Stock Market Update

The S&P 500 futures are down 25 points and are trading 0.5% below fair value, the Nasdaq 100 futures are down 178 points and are trading 0.9% below fair value, and the Dow Jones Industrial Average futures are down 130 points and are trading 0.3% below fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow industrials are lower in front of the August Employment Situation report at 8:30 ET. Early declines in the mega cap and semiconductor spaces has contributed to the downside bias after Broadcom (AVGO) issued disappointing guidance.

Yields are slightly lower ahead of the data. The 10-yr note yield is down two basis points to 3.70% and the 2-yr note yield is down two basis points to 3.73%.

The vibe may shift depending on the market's takeaway from the data in terms of Fed policy. The fed funds futures market is pricing in a 41% probability of a 50 basis points rate cut at the September 17-18 meeting, according to the CME FedWatch Tool.

In corporate news:

• Broadcom (AVGO 140.82, -12.07, -7.9%): beats by $0.02, reports revs in-line; guides Q4 revs below consensus; expects FY24 AI revs of $12.0 bln
• Salesforce (CRM 245.21, -0.91, -0.4%): confirms it agreed to acquire Own Company for approximately $1.9 bln in cash; projects FCF accretion in second year after closing; no change expected to FY25 guidance
• Intel (INTC 19.41, +0.04, +0.1%): ticks mildly higher after exploring sale of part of its Mobileye (MBLY) stake, according to Bloomberg
• UiPath (PATH 13.76, +1.02, +8.0%): beats by $0.01, beats on revs; guides Q3 revs in-line; guides FY25 revs above consensus; also announces that Ashim Gupta will be taking on an expanded role as Chief Operating Officer; announces $500 mln expansion to its stock repurchase program; with new authorization, company may repurchase up to $554 mln of its outstanding shares during remainder of program
• DocuSign (DOCU 56.69, -0.24, -0.4%): beats by $0.16, beats on revs; guides Q3 revs above consensus; guides FY25 revs above consensus

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly lower note with trading in Hong Kong suspended due to a typhoon. Japan's Nikkei: -0.7% (-5.8% for the week), Hong Kong's Hang Seng: CLOSED (-3.0% for the week), China's Shanghai Composite: -0.8% (-2.7% for the week), India's Sensex: -1.2% (-1.4% for the week), South Korea's Kospi: -1.2% (-4.9% for the week), Australia's ASX All Ordinaries: +0.3% (-1.2% for the week).
  • In economic data:
    • Japan's July Household Spending -1.7% m/m (expected -0.2%; last 0.1%); 0.1% yr/yr (expected 1.2%; last -1.4%). July Leading Index 109.5 (expected 109.4; last 109.1) and Coincident Indicator 3.0% m/m (last -3.4%)
    • South Korea's July Current Account surplus $9.13 bln (last surplus of $12.26 bln)
    • Australia's July Home Loans 2.9% m/m (expected 1.0%; last 1.0%) and July Invest Housing Finance 5.4% m/m (last 2.7%)
  • In news:
    • Continued resilience in the Japanese yen briefly lifted the currency back to its August high against the dollar in the 142 area.
    • Australia reported strong home loan growth in July just a day after Reserve Bank of Australia Governor Bullock made hawkish comments about the potential need for another rate hike.
    • Advanced technology exports to China are expected to see additional restrictions, according to Bloomberg.
• Major European indices trade in the red in anticipation of the U.S. Employment Situation report for August. STOXX Europe 600: -0.3% (-2.8% week-to-date), Germany's DAX: -0.5% (-2.2% week-to-date), U.K.'s FTSE 100: -0.3% (-1.9% week-to-date), France's CAC 40: -0.2% (-2.8% week-to-date), Italy's FTSE MIB: -0.3% (-2.3% week-to-date), Spain's IBEX 35: -0.3% (-1.4% week-to-date).
  • In economic data:
    • Eurozone's Q2 GDP 0.2% qtr/qtr (expected 0.3%; last 0.3%); 0.6% yr/yr, as expected (last 0.4%). Q2 Employment Change 0.2% qtr/qtr, as expected (last 0.3%)
    • Germany's July Industrial Production -2.4% m/m (expected -0.4%; last 1.7%); -5.3% yr/yr (last -3.6%). July trade surplus EUR16.8 bln (expected surplus of EUR21.0 bln; last surplus of EUR20.4 bln). July Imports 5.4% m/m (expected 0.3%; last 0.3%) and Exports 1.7% m/m (expected 1.2%; last -3.4%)
    • U.K.'s August Halifax House Price Index 0.3% m/m (expected 0.2%; last 0.9%); 4.3% yr/yr (expected 4.2%; last 2.4%)
    • France's July Industrial Production -0.5% m/m (expected -0.3%; last 0.8%). July trade deficit EUR5.9 bln (expected deficit of EUR6.5 bln; last deficit of EUR6.0 bln)
    • Italy's July Retail Sales 0.5% m/m (expected 0.1%; last -0.2%); 1.0% yr/yr (last -1.0%)
    • Spain's July Consumer Confidence 89.4 (last 88.4)
    • Swiss September SECO Consumer Climate -35 (expected -33; last -19)
  • In news:
    • Economic data released this morning included a downward revision to the eurozone's Q2 GDP growth and a larger than expected decrease in German Industrial Production in July, reflecting continued weakness in the eurozone's core.