Daily Markets: August Looks to Finish Quietly Ahead of a Busy September

Today’s Big Picture

Equity indices in Asia closed today higher across the board shrugging off the August contraction in China's Non-manufacturing PMI even as its August Manufacturing PMI missed expectations but remained in expansion territory by a rather narrow margin. By mid-day trading, equity indices in Europe were mixed and US futures point to a similar market open later this morning.

Today kicks off the final trading day of August and the unofficial end to summer. The S&P 500 is poised to close the month with its longest winning streak since 2017. Odds are we are in for a quiet day of trading activity but that will change tomorrow with the start of August economic data from ADP, ISM, and Markit Economics, all of which will be reviewed with a fine-tooth comb ahead of Friday’s August Employment Report.

Data Download

International Economy

Industrial Production in Japan fell 1.5% MoM in July after a 6.5% increase in June, a smaller decline than the 2.5% expected. The country’s unemployment rate in July dropped to 2.8% from 2.9% where it was expected to remain.

China’s NBS Manufacturing PMI dropped to 50.1 from 50.4 versus expectations for a decline to 50.2, to sit just barely in expansion territory - which is over 50. China’s Non-Manufacturing PMI fell into contraction, dropping to 47.5 from 53.3.

The Eurozone’s Core Inflation rate came in hotter than expected at +1.6% YoY in August, up from 0.7% in July and the expected increase to 1.5%. Headline Inflation for the month also rose more than expected, hitting 3% YoY vs. 2.2% in July and the expected rise to 2.7%. The August readings mark a 10-year high for the data set, something the European Central Bank will no doubt be considering ahead of its next monetary policy meeting in Frankfurt, Germany on September 9.

Domestic Economy

Yesterday the Dallas Fed released its August manufacturing data and was the last of the five major regions to do so and saw the headline index drop to 9.0 from 27.3, the smallest growth in activity since January. Overall, while none of the data’s components came in weak, they all saw major deceleration from July. The biggest drop across the board came from Shipments, which dropped 17.7 points MoM, a fall that is in the top 91st percentile of all declines. The drop in Outlook was in the 88th percentile of all declines in its historical range. In contrast, both the current and outlook levels are still at historically strong levels.

Yesterday also brought Pending Home sales for July, which were down 8.5% YoY in July, the second consecutive decline on low inventories. Pending sales declined 1.8% MoM versus expectations for a 0.4% increase.

Later today we will get the S&P/Case-Shiller Home Price index, Chicago PMI, Conference Board’s Consumer Confidence for August, and the usual weekly API Crude Oil Stock report.

Markets

On a fairly sleepy day, the S&P 500 managed to once again close at yet another record high, gaining 0.4% on the day to sit at a nearly 21% gain year-to-date. The Dow closed slightly lower, down 0.2%, but the Nasdaq Composite stole the show, gaining 0.9% to hit another all-time high. Treasury yields fell with the 10-year dropping to 1.28% and the long bond at 1.9%. The VIX dropped to 16 to sit near the lows of its recent trading range.

Stocks to Watch

Before markets open this morning, investors will be digging into several earnings reports including those from American Woodwork (AMWD) and NetEase (NTES).

Shares of Zoom Video (ZM) fell in after-market trading last night following July quarter results that beat top and bottom-line expectations but the company’s outlook for the current quarter hints at slower growth ahead as more workers return to physical offices and students head back to campus. The company issued full-year guidance with revenue of $4.01-$4.015 billion vs. the $4 billion consensus with EPS of $4.75-$4.79, well ahead of the $4.66 consensus.

PayPal (PYPL) shares ticked higher on report it is s weighing bids from Apex Fintech and DriveWealth as it seeks to offer stock-trading capabilities to its nearly 400 million users.

Shares of Robinhood Markets (HOOD) were under pressure yesterday following comments from SEC Chairman commented that banning the controversial practice of payment for order flow is “on the table.”

Google (GOOGL) announced it will invest $1.2 billion by 2030 to expand its cloud computing infrastructure in Germany and to increase the use of renewable energy.

Spok Holdings (SPOK) received a proposal from Acacia Research Corporation (ACTG) to buy all outstanding shares of the company in cash at $10.75 per share.

Prosus NV (PROSY) announced agreed to acquire Indian digital payments provider BillDesk for $4.7 billion; the transaction would make PayU one of the leading online payment providers globally by total payment volume.

South Korea is the first country to impose curbs on Google (GOOGL) and Apple’s (AAPL) policies that force developers to only use the tech giants’ proprietary billing systems.

After today’s market close, Ambarella (AMBA), CrowdStrike (CRWD), H&R Block (HRB), and PVH (PVH) will be among the companies reporting their latest quarterly results. Those looking to get a jump on the earnings reports to be had in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

• September 1: ADP Employment Change, Markit Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, EIA Crude & Gasoline stocks, Total Vehicle Sales
• September 2: US Balance of Trade, Unit Labor Costs Q2, weekly Jobless Claims, Nonfarm Productivity Q2, Factory Orders
• September 3: Nonfarm Payrolls, Markit Services PMI, ISM Non-Manufacturing PMI
• September 8: US JOLTs Report IBD/TIPP Economic Optimism, API Crude Oil Stocks
• September 9: weekly Jobless Claims, EIA Energy Stocks, European Central Bank meeting.
• September 10: PPI, Wholesale Inventories
• September 13: Monthly Budget Statement
• September 14: Inflation, API Crude Oil Stocks
• September 15: Export & Import Prices, NY Empire State Manufacturing Index, Industrial Production, EIA Crude & Gasoline Stocks
• September 16: Retail Sales, weekly Jobless Claims, Philadelphia Fed Manufacturing Index, Business Inventories, Net Capital Flows, Foreign Bond Investment
• September 17: University of Michigan Consumer Sentiment Report

Thought for the Day

If it could only be like this always–always summer, always alone, the fruit always ripe." – Evelyn Waugh

Disclosures

• CrowdStrike (CRWD) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• PayPal (PYPL) is a constituent of the Tematica BITA Digital Payments & Fintech Sustainability Screened Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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