September S&P 500 E-Mini futures (ESU24) are down -0.30%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.46% this morning, extending yesterday’s slump amid worries about a slowing U.S. economy, while investors awaited the latest reading on U.S. job openings.
In yesterday’s trading session, Wall Street’s main stock indexes closed in the red, with the benchmark S&P 500 posting a 2-week low and the tech-heavy Nasdaq 100 posting a 2-1/2 week low. Boeing (BA) slumped over -7% after Wells Fargo downgraded the stock to Underweight from Equal Weight with a price target of $119. Also, chip stocks lost ground, with Nvidia (NVDA) sliding more than -9% and Intel (INTC) dropping over -8% to lead losers in the Dow. In addition, U.S. Steel (X) fell more than -6% after Democratic presidential candidate Kamala Harris expressed opposition to the $14.1 billion sale of the steelmaker to Japan’s Nippon Steel, stating that the company should stay domestically owned. On the bullish side, Unity Software (U) gained about +2% after Morgan Stanley upgraded the stock to Overweight from Equal Weight with an unchanged price target of $22.
Economic data released on Tuesday showed that the U.S. ISM manufacturing index rose to 47.2 in August, although it fell short of expectations of 47.5. Also, the U.S. August ISM price paid sub-index unexpectedly rose to 54.0, stronger than expectations of a decline to 52.1. In addition, the U.S. S&P Global manufacturing PMI was revised downward to 47.9 in August, marking its first decline in seven months and missing the consensus of 48.0. Finally, U.S. July construction spending unexpectedly fell -0.3% m/m, weaker than expectations of +0.1% m/m and the biggest decline in 1-3/4 years.
“The trepidation regarding the recent rise in the unemployment rate will leave the market on edge until Friday morning’s data is in hand,” said Ian Lyngen and Vail Hartman at BMO Capital Markets. “ISM Manufacturing underwhelmed in August. Overall, there wasn’t anything encouraging in the data, but this isn’t particularly new for the U.S. manufacturing sector.”
Investor focus this week will center on Friday’s monthly payroll report for August, which is anticipated to reveal that payrolls in the world’s largest economy increased by 164,000, up from 114,000 in July.
“This week’s jobs report, while not the sole determinant, will likely be a key factor in the Fed’s decision between a 25 or 50 bps rate cut,” said Jason Pride and Michael Reynolds at Glenmede.
Meanwhile, U.S. rate futures have priced in a 61.0% chance of a 25 basis point rate cut and a 39.0% chance of a 50 basis point rate cut at the conclusion of the Fed’s September meeting.
On the earnings front, notable companies like Hewlett Packard Enterprise (HPE), Dollar Tree (DLTR), Dick’s Sporting Goods (DKS), Casey’s General Stores (CASY), Copart (CPRT), and C3.ai (AI) are set to report their quarterly figures today.
Today, all eyes are focused on the U.S. JOLTs Job Openings data, set to be released in a couple of hours. Economists, on average, forecast that the July JOLTs Job Openings will come in at 8.090M, compared to June’s figure of 8.184M.
Also, investors will focus on U.S. Factory Orders data, which arrived at -3.3% m/m in June. Economists foresee the July figure to be +4.7% m/m.
U.S. Trade Balance data will be reported today as well. Economists forecast this figure to stand at -$78.80B in July, compared to the previous figure of -$73.10B.
Later today, the Federal Reserve will release its Beige Book survey of regional business contacts, which includes anecdotes and commentary on business conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.819%, down -0.58%.
The Euro Stoxx 50 futures are down -1.12% this morning, tracking a global stock rout, driven by worries over the global economy’s health. Technology stocks were the top losers on Wednesday. Automobile and bank stocks also slumped. A survey released on Wednesday indicated that Eurozone business activity was lifted last month by France hosting the Olympic Games, but the region’s economic slump is expected to resume after the Paralympics conclude, as demand continues to be weak. Separately, data from Eurostat indicated that the Eurozone’s monthly producer prices surged in July, marking the largest increase since December 2022. In corporate news, Barratt Developments Plc (BDEV.LN) fell over -2% after the British housebuilder reported that housing demand remains sensitive to mortgage affordability following a 56% decline in its full-year profit. Also, Commerzbank Ag (CBK.D.DX) slid more than -1% after the German government announced on Tuesday its plans to reduce its stake in the bank.
Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, and Eurozone’s PPI data were released today.
The Spanish August Services PMI stood at 54.6, weaker than expectations of 54.8.
The Italian August Services PMI arrived at 51.4, weaker than expectations of 52.5.
The French August Services PMI came in at 55.0, in line with expectations.
The German August Services PMI was at 51.2, weaker than expectations of 51.4.
Eurozone August Composite PMI arrived at 51.0, weaker than expectations of 51.2.
Eurozone August Services PMI stood at 52.9, weaker than expectations of 53.3.
Eurozone July PPI has been reported at +0.8% m/m and -2.1% y/y, stronger than expectations of +0.3% m/m and -2.5% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.67% and Japan’s Nikkei 225 Stock Index (NIK) closed down -4.24%.
China’s Shanghai Composite Index closed lower today as weak services activity data dampened sentiment. Energy stocks led the declines on Wednesday, with oil prices continuing their slump from Tuesday amid fears of a global economic slowdown and expectations that the political dispute halting Libyan exports might be resolved. Real estate stocks also lost ground. A private-sector survey released on Wednesday showed that growth in China’s services sector activity decelerated in August despite the summer travel peak, leading some firms to reduce staff due to concerns over rising costs. Meanwhile, market participants are betting that weakening economic data might prompt the People’s Bank of China to loosen policy further. In other news, Bank of America cut its 2024 GDP growth forecast for China to 4.8% from 5.0% on Wednesday, attributing the adjustment to slowing growth momentum. The bank anticipates that growth in the second half will fall below 5% in year-over-year terms, even with the support of policy stimulus. In corporate news, Sanergy Group, the producer of graphite products currently under scrutiny following a stock collapse, rebounded over +78% after stating that Tuesday’s -98% drop was caused by forced unwinding of margin trading.
The Chinese August Caixin Services PMI came in at 51.6, weaker than expectations of 51.9.
Japan’s Nikkei 225 Stock Index closed sharply lower today, hitting a nearly 3-week low and tracking a tech-driven selloff on Wall Street overnight. Technology-related stocks led the declines on Wednesday. Those moves occurred as U.S. peers faced significant selling pressure, exacerbated by a slump in Nvidia, and weak manufacturing data renewed fears of a potential recession in the world’s largest economy. A sharp rebound in the yen also pressured Japanese equities, fueled by expectations that the Bank of Japan will hike interest rates again before the year ends. Meanwhile, a private sector survey released on Wednesday indicated that Japan’s service sector continued to experience strong growth in August, fueled by sustained demand and business expansion, marking the 23rd increase in 24 months. In other news, Japan’s ruling party executive Toshimitsu Motegi stated on Wednesday that he would aim to compile a comprehensive stimulus package to sustain economic recovery, should he win the ruling party’s leadership race. In corporate news, Fuji Soft surged more than +7% after saying it would consider a counteroffer from Bain Capital should the private equity firm submit a binding proposal. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +29.67% to 27.05.
The Japanese August au Jibun Bank Japan Services PMI arrived at 53.7, weaker than expectations of 54.0.
Pre-Market U.S. Stock Movers
Zscaler (ZS) plunged over -15% in pre-market trading after the cybersecurity company provided a below-consensus FY25 forecast.
Gitlab (GTLB) surged more than +15% in pre-market trading after the DevOps company posted upbeat Q2 results and raised its full-year guidance.
Super Micro Computer (SMCI) fell over -2% in pre-market trading after Barclays downgraded the stock to Equal Weight from Overweight with a price target of $438.
Booking Holdings (BKNG) dropped more than -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.
Asana (ASAN) slumped over -14% in pre-market trading after the company issued weaker-than-expected Q3 guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - September 4th
Copart (CPRT), Hewlett Packard (HPE), Dick’s Sporting Goods (DKS), Hormel Foods (HRL), Dollar Tree (DLTR), Caseys (CASY), Core Main (CNM), Descartes Systems (DSGX), Ciena Corp (CIEN), Credo Technology Holding (CRDO), AeroVironment (AVAV), C3.ai (AI), Sprinklr (CXM), Verint (VRNT), Rev Group (REVG), Phreesia (PHR), Couchbase (BASE), ChargePoint Holdings (CHPT), Torrid Holdings (CURV), Yext (YEXT), Daktronics (DAKT), Americas Car-Mart (CRMT), J.Jill (JILL), Concrete Pumping A (BBCP).
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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