Daily Markets: Stocks Try to Rebound After Consecutive Down Days

Today’s Big Picture

Asia-Pacific equity markets finished the day mixed. China’s Shanghai Composite and Taiwan’s TAIEX both gained just over 0.40% and Hong Kong’s Hang Seng closed flat, down a mere 0.01% while South Korea’s KOSPI fell 0.23%, Japan’s Nikkei declined 0.44%, India’s SENSEX was off 0.59%, and Australia’s ASX All Ordinaries closed 0.64% lower led by Non-Energy Materials and Consumer Services names. Western European markets are down across the board in midday trading and U.S. equity futures point to a positive open.

We have another day of digestion as investors continue to take stock of the Fed’s July meeting minutes and the “lingering inflation woes” message. They will contrast those findings with recent economic data that shows the economy growing meaningfully above trend, but inflation not knuckling under in a meaningful way. Puzzling through that, investors will continue to watch 10-year Treasury yields which closed last night up again, finishing at 4.252% following the Fed minutes.

Aside from the Fed’s comments on inflation and the current economic data, the Atlanta Fed’s GDPNow forecast was updated yesterday to indicate an estimated 5.8% growth in GDP for the current quarter. This type of growth was last seen in January of 2022 and surely has raised the specter of an admittedly data-dependent Fed reacting to cool growth as it sees fit.

Data Download

International Economy

Last night saw trade and machine order data out of Japan. June Core Machinery Orders came in at 2.7%, reversing the prior reported 7.6% decline but softer than the 4.5% estimate. Imports showed a 13.5% decline, eclipsing last month’s 12.9% fall and surprising significantly to the downside against expectations of only a 0.15% drop. Exports rolled over to post a 0.32% decline, which, while lower than the previously reported 1.5% growth showed a slight upside surprise versus an expected 1.0% drop.

Domestic Economy

If it’s Thursday, and it is, it means a fresh look at weekly initial and continuing jobless claims and the latest natural gas inventory data is on deck. We also have the July Leading Indicators as well as the August reading on the Philly Fed Index. Following yesterday’s July Housing Starts and Industrial Production data, the Atlanta Fed’s GDPNow model was revised to +5.8% for the current quarter, up from 5.0% earlier this week, and 3.9% at the beginning of August.

Markets

The release of the latest round of Fed minutes gave investors pause yesterday as reflected in their bidding down all sectors, led by Consumer Discretionary (-1.24%) and Real Estate (-1.22%) followed closely by Communications Services which fell 1.19%. Relative safety was found in Financials and Utilities, down 0.15% and 0.23%, respectively. Major equity index results resembled a risk on mindset as the Dow declined 0.52%, the S&P 500 dropped 0.76%, the Nasdaq Composite was off 1.15% and the Russell 2000 closed 1.28% lower. Insurance companies got a lift after traders reacted to Progressive Corp’s (PGR) announcement that saw net premiums written rise 21% in the YoY July period. Shares rose 8.87%.

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

• Dow Jones Industrial Average: 4.88%
• S&P 500: 14.71%
• Nasdaq Composite: 28.74%
• Russell 2000: 6.26%
• Bitcoin (BTC-USD): 73.15%
• Ether (ETH-USD): 50.88%

Stocks to Watch

Before U.S. equity markets begin trading today, Dole (DOLE), MSG Sports (MSGS), SpartanNash (SPTN), Tapestry (TPR), The Children’s Place (PLCE), and Walmart (WMT) are expected to report quarterly results.

Cisco (CSCO) reported July quarterly results that bested top and bottom line expectations. For its October quarter, Cisco sees EPS of $1.02-1.04 vs. the $1.00 consensus with revenue in the range of $14.50-14.70 billion, bookending the $14.63 billion consensus. In discussing that outlook, Cisco shared it is “seeing solid customer demand, gaining market share, and innovating in key areas like AI, security, and cloud. This momentum gives us confidence in our ability to capture the many opportunities ahead."

Wolfspeed (WOLF) reported a larger-than-expected loss for its June quarter despite revenue topping the consensus forecast and up 3.2% YoY. For the current quarter, the company guided its bottom line below consensus expectations as it expands its production footprint, “ incurring significant factory start-up costs.”

Even though Chegg (CHGG) has ~$89 million left under its current $2 billion share repurchase authorization, the company’s Board approved a $200 million increase for the program.

Robinhood Markets (HOOD) said its net cumulative funded accounts rose to 23.2 million exiting July, up by ~50,000 vs. the end of June. Monthly active users increased by 2% during the month to 11.0 million. The company also shared that assets under custody rose 6% during the month, ending July at $94.5 billion.

IPOs

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

After Today’s Market Close

Applied Materials (AMAT), Bill.com (BILL) Farfetch (FTCH), and Ross Stores (ROST) are slated to report quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Friday, August 18

• Japan: Consumer Price Index - July
• UK: Retail Sales - July
• Eurozone: Consumer Price Index - July

Thought for the Day

“A state of wonder is a state of mind.” ~ Margaret Stone

Disclosures

• Cisco Systems (CSCO) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
• Walmart (WMT), Farfetch (FTCH), Ross Stores (ROST) are constituents of the Tematica BITA Big Spenders & Savers Index
• Walmart (WMT) 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.

Other Topics

Stocks Economy Central Banks Earnings