last 0.4%), June Building Consents -13.8% m/m (last -1.9%)
  • In news:
    • The Bank of Japan raised its policy rate by 15 basis points to 0.25% and Governor Ueda left the door open for another hike this year. The central bank also announced that its asset purchases will be reduced by JPY400 bln each quarter.
    • China's official Manufacturing PMI remained in contraction in July while Non-Manufacturing PMI showed decelerating growth.
    • China's Politburo held a meeting to establish economic priorities for the second half of the year, shifting the focus toward boosting consumption.
• Major European indices trade on a mostly higher note. STOXX Europe 600: +0.9%, Germany's DAX: +0.4%, U.K.'s FTSE 100: +1.1%, France's CAC 40: +1.2%, Italy's FTSE MIB: UNCH, Spain's IBEX 35: -1.1%.
  • In economic data:
    • Eurozone's flash July CPI 0.0% m/m (last 0.2%); 2.6% yr/yr (expected 2.5%; last 2.5%). July Core CPI -0.2% m/m (last 0.4%); 2.9% yr/yr (expected 2.8%; last 2.9%)
    • Germany's June Import Price Index 0.4% m/m (expected 0.1%; last 0.0%); 0.7% yr/yr (expected 0.5%; last -0.4%). July Unemployment Change 18,000 (expected 16,000; last 20,000) and Unemployment Rate 6.0%, as expected (last 6.0%)
    • France's flash July CPI 0.1% m/m (expected 0.3%; last 0.1%); 2.3% yr/yr (expected 2.4%; last 2.2%). June PPI -0.3% m/m (last -1.6%); -6.0% yr/yr (last -6.7%)
    • Italy's flash July CPI 0.5% m/m (expected 0.3%; last 0.1%); 1.3% yr/yr (expected 1.2%; last 0.8%). June PPI 0.7% m/m (last 0.3%); -2.5% yr/yr (last -3.5%)
    • Spain's May Current Account surplus EUR5.56 bln (last surplus of EUR2.83 bln)
    • Swiss July ZEW Expectations 9.4 (last 17.5)
  • In news:
    • Eurozone's flash CPI for July accelerated to 2.6% yr/yr from 2.5% while core CPI growth remained at 2.9%.
    • The Bank of England's Shadow Monetary Policy Committee is calling the Bank of England to hold its bank rate at 5.25% tomorrow.
    • Chip equipment manufacturer ASML is rallying amid reports that shipments of advanced technology to China from Japan, Netherlands, and South Korea will be exempt from restrictions.