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 18 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are down eight points and are trading fractionally below fair value.

Contracts tied to the S&P 500, Nasdaq 100, and Dow industrials are flattish this morning after a big run in equity markets. The S&P 500 was 1.1% below its all-time high at yesterday's close after flirting with correction territory earlier this month (i.e. 10% decline from recent high).

Market participants are still in wait-and-see mode in front of Wednesday's release of benchmark revisions for nonfarm payrolls and the FOMC Minutes for the July 30-31 meeting, followed by Fed Chair Powell's speech on Friday at the Jackson Hole Economic Symposium.

The 10-yr note yield is unchanged at 3.87% and the 2-yr note yield is down two basis points to 4.05%.

In corporate news:

• Lowe's (LOW 244.00, +0.79, +0.3%): beats by $0.14, misses on revs; lowers FY25 EPS below consensus, revs below consensus
• Vipshop (VIPS 13.10, -0.92, -6.6%): misses by RMB0.03, misses on revs; guides Q3 revs below consensus
• Medtronic (MDT 85.25, +0.43, +0.5%): beats by $0.03, reports revs in-line; raises low end of FY25 EPS guidance, in-line; raises organic revs outlook
• Palo Alto Networks (PANW 352.30, +8.94, +2.6%): beats by $0.10, beats on revs; guides OctQ EPS above consensus, revs in-line; guides FY25 EPS and revs in-line; increases buyback authorization by $500 mln to $1 bln
• Fabrinet (FN 254.00, +22.45, +9.7%): beats by $0.17, beats on revs; guides SepQ EPS above consensus, revs above consensus; increases share buyback authorization
• Boeing (BA 177.64, -2.00, -1.1%): inching lower after U.S. FAA adopts airworthiness directive for 787 Dreamliners following March incident when plant went into mid-air dive, according to Reuters; pauses flight tests for its 777X while it investigates cracks in key part, according to Bloomberg
• Paramount Global (PARA 10.76, -0.31, -2.8%): Edgar Bronfman bids for National Amusements and stake in Paramount, according to WSJ

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday mostly higher, although markets in China were holdouts in that regard. Japan's Nikkei: +2.0%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: -0.9%, India's Sensex: +0.5%, South Korea's Kospi: +0.8%, Australia's All Ordinaries: +0.2%.
  • In economic data:
    • South Korea's August Consumer Confidence 100.8 (last 103.6)
    • Hong Kong's July CPI 1.0% m/m (last 0.5%) and 2.5% yr/yr (expected 1.6%; last 1.5%)
  • In news:
    • Hong Hong's Hang Seng declined 0.3% and China's Shanghai Composite dropped 0.9%.
    • The PBOC left its 1-yr and 5-yr loan prime rates unchanged at 3.35% and 3.85%, respectively. That decision was expected, although it was still viewed with some disappointment given China's economic slowdown and purported need to stimulate consumer spending.
    • The Reserve Bank of Australia meeting minutes, meanwhile, showed members were aligned primarily with the idea that it is unlikely a rate cut will happen in the short term.
    • Japan's Nikkei (+2.0%) was a notable winner, rebounding as the yen weakened early in its trading session before showing some renewed strength late in the day.
• Major European indices are mostly lower. STOXX Europe 600: flat, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.7%, France's CAC 40: +0.1%, Spain's IBEX 35: -0.2%, Italy's FTSE MIB: -0.2%.
  • In economic data:
    • Eurozone's July CPI 0.0% (expected 0.0%; last 0.2%) and 2.6% yr/yr (expected 2.6%; last 2.5%); July Core CPI -0.2% m/m (expected -0.2%; last 0.4%) and 2.9% yr/yr (expected 2.9%; last 2.9%)
    • Germany's July PPI 0.2% m/m (expected 0.2%; last 0.2%) and -0.8% yr/yr (expected -0.8%; last -1.6%)
  • In news:
    • Sporting only small losses in most cases as participants wait for the response to key events this week in the U.S., starting with Wednesday's release of benchmark revisions for nonfarm payrolls and the FOMC Minutes for the July 30-31 meeting, and culminating with Fed Chair Powell's speech on Friday at the Jackson Hole Economic Symposium.
    • ECB member Rehn suggested growth risks raise the prospect of a rate cut in September.
    • Sweden's Riksbank cut its key policy rate by 25 basis points to 3.50%, as expected, and said 2-3 more rate cuts could be seen this year if the inflation outlook remains the same.
    • The U.K.'s FTSE 100 (-0.7%) is underperforming today amid some misgivings that relative economic strength in the U.K. could forestall further rate cuts.