Stock Market Update

The S&P 500 futures are down 64 points and are trading 1.2% below fair value, the Nasdaq 100 futures are down 348 points and are trading 1.7% below fair value, and the Dow Jones Industrial Average futures are down 311 points and are trading 0.8% below fair value.

Early trading features a continuation of yesterday's selling that was driven by growth concerns that were piqued by disappointing data. Market participants are waiting on more influential data this morning in the form of the  July Employment Situation Report at 8:30 ET.

Global equity markets were also impacted by the growth worries. Japanese stocks saw their largest decline since 2020, according to The Wall Street Journal, leading the Nikkei (-5.8%) to fall past its 200-day moving average. Major European indices are also on track for a lower finish to the week.

The early bias in the US market also relates to weakness in mega caps, which are responding to earnings from Amazon (AMZN) and Apple (AAPL), and semiconductor shares, which are responding to earnings from Intel (INTC). AMZN is down nearly 10% ahead of the open and INTC shows a more than 20% decline.

In corporate news:

• Apple (AAPL 217.79, -0.57, -0.3%): beats by $0.06, beats on revs; Q4 (Sep) Outlook: Expects total company revenue to grow yr/yr at a rate similar to Q3 (Q3 Actual +4.9%, Q4 FactSet consensus +4.3%). The company expects double digit services growth. Gross margin is expected to be 45.5-46.5%; Expects F/X headwind of about 1.5% yr/yr.
• Amazon (AMZN 168.89, -15.21, -8.3%): beats by $0.23, reports revs in-line, beats on operating income; guides Q3 revs in-line; Remain bullish on long-term impact of AI; however, progress may not be a straight line
• Intel (INTC 22.51, -6.51, -22.4%): misses by $0.08, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; Suspending dividend starting in 4Q24 and announced cost reduction plan, including headcount reduction greater than 15%
• DoorDash (DASH 118.65, +10.45, +9.7%): reports Q2 (Jun) results, beats on revs; Q2 adj EBITDA above guidance range; provides Q3 guidance
• Block (SQ 61.63, +1.73, +2.9%): beats by $0.09, misses on revs
• Atlassian (TEAM 152.00, -21.24, -12.3%): beats by $0.08, reports revs in-line; guides Q1 revs below consensus
• Snap (SNAP 10.41, -2.40, -18.7%): beats by $0.01, misses on revs; guides Q3 revs in-line
• Booking Holdings (BKNG 3450.00, -214.18, -5.9%): beats by $3.27, beats on revs;  Travel market continues to normalize, expects Q3 room night growth to be impacted by booking window that's expanding less than Q2
• Clorox (CLX 139.80, +5.66, +4.2%): beats by $0.27, misses on revs; guides FY25 EPS above consensus, revs below consensus
• U.S. Steel (X 40.00, -0.66, -5.9%): beats by $0.08, beats on revs, continues to make progress on U.S. regulatory processes ahead of anticipated closing of transaction with Nippon Steel Corporation
• Exxon Mobil (XOM 118.07, +1.12, +1.0%): beats by $0.12, beats on revs
• Chevron (CVX 151.75, -0.87, -0.6%): misses by $0.38, beats on revs; announces headquarters will move from San Ramon, California, to Houston, Texas; announces other senior leadership changes

Reviewing overnight developments:

• It was a sea of red across Asia as all major markets ended the week on a lower note alongside gains in sovereign debt. Japan's Nikkei: -5.8% (-4.7% for the week), Hong Kong's Hang Seng: -2.1% (-0.5% for the week), China's Shanghai Composite: -0.9% (+0.5% for the week), India's Sensex: -1.1% (-0.4% for the week), South Korea's Kospi: -3.7% (-2.0% for the week), Australia's ASX All Ordinaries: -2.1% (+0.2% for the week).
  • In economic data:
    • Japan's July Monetary Base 1.2% yr/yr (expected 0.9%; last 0.6%)
    • South Korea's July CPI 0.3% m/m, as expected (last -0.2%); 2.6% yr/yr (expected 2.5%; last 2.4%)
    • Australia's July Home Loans 0.5% m/m (expected -1.0%; last -1.9%) and Invest Housing Finance 2.7% m/m (last -1.3%). Q2 PPI 1.0% qtr/qtr, as expected (last 0.9%); 4.8% yr/yr (last 4.3%)
  • In news:
    • Japan's Nikkei (-5.8%) fell past its 200-day moving average, returning to levels from early February, with Daiwa Securities plunging nearly 20.0%.
    • Japan's Industry Minister Saito said that economic fundamentals are "not bad" while a former Bank of Japan official said that another rate hike is likely in October.
    • South Korea's vice finance minister said that inflation is expected to begin approaching target after this month.
• Major European indices are on track for a lower finish to the week. STOXX Europe 600: -1.8% (-2.0% week-to-date), Germany's DAX: -1.7% (-3.5% week-to-date), U.K.'s FTSE 100: -0.4% (-0.4% week-to-date), France's CAC 40: -0.8% (-2.8% week-to-date), Italy's FTSE MIB: -1.7% (-4.4% week-to-date), Spain's IBEX 35: -0.7% (-3.5% week-to-date).
  • In economic data:
    • France's June Industrial Production 0.8% m/m (expected 1.0%; last -2.2%) and June government budget deficit EUR103.5 bln (last deficit of EUR113.5 bln)
    • Italy's June Industrial Production -2.6% yr/yr (last -3.3%) and June Retail Sales -0.2% m/m (expected 0.2%; last 0.4%); -1.0% yr/yr (last 0.5%)
    • Spain's July Unemployment Change -10,800 (expected -17,400; last -46,800)
    • Swiss July CPI -0.2% m/m, as expected (last 0.0%); 1.3% yr/yr, as expected (last 1.3%). July procure.ch PMI 43.5 (expected 44.4; last 43.9)
  • In news:
    • Bank of England Governor Bailey said that it would be wrong to assume that all upcoming meetings will result in cuts while Chief Economist Pill said that the central bank is not committing to additional rate cuts.
    • A poll conducted by YouGov showed that British inflation expectations for the year ahead ticked up to 2.7% from 2.6%.
    • International Consolidated Airlines reported solid results for the quarter and resumed its dividend.