Daily Markets: Delta Variant Snags Focus from Earnings

Close-up of the street sign for Wall Street
Credit: Andrew Kelly - Reuters /

Today’s Big Picture

Equity indices in Asia ended the day’s mostly higher, led by the 0.6%-0.7% move higher in Japan’s Nikkei and China’s Shanghai Composite. Markets in Hong Kong and India were closed today. Better than expected export data out of Japan helped the Nikkei snap its recent losing streak – see Data Download for more. By mid-day trading, European equity indices were higher across the board, spurred on by financial stocks even though Daimler (DDAIF) suggested the current chip supply shortage will persist through the back half of the year. U.S. futures point to equities clawing back more of their recent sell-off when those markets open later this morning.

Following comments from World Health Organization Director-General Tedros Adhanom Ghebreyesus yesterday that the world is in the early stages of another wave of Covid-19 infections and deaths, odds are high the Delta variant will be a key focus for investors as the June quarter earnings season intensifies in the coming days. In Washington today, Senate Republicans are expected to block a vote that would advance a massive bipartisan infrastructure bill because they have yet to strike a deal with Democrats to draft the legislation.

Data Download

International Economy

The record levels of Covid-19 infections in Malaysia and Vietnam could further exacerbate the global shortage of microchips. The two countries are facing their worst outbreaks yet, and with over 50 international chip vendors in Malaysia alone, as well as several testing packaging facilities for semis, the imposition of the nation’s fourth lockdown has global ramifications.

South Korea’s Producer Price Index (PPI) slowed to 6.4% YoY in June from an upwardly revised 6.6% in May. On a MoM basis, PPI slowed to 0.4% from 0.5%.

Japan’s Exports were stronger than expected, rising 48.6% YoY in June after rising 49.6% in May, from which they were expected to slow to 46.2% YoY. Imports rose more than expected to 32.7% YoY in June from 27.9% in May, from which they were expected to accelerate to 29.0%.

Industrial Sales in Italy jumped 40.2% YoY in May after rising 105.1% in April. Construction Output increased 32.6%YoY in May after rising 60.2% in April.

Domestic Economy

Yesterday’s Building Permits came in weaker than the expected 1.7 million at just 1.598 million and were down over 5% compared to May. On the other hand, Housing Starts rose 6.3% from March and were slightly above the expected 1.590 million at 1.643 million. Taking a step back to look at the longer-term picture, the 12-month average for Housing Starts rose to a new multi-year high in June, hitting the highest level since June 2007. The backlog of homes under construction is accelerating but completions are only up 6.5% YoY, only about half the pace of the last cycle thanks to expanding completion times. Hello supply constraints and shortages! That dynamic looks to be leading builders to reducing their pipeline of homes to focus on completing current builds.

Later today we will get the usual weekly MBA Mortgage Applications and EIA Energy stocks reports.


As has been the norm for much of this bull market, declines are quickly met with buy-the-dip and yesterday was no exception. The Dow rose 1.6% after Monday’s biggest decline of the year. The Nasdaq Composite also rose 1.6% and the S&P 500 added 1.5% with all but Consumer Staples (down -0.1%) gaining ground after all 11 sectors closed in the red on Monday. The Russell 2000 managed to erase in one day, all the losses from the prior three days, with a 3% gain on Tuesday. Bitcoin fell for the fourth consecutive day and dropped more than 52% below its all-time high of over $63,000.

Stocks to Watch

Before markets begin trading, investors will have several quarterly earnings reports to chew through including those from ASML (ASML), Coca-Cola (KO), Harley Davidson (HOG), Johnson & Johnson (JNJ), NVR (NVR), and Verizon (VZ).

Netflix (NFLX) reported a very mixed quarter after the close yesterday. Q3 streaming net adds guidance was much weaker than expected while for Q2 it was stronger than expected. EPS guidance for Q3 was 17.5% above expectations, but a miss for Q2. Revenue for Q3 was in-line while for Q2 was a slight beat.

June quarter results from Chipotle Mexican Grill (CMG) topped consensus expectations with revenue rising 39% YoY spurred on by comp sales of 31.2% YoY vs. the 29.8% consensus for the quarter and +17.2% in the March quarter. Digital sales increased 10.5% during the quarter to account for 48.5% of all sales. Labor costs as a percentage of revenue were 24.5% of sales vs. 24.3% consensus and food, beverage & packaging costs were 30.4% of sales vs. 30.6% consensus. For the current quarter, the company sees comparable restaurant sales growth in the low to mid-double-digits range with an expected 200 new restaurant openings.

Strong cloud momentum at SAP SE (SAP) led the company to deliver better than expected June quarter results.The current cloud backlog was up 17% YoY to €7.77 billion while cloud revenue in the quarter rose 11% to €2.28 billion.

While United Airlines (UAL) landed a better than expected June quarter as international long haul and business travel accelerated faster than anticipated, the company expects continued gains as more businesses return by end of summer and into 2022, with a full recovery in demand anticipated by 2023. The company will hold its corresponding earnings conference call later today and we suspect the Delta variant will be a hot topic during that conversation with investors.

Lands' End (LE) boosted its 2021 guidance sharing "strong topline momentum continues, driven by our global eCommerce business, as well as a faster than anticipated recovery in our Outfitters business, primarily in National Accounts and school uniforms."

In a tweet, Elon Musk shared that later this year Tesla (TSLA) will make its “Supercharger network open to other EVs later this year." Tesla operates more than 25,000 Superchargers at 2,700 charging stations worldwide, according to its website.

Intel (INTC) and Bharti Airtel announced a collaboration to drive network development of 4G and 5G virtualized radio access network and open radio access network technology to transform Airtel's networks to reap the full possibilities of 5G for its customers.

Reports suggest Bank of America's (BAC) prime brokerage unit has started the clearing and settlement of cryptocurrency exchange-traded products for hedge funds in Europe.

Nidec (NJDCY) will establish a joint venture with noted Apple (AAPL) partner Foxconn (HNHAF) for EV motor production.

Ulta Beauty (ULTA) shared it will open its first beauty shops inside of Target (TGT) next month. The mini-shops will feature an assortment of merchandise from more than 50 prestige brands for makeup, skincare, and haircare.

After today’s market close, CSX (CSX), Las Vegas Sands (LVS), Texas Instruments (TXI), and Whirlpool (WHR) are among the companies reporting their quarterly results. Those looking to get a jump on earnings reports to be had in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

  • July 22: Weekly jobless claims, Chicago Fed National Activity Index, Existing Home Sales
  • July 23: Markit Manufacturing PMI (flash), Markit Services PMI (flash)
  • July 26: New Home Sales and Dallas Fed Manufacturing Index
  • July 27: Durable Goods, S&P/Case-Shiller Home Price, Conference Board Consumer Confidence, weekly API Crude Oil Stocks
  • July 28: Wholesale Inventories, Goods Trade balance, EIA Energy stocks, Fed Interest Rate Decision, and Press Conference
  • July 29: US GDP Q2, Pending Home Sales, Weekly Jobless Claims
  • July 30: Personal Income & Spending, PCE Price Index, Employment Cost Index, Chicago PMI, University of Michigan Consumer Sentiment
  • August 2: Markit Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, Total Vehicle Sales
  • August 3: Factory Orders, IBD/TIPP Economic Optimism, API Crude Oil Stocks
  • August 4: ADP Employment Change, Markit Services PMI, ISM Non-Manufacturing PMI, EIA Crude Oil Stocks
  • August 5: Trade Balance, weekly Jobless Claims
  • August 6: Non-farm payrolls, Wholesales Inventories
  • August 9: JOLTs Job Openings and Labor Turnover Survey
  • August 10: Nonfarm Productivity Q2, Unit Labor Costs, API Crude Oil Stocks
  • August 11: Consumer Price Index (CPI), EIA Energy Stocks, Monthly Budget Statement
  • August 12: Producer Price Index (PPI), weekly Jobless Claims
  • August 13: Import & Export Prices, University of Michigan Consumer Sentiment

Thought for the Day

“Learn what is to be taken seriously and laugh at the rest.” ~Herman Hesse


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

Chris Versace

Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.

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Lenore Elle Hawkins

Lenore Elle Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, her focus is on macroeconomic influences that create investing headwinds or tailwinds. Lenore co-authored the book Cocktail Investing and in addition to her Tematica work, provides M&A consulting services for companies in Europe looking to expand globally. She holds a degree in Mathematics and Economics from Claremont McKenna College, an MBA in Finance from the Anderson School at UCLA and is a member of the Mont Pelerin Society.

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Mark Abssy

Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.

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