Stock Market Update

The S&P 500 futures are up nine points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 20 points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 65 points and are trading 0.2% above fair value.

There's a positive bias in early trading. Earnings results from Target (TGT) and TJX (TJX) garnered upbeat responses, contributing to the upside bias. Participants are still waiting on the release of benchmark revisions to nonfarm payrolls for April 2023-March 2024 at 10:00 a.m. ET, the $16 billion 20-yr bond auction at 1:00 p.m. ET, and the release of the Minutes for the July 30-31 FOMC meeting at 2:00 p.m. ET.

The 10-yr note yield is down one basis point to 3.81% and the 2-yr note yield is down two basis points to 3.98%. 

Commodity futures are mostly higher. WTI crude oil futures trade 0.1% higher at $73.27/bbl, natural gas futures are up 1.1% to $2.22/mmbtu, and copper futures trade up 0.9% to $4.20/lbs.

In corporate news:

• Target (TGT 162.98, +19.77, +13.8%): beats by $0.39, reports revs in-line; Q2 comps +2%; guides Q3 EPS in-line; raises FY25 EPS guidance; sees FY25 comps at lower half of range
• TJX (TJX 117.08, +3.77, +3.3%): beats by $0.04, beats on revs; guides Q3 EPS below consensus; guides FY25 EPS in-line; to acquire 35% stake in privately held Brands for Less
• Macy's (M 16.56, -1.18, -6.7%): beats by $0.23, misses on revs; reaffirms FY25 EPS guidance, guides FY25 revs below consensus; lowers comp guidance
• Toll Brothers (TOL 134.68, +1.16, +0.9%): beats by $0.29, reports revs in-line; provides Q4 guidance; increases expected repurchase total for FY24 (Oct); projects FY24 EPS above consensus; raises adjusted gross margin forecast
• Coty (COTY 9.48, -0.05, -0.5%): misses by $0.08, reports revs in-line; guides FY25 EPS in-line
• Keysight (KEYS 153.52, +14.95, +10.8%): beats by $0.22, beats on revs; guides Q4 EPS in-line, revs in-line
• Analog Devices (ADI 227.00, +3.51, +1.6%): beats by $0.07, beats on revs; guides Q4 EPS in-line, revs in-line
• La-Z-Boy (LZB 40.31, -1.56, -3.7%): beats by $0.02, beats on revs; guides Q2 revs below consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: -0.7%, China's Shanghai Composite: -0.4%, India's Sensex: +0.1%, South Korea's Kospi: +0.2%, Australia's ASX All Ordinaries: +0.3%.
  • In economic data:
    • Japan's July trade deficit JPY760 bln (expected deficit of JPY720 bln; last deficit of JPY820 bln). July Imports 16.6% yr/yr (expected 14.9%; last 3.2%) and Exports 10.3% yr/yr (expected 11.4%; last 5.4%)
    • South Korea's July PPI 0.3% m/m (last -0.1%); 2.6% yr/yr (last 2.5%)
    • Australia's July MI Leading Index 0.0% m/m (last 0.0%)
    • New Zealand's July Credit Card Spending -3.8% yr/yr (last -3.1%)
  • In news:
    • China Securities Journal speculated that the People's Bank of China could lower the seven-day reverse repurchase rate by up to 20 basis points in Q4.
    • China may permit local governments to buy homes with funds raised through bond sales.
    • South Korea's exports through the first 20 days of August were up 18.5% with chip exports rising 42.5%.
    • Fitch affirmed New Zealand's AA+ rating with a Stable outlook.
• Major European indices trade just above their flat lines. STOXX Europe 600: +0.3%, Germany's DAX: +0.5%, U.K.'s FTSE 100: +0.2%, France's CAC 40: +0.4%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.2%.
  • In economic data:
    • U.K.'s July Public Sector Net Borrowing GBP2.18 bln (expected GBP500 mln; last GBP12.55 bln)
  • In news:
    • The U.K. reported larger than expected borrowing for July after Chancellor Reeves said that taxes will be increased while spending will be cut in the Autumn budget.
    • Hungary expects 2024 domestic growth of about 2%, which would be on the lower end of the previous forecast.