Tuesday, July 30th, 2024
We note a pattern early in this trading week. Following a Monday that hit the opening bell with gusto, major market indices ended the day flat (aside from the small-cap Russell 2000, which fell -1%). This morning we’re flat again, and it may be easier to see why: the July meeting of the Federal Open Market Committee (FOMC) starts today and ends tomorrow afternoon, holding interest rates in its balance.
There are few remaining analysts who feel a rate cut is likely tomorrow. But the language in the press release — and in Fed Chair Jerome Powell’s press conference directly following — will be key, as it will help signal a way forward for the monetary policy body: most importantly, how likely is a rate cut in September? This week’s stock market does not look hungry to act until it receives this information.
Case-Shiller home prices for May are out this morning. This set of housing data, months in arrears from more current results, is nevertheless considered the most accurate of housing price figures. The 20-city rose +0.3% month over month and +6.8% year over year — exactly in-line with estimates. This marks another record high, but is down from the upwardly revised +7.3% for April. The National Index came in at +5.9% from a year ago.
The 20-city survey had no negative headlines. Every city on the list went up in home prices in the past year, with Portland, OR trailing for the second-straight month, +1% year over year. The leaders for the month were New York City +9.4%, San Diego +9.1% and Las Vegas +8.6%. Thus, we see the West region, after a several-month period of relative dormancy after leading housing prices higher previously, looks to be on the rebound. Dallas, Denver and Tampa were all sub-3.4% for the month.
PayPal PYPL is up +8% in today’s pre-market. This reflects on the company’s Q2 beats on both top and bottom lines ahead of today’s opening bell. Earnings of $1.19 per share easily surpassed the 97 cents in the Zacks consensus, on revenues of $7.89 billion in the quarter, which outpaced the $7.80 billion anticipated. Payment volumes and transactions rose +11% and +8%, respectively. Guidance for next quarter was revised to single-digit growth for both earnings and sales.
Procter & Gamble PG reported a mixed fiscal Q4 this morning. Earnings of $1.40 per share outperformed estimates by 3 cents (which matched the year-ago earnings of $1.37 per share) on revenues of $20.53 billion, which missed expectations by -0.91% (and slightly below the $20.55 billion reported a year ago). P&G has only one earnings miss in the past five years, but has only beaten top line estimates once in the past four quarters. Shares are down -5% in early trading. For more on PG’s earnings, click here.
Merck MRK notched its 12th straight earnings beat ahead of the opening bell. The Big Pharma staple posted $2.28 per share was ahead of the $2.16 in the Zacks consensus and the $2.06 from the year-ago quarter, with $16.11 billion in revenues ahead of estimates by +1.35%. Early traders are selling the news here, however — down -3% in pre-market trading, and still up +12% year to date. For more on MRK’s earnings, click here.
After today’s closing bell, we get a slew of new earnings reports. Microsoft MSFT will be chief among them, expected to grow +7.8% in earnings per share and +14.2% on revenues. The world’s biggest software company has only missed once on earnings in the past five years. Chip-maker Advanced Micro Devices AMD will also report this afternoon, expecting +15.5% earnings growth year over year and +6.4% on sales. Plenty of other companies are coming out with earnings later today, as well, including Zacks Rank #4 (Sell)-rated Starbucks SBUX.
We’ll also see labor market and consumer numbers after the open today. The Job Openings and Labor Turnover Survey (JOLTS) for June will help kick off a new Jobs Week (with private-sector payrolls out Wednesday and the Employment Situation report on Friday morning). Consumer Confidence for July will also be hitting the tape later this morning. Both of these metrics are expected to come in slightly lower, month over month.
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