Daily Markets: Will More Inflation Data Push Stocks Towards a Breakout Rally?

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session mixed. China’s Shanghai Composite declined 0.15% and Australia’s ASX All Ordinaries was down 0.50% while South Korea’s KOSPI rose 0.16%, India’s Sensex gained 0.22%, Hong Kong’s Hang Seng added 0.46% and Taiwan’s TAIEX advanced 0.60%. Japan’s Nikkei led the way, up 2.62%. By mid-day trading, major European equity indices are up across the board and U.S. futures point to a positive open later this morning.

We have one more set of inflation data coming out this morning, the July Import and Export Prices and the 1-year inflation expectation index contained in the preliminary August University of Michigan Consumer Sentiment Index. While both aren’t the usual focal points the monthly CPI and PPI data are, investors will be looking for further confirmation that we are seeing progress on taming inflation. Stocks still face technical resistance near the 4,300 level on the S&P 500, a level we could test today depending on the morning’s inflation findings.

Data Download

International Economy

The UK’s 2Q 2022 GDP rose 2.9% YoY, down from 8.7% the prior quarter, but modestly better than the expected 2.8%. For the month of June, its GDP rose 1.9%, substantially ahead of the 1.2% consensus.

The final July reading on France’s inflation rate clocked in at 6.1% YoY (0.3% MoM), matching the consensus forecast.

Industrial production in the Eurozone rose 2.4%, not only up from the prior month’s 1.6% figure but crushing the expected 0.8% gain.

Domestic Economy

At 8:30 AM ET, we’ll get the week’s last set of inflation data with the Import and Export prices for July. Import prices are expected to fall 1.0% MoM vs. +0.2% in June, while the consensus view sees Export prices retreating 1.1% MoM, a big turn from June’s +0.7% figure.

At 10 AM ET, the preliminary August print for the University of Michigan Consumer Sentiment Index will be had and its headline reading is thought to increase to 52.5 from 51.5 in July. Also in that report will be an updated view on 1-year inflation expectations, which ticked lower to 5.2% in July from 5.4% in May and June.

U.S. natural gas prices surged to just below $9 yesterday and closed at $8.874/MMBtu, the highest closing price since July 26.

Markets

While Producer Price Index results came in slightly better than expected, markets didn’t have the same reaction to this news as they did concerning Wednesday’s CPI print. Natural Gas prices rallying may have had more to do with setting the scene yesterday for markets as Energy names had a big day, gaining 3.22% and forecasting higher energy costs. Given the small weighting of the Energy sector in the S&P 500 it wasn’t enough to completely offset the rest of the market. We saw the S&P 500 and the Dow end the day essentially flat, down 0.07% and up 0.08%, respectively. The Nasdaq Composite declined 0.58% and small caps gained as the Russell 2000 closed ahead 0.31%.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -8.26%
• S&P 500: -11.73%
• Nasdaq Composite: -18.31%
• Russell 2000: -13.08%
• Bitcoin (BTC-USD): -49.93%
• Ether (ETH-USD): -50.11%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Honest Company (HNST) and Spectrum Brands (SPB) will be among the handful of companies issuing their latest quarterly results and guidance.

Shares of Toast (TOST), a software as a service company focused on the restaurant industry, climbed in aftermarket trading last night after the company reported its June quarter revenue rose 58.5% YoY to $675 million, crushing the $647.6 million consensus. During the quarter, Toast added over 6,000 net new locations and its subscription revenue grew 100% YoY. The company issued upside guidance for both the current quarter and upped its 2022 revenue guidance to $2.62-$2.66 billion vs. the $2.54 billion consensus and its prior guidance of $2.50-$2.55 billion.

By comparison, restaurant software as a service platform company Olo Inc. (OLO) shares sank last night after the company reported mixed June quarter results but issued downside guidance for the current quarter and lowered its 2022 outlook. For the current quarter, Olo sees revenue of $46.5-$47.0 million vs. the $51.17 million consensus, and for 2022 revenue is now expected to be $183-$184 million vs. it is prior guidance of $195-$197 million and the $195.79 consensus.

German automaker BMW (BMWYY) has confirmed that large-scale production and sales of the hydrogen fuel cell-powered model iX5 will begin in 2025. The vehicle was developed in partnership with Japanese automaker Toyota (TM). Hydrogen fuel cells are much more compact and easier to recharge than current battery technology and the hope of many is that with hydrogen being as abundant as it is the technology will prove to be a truly cleaner replacement for internal combustion engines.

Bloomberg reports Apple (AAPL) asked suppliers to build at least as many next-generation iPhones this year as it did in 2021, roughly 90 million units. For 2022, the report indicates the iPhone maker targets ~220 million iPhones roughly level with 2021.

Rivian Automotive (RIVN) reported a slightly smaller loss than expected for its June quarter with revenue that tallied $364K. During the quarter, the company produced 4,401 vehicles and delivered 4,467 vehicles. Exiting the quarter its R1 preorder backlog was ~98K from customers in U.S. and Canada and its cash and equivalents on hand totaled $15.46 billion. Rivian reiterated its 2022 production target of 25K vehicles.

IPOs

Reborn Coffee (REBN) priced an upsized IPO offering of 1.44 million shares at $5 per share.

Electric sports boat developer Forza X1 (FRZA), a wholly owned subsidiary of Twin Vee Powercats (VEEE) priced its initial public offering of 3 million shares at $5.00 per share

Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Once again it is Friday and that means no companies are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Monday, August 15

• Japan: Industrial Production & Capacity Utilization – June
• Germany: Wholesale Price Index – July
• US: Empire State Manufacturing Index – August
• US: NAHB Housing Market Index – August

Tuesday, August 16

• UK: Employment Change, Average Hourly Earnings – June
• Germany: ZEW Current Conditions & Economic Sentiment – August
• Eurozone: ZEW Economic Sentiment – August
• US: Housing Starts & Building Permits – July
• US: Industrial Production & Capacity Utilization – July

Wednesday, August 17

• Japan: Core Machinery Orders – June
• Japan: Imports/Exports – July
• UK: CPI, PPI – July
• Eurozone: 2Q 2022 GDP
• US: Weekly MBA Mortgage Applications
• US: Retail Sales – July
• US: Business Inventories – June
• US: Weekly EIA Crude Oil Inventories

Thursday, August 18

• Eurozone: CPI - July
• US: Weekly Initial & Continuing Jobless Claims
• US: Philadelphia Fed Index – August
• US: Existing Home Sales – July
• US: Weekly EIA Natural Gas Inventories

Friday, August 19

• Japan: CPI – July
• UK: Retail Sales – July
• Germany: PPI - July

Thought for the Day

“You have to just do what you love and hope other people love it too.” ~ Joan Jett

Disclosures

• Rivian Automotive (RIVN), Honest Company (HNST)are constituents of the Tematica BITA Cleaner Living Index
• Rivian Automotive (RIVN), Honest Company (HNST)are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index
• Apple (AAPL) is a constituent of the Tematica Research Thematic Dividend All-Stars 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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