Daily Markets: First Look at U.S. Economy in June
Today’s Big Picture
Equity indices in Asia finished the day mostly higher following the Nasdaq Composite Index notching a new record high yesterday. While Japan’s Nikkei edged 0.3% lower on the day, the Hong Kong Hang Seng rose 1.8%, South Korea’s Kospi finished 0.4% higher and the Shanghai Composite rose 0.3%. By comparison, European equity indices were lower by mid-day trading and U.S. futures point to a modest move forward when those markets open later this morning.
On the economic front, we’ll receive the first look at how the U.S. economy fared in June courtesy of the IHS Markit Flash June Manufacturing and Services PMIs. Another area of investor focus will be indications of job creation and employment gains during the month. Meanwhile, Senate Majority Leader Charles Schumer and House Speaker Nancy Pelosi will meet with White House officials on Wednesday to talk about the path forward on infrastructure. The reported conversation will center on a budget resolution that could pave the way for moving a bill through the Senate with just Democratic votes amid bipartisan talks.
This morning we received the June Flash Manufacturing & Services PMIs from IHS Markit:
- Australia’s Manufacturing PMI for June dropped to 58.4 from 60.4. Services PMI also dropped, falling to 56.0 from 58.0.
- Japan’s Jibun Bank Manufacturing PMI for the month dropped to 51.5 from its prior reading of 53 while the Services PMI rose to 47.2 from May’s 46.5 reading.
- The Eurozone’s Flash Manufacturing PMI came in at 63.1 for June, matching the prior month and ahead of the expected 62.1. The Services sector registered a reading of 58.0 in June vs. the 57.8 consensus and 55.2 in May.
- The UK’s Markit/CIPs Manufacturing PMI dipped to 64.2 in June from 65.6 the prior month but edged out the consensus forecast that called for a fall to 64. The initial reading on the country’s Services sector also slipped in June to 61.7 vs. 62.9 in May, missing the expected 63.
The Delta variant of the coronavirus, first identified in India, is now responsible for 20% of every new Covid-19 case in the U.S. Given the increase in vaccinations, it is unclear just how much of a problem this could be.
Yesterday we learned that Existing Home sales fell -0.9% MoM in May after dropping -2.7% in April, making the fourth consecutive MoM decline. On a more constructive note, relative to sales, inventories of both total existing homes and single-family homes have been rising. That said, the increase has been very small relative to the major declines in supply since the pandemic began. Richmond Fed Manufacturing Index rose to 22 in June from 18 in May, the third consecutive monthly increase.
Later today we’ll get the June Flash IHS Markit readings for the US Manufacturing and Services PMIs as well as the May New Home Sales data. We’ll also get the usual Wednesday weekly data that is the Mortgage Applications Index and EIA Crude Oil Inventories.
The S&P 500 gained 0.5% yesterday following upbeat comments on the economy from Fed Chair Powell made during his congressional testimony. While there was nothing new on the monetary policy front, Powell shared the Fed’s view that factors impacting the labor market and contributing to increased levels of inflation should both be transitory and sees vibrant job creation this fall. The Nasdaq Composite finished 0.8% higher on the day, closing once again at a record high, while the Dow Jones Industrial Average and the Russell 2000 increased 0.2% and 0.4%, respectively.
After Brent crude hit $75 per barrel for the first time in more than two years, oil prices took a breather on reports Russia and other OPEC+ countries may decide to further raise production starting in August.
At one point during morning trading, Bitcoin was down double digits and down 48% from its all-time high, but managed to recover from those closes, ending the day in positive territory.
Stocks to Watch
According to a post from CEO Mark Zuckerberg, Facebook (FB) is bringing its Shops feature to its messaging app WhatsApp and Facebook Marketplace.
Intel (INTC) is restructuring its Data Platform Group into two new units: the Datacenter and AI unit and the Network and Edge Group. The company is also creating two new business units: the Software and Advanced Technology Group and the Accelerated Computing Systems and Graphics Group.
Corning (GLW) announced “moderate” price increases for its display glass substrate prices for 3Q 2021 due to higher logistics and materials costs and other operational expenses during the extended glass shortage.
Peloton (PTON) announced a new corporate wellness program that allows employers to offer subsidized exercise accounts for their workers.
With licensee Maxim’s Caterers Limited, Shake Shack (SHAK) will open 10 new Shacks in territories in China by 2031.
Shares of electric-vehicle manufacturer Xpeng (XPEV) are up premarket trading following the news the company received approval to list its shares on the Hong Kong stock exchange
Nikola Corporation (NKLA) and Wabash Valley Resources announced Nikola is investing $50 million in cash and stock in exchange for a 20% equity interest in the clean hydrogen project being developed in West Terre Haute, Indiana.
Amazon (AMZN) announced 14 new renewable energy projects in the U.S., Canada, Finland, and Spain. The new projects bring Amazon's total renewable energy investments to date to 10 gigawatts (GW) of electricity production capacity, roughly enough to power 2.5 million US homes.
Sprinklr (CXM) priced its 16.625 million share IPO offering at $16.00 per share, below the targeted $18-$20 range.
After today’s market close, KB Home (KBH) will be among the companies reporting their quarterly results. Those looking to get a jump on those reports and others to be had in the coming days should visit Nasdaq’s earnings calendar page.
On the Horizon
- June 24: Durable Goods Orders, Wholesale Inventories, Weekly Jobless Claims, GDP Price Index Q1, Goods Trade Balance, Corporate Profits Q1
- June 25: Personal Income & Spending, PCE Price Index, Michigan Consumer Sentiment
- June 28: Dallas Fed Manufacturing Index
- June 29: S&P/Case-Shiller Home Price Index, Conference Board Consumer Confidence, API Crude Oil Stocks
- June 30: ADP Employment report, Chicago PMI, Pending Home Sales, EIA Energy Stocks
- July 1: Weekly jobless claims, Markit Manufacturing PMI (final), Construction Spending, ISM Manufacturing PMI
- July 2: Balance of Trade, Nonfarm Payrolls, Factory Orders
- July 6: Markit Services PMI (final), ISM Non-Manufacturing PMI, IBD/TIPP Economic Optimism
- July 7: JOLTs Job Opening Report, FOMC Minutes, API Crude Oil stocks
- July 8: Weekly jobless claims, EIA Energy stocks
- July 9: Wholesale Inventories
- July 13: Inflation, Monthly Federal Budget statement, API Crude Oil stocks
- July 14: Producer Price Index, EIA Crude Oil stocks
- July 15: Weekly jobless claims, NY Empire State Manufacturing Index, Philly Fed Manufacturing Index, Industrial Production, Import & Export Prices
- July 16: Retail Sales, Michigan Consumer Sentiment, Business Inventories, Net Capital Flows, Foreign Bond Investment
- July 19: NAHB Housing Market Index
- July 20: Building Permits, Housing Starts, API Crude Oil stocks
- July 21: EIA Energy stocks
- July 22: Weekly jobless claims, Chicago Fed National Activity Index, Existing Home Sales
- July 23: Markit Manufacturing PMI (flash), Markit Services PMI (flash)
Thought for the Day
“I have no special talents. I am only passionately curious.” Albert Einstein
- Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
- Nikola Corporation (NKLA), Peloton (PTON), Xpeng (XPEV) are constituents of the Tematica BITA Cleaner Living Index
- Nikola Corporation (NKLA), Peloton (PTON), Xpeng (XPEV) are constituents of the Tematica BITA Cleaner Living 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.