Stock Market Update

The S&P 500 futures are up 25 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 100 points and are trading 0.5% above fair value, and the Dow Jones Industrial Average futures are up 15 points and are trading 0.1% above fair value.

There's a positive bias in early trading on the first day of the new month. Ongoing optimism about rate cuts, along with buying in mega cap and semiconductor shares, has supported the early bias. This price action follows solid quarterly results from Meta Platforms (META), which sports a nearly 8% gain in front of the open.

Treasury yields are lower this morning, acting as additional support for equities. The 10-yr note yield is down five basis points to 4.06% and the 2-yr note yield is down five basis points to 4.29%.

The Bank of England lowered its bank rate by 25 basis points to 5.00%, as expected. This follows yesterday's policy directive by the Fed, which left rates unchanged, but Fed Chair Powell corroborated the market's thinking that rate cuts may begin as soon as September if the data progress as expected. 

Today's economic lineup features:

• 8:30 ET: Weekly Initial Claims (Briefing.com consensus 233,000; prior 235,000), Continuing Claims (prior 1.851 mln), preliminary Q2 Productivity (Briefing.com consensus 1.6%; prior 0.2%), and preliminary Q2 Unit Labor Costs (Briefing.com consensus 1.7%; prior 4.0%)
• 10:00 ET: June Construction Spending (Briefing.com consensus 0.1%; prior -0.1%) and July ISM Manufacturing (Briefing.com consensus 48.5%; prior 48.5%)
• 10:30 ET: Weekly natural gas inventories (prior +22 bcf)

In corporate news:

• Meta Platforms (META 510.48, +35.65, +7.5%): beats by $0.44, beats on revs; guides Q3 revs in-line, reaffirms FY24 total expense guidance, raises low end of capex guidance; Rather risk building AI capacity before it is needed rather than too late
• Qualcomm (QCOM 179.55, -1.40, -0.8%): beats by $0.08, beats on revs; guides Q4 EPS and revs mid points above consensus; Automotive a standout again as company secured over ten new design wins with auto OEMs
• Corteva (CTVA 53.85, -2.25, -4.0%): beats by $0.11, reports revs in-line; guides FY24 EPS in-line, revs in-line; plans to buyback $1.0 bln of shares in FY24; announces CFO Dave Anderson retirement, appoints David Johnson as EVP, CFO
• Lam Research (LRCX 897.70, -23.54, -2.6%): beats by $0.59, beats on revs; guides Q1 EPS in-line, revs in-line
• Carvana (CVNA 147.73, +15.50, +11.6%): reports Q2 results, beats on revs, expects sequential increase in retail units in Q3 compared to Q2; upgraded/resumed at Overweight from Equal Weight at Wells Fargo
• Teladoc (TDOC 7.67, -1.76, -18.7%): misses by $0.03, misses on revs; withdraws guidance
• Arm Holdings plc (ARM 132.45, -11.72, -8.1%): beats by $0.06, beats on revs; guides Q2 EPS, revs in-line; reaffirms FY25 EPS, revs guidance
• Western Digital (WDC 64.40, -2.95, -4.4%): beats by $0.26, reports revs in-line; guides SepQ EPS in-line, revs below consensus
• C.H. Robinson (CHRW 98.01, +8.96, +10.1%): beats by $0.19, misses on revs
• The Cigna Group (CI 344.98, -3.69, -1.1%): beats by $0.29, beats on revs; guides FY24 EPS in-line
• Biogen (BIIB 214.33, +1.13, +0.5%): beats by $1.26, beats on revs; raises FY24 EPS above consensus
• Wayfair (W 52.27, -2.16, -4.0%): misses by $0.01, reports revs in-line
• Disney (DIS 93.87, +0.18, +0.2%): planning to eliminate more jobs in TV unit, according to Bloomberg 

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mixed note with Japan's Nikkei (-2.5%) revisiting its July low. Japan's Nikkei: -2.5%, Hong Kong's Hang Seng: -0.2%, China's Shanghai Composite: -0.2%, India's Sensex: +0.2%, South Korea's Kospi: +0.3%, Australia's ASX All Ordinaries: +0.3%.
  • In economic data:
    • China's July Caixin Manufacturing PMI 49.8 (expected 51.4; last 51.8)
    • Japan's July Manufacturing PMI 49.1 (expected 49.2; last 50.0)
    • South Korea's June trade surplus $3.62 bln (expected surplus of $5.00 bln; last surplus of $7.99 bln). June Imports 10.5% yr/yr (expected 13.4%; last -7.5%) and Exports 13.9% yr/yr (expected 18.4%; last 5.1%). July Manufacturing PMI 51.4 (last 52.0)
    • India's July Manufacturing PMI 58.1 (expected 59.0; last 58.3)
    • Hong Kong's June Retail Sales -9.7% yr/yr (last -11.5%)
    • Australia's July Manufacturing PMI 47.5 (expected 47.4; last 47.2). June trade surplus AUD5.589 bln (expected AUD5.080 bln; last AUD5.052 bln). June Imports 0.5% m/m (last 3.3%) and Exports 1.7% m/m (last 1.3%). Q2 Import Price Index 1.0% qtr/qtr (expected -0.9%; last -1.8%) and Export Price Index -5.9% qtr/qtr (last -2.1%)
  • In news:
    • China's Caixin Manufacturing PMI (49.8) fell into contraction for the first time since October while Australia's Manufacturing PMI (47.5) remained below 50.0 for the sixth month in a row.
    • South Korea's exports grew at their fastest pace in six months in June.
    • China Securities Daily speculated that the reserve requirement ratio could be reduced as early as this quarter.
• Major European indices trade on a mostly lower note. STOXX Europe 600: -0.2%, Germany's DAX: -0.7%, U.K.'s FTSE 100: +0.2%, France's CAC 40: -0.8%, Italy's FTSE MIB: -0.9%, Spain's IBEX 35: -0.5%.
  • In economic data:
    • Eurozone's July Manufacturing PMI 45.8 (expected 45.6; last 45.8) and July Unemployment Rate 6.5% (expected 6.4%; last 6.4%)
    • Germany's July Manufacturing PMI 43.2 (expected 42.6; last 43.5)
    • U.K.'s July Nationwide HPI 0.3% m/m (expected 0.1%; last 0.2%); 2.1% yr/yr (expected 1.8%; last 1.5%). July Manufacturing PMI 52.1 (expected 51.8; last 50.9)
    • France's July Manufacturing PMI 44.0 (expected 44.1; last 45.4)
    • Italy's July Manufacturing PMI 47.4 (expected 46.0; last 45.7). June Unemployment Rate 7.0% (expected 6.8%; last 6.9%)
    • Spain's July Manufacturing PMI 51.0 (expected 52.5; last 52.3)
  • In news:
    • The Bank of England lowered its bank rate by 25 basis points to 5.00%, as expected.
    • Final July Manufacturing PMI readings from Italy (47.4), France (44.0), and Germany (43.2) remained in contraction while Spain (51.0) and the U.K. (52.1) reported modest growth.
    • Energy giant Shell beat quarterly expectations and announced a buyback while Rolls-Royce raised its guidance and reinstated its dividend.
    • BMW reported disappointing results.