(Market open Thursday) Stock index futures were pointing to a higher open but fell slightly after signs that the US economy is stubbornly strong despite attempts by the Federal Reserve to slow growth.
Market potential movers
Second Quarter Gross Domestic Product (GDP) was revised to -0.06%, better than the -0.08% expected. The adjustment appears to be driven by an increase in consumer spending. However, the GDP price index was much higher at 9% compared to the estimate of 8.7%, showing that inflation rose at a faster pace than expected in the second quarter.
Additionally, initial weekly jobless claims were lower than expected at 243,000 instead of the expected 253,000.
Both reports reflect a stronger economy that the Fed may consider too strong as its goal is to slow economic growth to reduce inflation. Perhaps Fed Chairman Jerome Powell will address that in his comments on Friday. The 10-year Treasury yield (TNX) was also higher before the market opened and is on track for five straight days of gains. Rising yields may be the market’s way of telling the Fed that it still has work to do on inflation.
S&P 500 Futures Contracts were down slightly after the report but still in positive territory before the opening bell. The Cboe Market Volatility Index (VIX) increased slightly.
A number of stocks were moving ahead of the market with new earnings reports.
- Nvidia NVDA said it fell short of revenue expectations due to a sudden slowdown in demand for computer chips. He lowered his outlook, sending the stock down 3.4%.
- Salesforce.com RCMP announced better-than-expected earnings and revenue, but lowered its forecast. The stock lost almost 7%.
- Snowflake SNOW topped earnings and revenue, then raised its revenue projections for the third quarter and full year. SNOW was up nearly 20% on the news.
- Autodesk ADSK also soared more than 18% on much better-than-expected earnings and revenue. The company said it remains on track to meet its fiscal 2023 targets.
- Abercrombie & Fitch ANF announced a surprise loss for the quarter, sending the stock down almost 12%. The company cited inflation as one of the main reasons for the failure.
- Burlington BURL beat earnings estimates despite no revenue, but still fell more than 12% due to issues with weak consumer demand and ongoing inventory issues.
- General dollar CEO beat on upper and lower digits but still fell more than 2%.
- dollar tree LTRD topped earnings despite missing revenue, but offered a weaker sales forecast that sent the stock down more than 7%.
After climbing more than 20% yesterday with the announcement of a partnership with Amazon AMZN sell exercise bikes, Platoon PTON slipped more than 15% this morning after posting heavy losses for its second quarter.
After market close, Working day WDAY, Ultimate beauty ULTAand Difference GPS must declare their income.
You’re here TSLA investors shouldn’t panic when they see their accounts today. The stock didn’t dive, it just split 3-to-1. So shareholders should have three times the number of shares at about a third of yesterday’s closing price.
Market Minutes Review
Stocks moved back into positive territory yesterday with the Nasdaq ($COMP), S&P 500® Index (SPX) and the Dow Jones Industrial Average ($DJI) up 0.45%, 0.24%, 0.13% respectively. However, stocks are unlikely to move much as investors await the next Federal Reserve meeting in Jackson Hole, Wyoming.
Minneapolis Fed Chairman Neel Kashkari managed to rouse bond investors with hawkish remarks during Wednesday’s session. He said the Fed must remain vigilant in its tightening efforts as there is a fear that inflation could unanchor. The 2-year Treasury yield increased by nine basis points to 3.37% and the 10-year Treasury yield (TNX) gained five basis points to 3.11%. After yesterday’s close, the CME FedWatch Tool calculated a 60.5% chance that the Fed would raise rates by 75 basis points by the end of September.
Despite warmongering rhetoric and rising yields, the US dollar index ($DXY) was relatively static, closing down just 0.01%.
Among companies reporting profits yesterday, high-end retailer Nordström (JWN) missed big expectations and plunged nearly 20% on the day. JWN’s results could be significant – if the wealthy also pinch pennies, it could reduce consumption.
On the bright side, accounting software publisher Intuitive (INTU) beat estimates and rose 3.6%, a sign that companies are continuing to grow and invest in their businesses.
Three things to watch out for
FOOD BATTLE: American shoppers are leaving their homes and going to physical stores to do their shopping. According to Gallup, in-person shopping trips were up six points to 37% from a year ago. However, shoppers are still using the convenience of online shopping, with 28% of grocery orders being placed online, up five points from the previous year.
Diners are also going out more than last year, as the number of people dining out at least once a month is up nine points from 2021. The survey was conducted in early July.
CORN POP: Corn prices have risen recently as the USDA has seen an increase in corn crops rated poor or very poor and the Pro Farmer Midwest Crop Tour examined drought conditions in southeastern South Dakota and has reported an increase in maize crops rated as poor or very poor. U.S. corn futures are up more than 17% from their July lows and recently surpassed June highs.
However, corn prices are still 19% below their peaks in May when the uncertainty peaked with Russia’s invasion of Ukraine.
EARNINGS ABROAD: According to data from Refinitiv, European second-quarter earnings reports look a little different from those in the United States. The STOXX Europe 600 is growing at 29.5%, well above the S&P 500’s 8.8% gain for the period. However, as in the United States, European profits are largely driven by the energy sector with a growth rate of 205.8%. S&P 500 energy companies are on track for a 120.2% growth rate in the second quarter.
The STOXX 600 is also seeing higher growth rates in industrials (42.6%), basic materials (40.9%), consumer discretionary (22.7%) and healthcare (18.3%). %). The lowest earnings growth rates are in real estate (-67.8%), consumer staples (-64.3%) and financials (-1.9%).
Notable Calendar Items
August 26: Fed Chairman Jerome Powell speaks in Jackson Hole, PCE price index, Michigan consumer sentiment, personal income and Marvell Technology (MRVL) and Dell (DELL) earnings
August 29: Dallas Federal Reserve Manufacturing Index
August 30: CB Consumer Confidence, JOLTs Job Openings and earnings from Crowdstrike (CRWD), Hewlett Packard (HPE), Chewy (CHWY), Best Buy (BBY) and Big Lots (BIG)
August 31 : Gains from Polestar Automotive (PSNY), Trip.com (TCOM), Cooper (COO) and Five Below (FIVE)
September 1st : ADP non-farm payrolls, ISM manufacturing PMI and earnings from Broadcom (AVGO), Lululemon (LULU), Hormel Foods (HRL), Campbell Soup (CPB) and Toro (TTC)
TD Ameritrade® Commentary for educational purposes only. SIPC member.
Image from Shutterstock
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investment advice.