Markets

Daily Markets: Jobless Claims and Infrastructure to Drive Day's Trading

Man with unemployment form in Florida
Credit: Marco Bello / Reuters - stock.adobe.com

Today’s Big Picture

The major equity indices in Asia-Pacific were mostly mixed today, with both China’s Shanghai Composite and Japan’s Nikkei unchanged while Hong Kong’s Hang Seng finished 0.3% higher and Australia’s ASX 200 slipped 0.2%. By midday trading, the major European equity indices were higher across the board and U.S. equity futures point to further gains when those markets open later this morning.

Today, investors will digest the latest weekly jobless claims report, which is expected to show a fall to 380,000 from 412,000 the prior week, as well as the May Durable Goods Order data. Investors will also be watching Washington for progress on infrastructure spending as well as the results of the Fed’s latest bank stress tests. A bipartisan group of Senators behind an infrastructure plan that appears to be gaining momentum is slated to meet President Joe Biden at the White House today. After today’s market close, the Federal Reserve will release the results of its latest annual bank stress tests, and banks are expected to gain more autonomy in deciding how much capital they can return to their shareholders. Previously, the Fed said it would end temporary restrictions on banks' dividends and stock buybacks that were instilled during the pandemic after June 30 if they pass this latest round of stress tests.

Data Download

International Economy

France’s Business Confidence for June came in at 107, unchanged MoM and below the expected increase to 109.

Germany’s Ifo Business Climate in June rose to 101.8, up from 99.2 in May and well ahead of the expected increase to 100.6. The Current Conditions component jumped to 99.6 for June compared to May’s 95.7 reading and the expected increase to 97.8. The June reading for the Ifo Expectations component came in at 104, a tick higher than the expected 103.9 and solid MoM improvement from May’s 102.9.

The Bank of England left its key interest rate unchanged at 0.1%.

Domestic Economy

Mortgage applications were up 2.1% for the week ended June 18 after a 4.2% increase the prior week.

The IHS Markit Manufacturing PMI for June rose to 62.6 from 62.1 in May, beating expectations for a decline to 61.5. The month saw yet another month of record growth in Factory Activity with Output and New Orders rising sharply. Supplier delays and difficulties finding suitable workers dampened production. Average supplier delivery times lengthened to the greatest extent on record by some margin. Broad-based raw material price increases pushed input inflation to a new record high. Markit Service PMI fell to 64.8 from 70.4, well below expectations for a minor decline to 70.0. Despite the miss, this was the second-sharpest expansion in the service sector since data collection began in October 2009.

New Home Sales fell 5.9% MoM in May to an annualized rate of 769k after dropping 7.8% in April, well below market expectations of 870k. This is the lowest reading in a year and is almost 7% below the level in February. Inventories are improving, with homes for sale up 7.8% over the past three months with the number of months’ supply up 15% during that time.

The current account deficit rose to the highest level since Q1 2007 as the goods deficit increased and the surplus on primary income (differences in income earned abroad by U.S. entities versus foreign entities in the U.S.) declined.

David Certner, legislative counsel and director of legislative policy for government affairs at AARP, warned that many workers would be forced to dip into their retirement funds to stay afloat as a result of COVID-related money troubles.

Today brings Durable Goods Orders, Wholesale Inventories, the usual weekly Jobless Claims, GDP Price Index Q1, Goods Trade Balance, and Corporate Profits for Q1.

Markets

Despite coming within one point of its all-time high at 4,257.16, the S&P 500 dipped 0.1% yesterday. The Nasdaq Composite inched ahead by +0.1% winning an intraday and closing record high, while the Dow Jones Industrial Average traded off 0.2% and the Russell 2000 closed 0.3% higher. Stocks of homebuilders fell yesterday as May New Home Sales unexpectedly fell 5.9% MoM to a 1-year low of 769K, well below the expected 868K.

Stocks to Watch

KB Home (KBH) reported mixed May quarter results with EPS that topped the consensus forecast while revenue for the quarter, which rose almost 58% YoY, came up short. Homes delivered during the quarter rose 40% to 3,504 and the average selling price increased 13% to $409,800. KB sees August quarter housing revenue of $1.5-1.58 billion and full-year housing revenue in the $5.9-46.1 billion range.

PerkinElmer (PKI) shared it now expects to beat its prior 2Q guidance of $2.35 in EPS and $1.11 billion in revenue vs. a consensus EPS of $2.44 and $1.12 billion in revenue.

Yum Brands (YUM) Taco Bell is testing the Naked Chalupa with Crispy Plant-Based Shell, another menu addition to reach vegetarian, vegan, and "veggie-curious" customers.

Visa (V) signed a definitive agreement to acquire Tink, a European open banking platform that enables financial institutions, FinTechs, and merchants to build tailored financial management tools, products, and services for European consumers and businesses based on their financial data for 1.8 billion Euros.

Electronic Arts (EA) announced Wednesday that it has agreed to acquire game studio Playdemic from AT&T’s (T) WarnerMedia for $1.4 billion.

Brunswick Corp. (BC) announced an agreement to buy Norway-based marine electronics and sensors maker Navico for $1.05 billion.

eBay (EBAY) will sell an 80.01% stake in its Korean businesses to Emart for about $3 billion.

Columbia Banking System (COLB), the holding company for Columbia State Bank, and Bank of Commerce Holdings (BOCH), the holding company for Merchants Bank of Commerce, announced the signing of a definitive agreement to merge Bank of Commerce into Columbia in an all-stock transaction valued at approximately $266.0 million, or $15.72 per share of Bank of Commerce common stock.

STMicroelectronics (STM) and Tower Semiconductor (TSEM) announced an agreement by which ST will welcome Tower to its Agrate R3 300mm fab under construction on its Agrate Brianza site in Italy. The fab is expected to be ready for equipment installation later this year and start production in the second half of 2022.

Data-streaming firm Confluent Inc. (CFLT) priced its 23 million share IPO at $36 per share, above the targeted price range of $29-$33.

After today’s market close, Blackberry (BB), CalAmp (CAMP), FedEx (FDX), and Nike (NKE) will report their quarterly results. Investors 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 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

“Be the reason someone smiles. Be the reason someone feels loved and believes in the goodness of people.” Roy T. Bennett

Disclosures

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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