The big picture today
Asia-Pacific stock markets ended the day largely ahead as promises of economic support from the Chinese government boosted markets, although Japan’s Nikkei and India’s SENSEX ended the day negative but nearly flat. South Korea’s KOSPI rose 0.30%, Australia’s ASX All Ordinaries gained 0.50%, Taiwan’s TAIEX rose 0.97%, China’s Shanghai Composite gained 2.13% and Hong Kong’s Hang Seng jumped 4.10% in a broad rally led by financials. Major European markets are up midday and US stock futures point to a positive open.
Until the Fed concludes its meeting tomorrow and informs the market of its thoughts on the future of monetary policy, investors will have a full plate of profits to digest today. The rebound in house prices and the story of a soft landing finding growing support are potential influences worth noting in the Fed’s policy statement and Fed Chair Powell’s post-announcement comments.
Reading and digesting today’s earnings reports and corresponding earnings conference calls will flesh out expectations for 2H 2023 across a growing range of sectors. Quarterly results after today’s close of Alphabet (GOOGL) And Microsoft (MSFT) will shine the spotlight on cloud and AI, with many looking to see if the latter’s near-term promise supports the headlines and stock price movement of the past few months.
The Ifo business climate indicator for Germany fell for the third consecutive month to 87.3 in July, the lowest level since last November and well below market expectations of 88.0. The latest reading suggests that the road to recovery in Europe’s largest economy could be longer than initially expected, given lingering inflationary pressures and escalating borrowing costs. By sector, sentiment deteriorated among manufacturers (-14.2 versus -9.7), service providers (0.9 versus 2.7), retailers (-23.7 versus -20.2) and builders (-24.0 versus -20.5).
The Confederation of British Industry survey’s total order book balance rose six points to -9.0 in July, the highest level since last December and above its long-term average of -13. In addition, the last three months’ production indicator also turned positive for the first time this year, while the survey’s monthly expected producer price indicator hit its lowest level since February 2021.
The Chinese government has announced it will step in to support its economy after failing to fully re-engage in the post-Covid period. Specific support has been promised to the real estate sector which is collapsing under the weight of a high level of indebtedness.
We have some new economic data on the record today, including back-to-back numbers as of 9 a.m. ET for new home prices in May. The S&P/Case-Shiller home price index should rise 1.2% in May, a little slower than the 1.7% gain recorded in April. The FHFA House Price Index is expected to post a smaller gain at just 0.2% MoM.
Stocks had a relatively calm day ahead of the Fed’s rate announcement tomorrow. Futures have priced a 98.90% chance of a 25 basis point move up, which hasn’t changed much over the past week and while there have been some warning signs at the start of this earnings season, the general consensus is starting to shift towards a softer landing than initially expected. Utilities (-0.26%) and Healthcare (-0.22%) were the only sectors under pressure yesterday. Energy (1.61%) leads, financials and real estate both rose 0.96% and the other sectors posted modest gains. Broad indices ended the day ahead with the Nasdaq Composite up 0.19%, the Russell 2000 up 0.28%, the S&P 500 up 0.40% and the Dow Jones up 0.52%. All was not benign because the shares of Estee Lauder (EL) fell 1.46% after Chinese spending concerns prompted price target cuts and downgrades by several analyst firms. Stocks are up slightly in premarket trading, so let’s see if China’s economic support pledge changes its mind today.
Here’s how the major market indicators stack up since the start of the year:
- Dow Jones Industrial Average: 6.83%
- S&P 500: 18.63%
- Nasdaq compound: 34.32%
- Russell 2000: 11.61%
- Bitcoin (USD-BTC): 75.73%
- Ether (ETH-USD): 54.39%
Stocks to Watch
Before U.S. stock markets begin trading today, 3M (MMM), Alaska Air (ALK), Albertsons (SCI), Corning (GLW), Danaher (DHR), Dow (DOW), General Motors (GM), Kimberly Clark (KMB), Lamb Weston (LW), Paccar (PCAR), Polaris Industries (PII), Sherwin Williams (SHW) and Unilever (UL) are among the companies expected to report quarterly results.
F5 Networks (FFIV) crushed June-quarter EPS expectations at $3.21 versus consensus of $2.86. Revenue for the period increased 4.2% year-on-year to $702.64 million, beating consensus of $698.93 million. On the earnings call, management said that “from a demand perspective, we are seeing early signs of stabilization.” For the current quarter, F5 guided EPS to $3.15-$3.27 versus consensus of $3.22 with revenue between $690-710 million versus consensus of $702.27 million.
Results for the quarter from June to NXP Semiconductor (NXPI) beat consensus guidance for revenue and EPS. The company’s automotive segment saw both quarter-on-quarter and year-on-year revenue gains, while its mobile business fell 27% year-on-year and its industrial and IoT segment saw a 19% year-on-year decline in revenue. Offsetting these declines, NXP’s Communications Infrastructure and Other segment revenue increased 15% year-over-year and 8% from the prior quarter. For the current quarter, NXP forecasts revenue between $3.3 billion and $3.5 billion compared to consensus of $3.31 billion and $3.3 billion in the June quarter.
Nucor (NUE) announced mixed earnings for the June quarter, characterized by net income that beat consensus forecasts and revenue that fell 19.3% year-on-year to $9.52 billion, missing the consensus of $9.62 billion. For the current quarter, the company shared that it expects earnings to decline from the June quarter result of $5.81, as earnings decline in its steel mills segment, steel products earnings moderate from the second quarter and materials segment earnings are expected to fall.
Whirlpool (WHR) reported better-than-expected EPS for the June quarter, although revenue for the quarter fell 6.0% year-over-year to $4.79 billion from consensus of $4.81 billion. The more normalized promotional activity compared to the first half of 2022 had a positive impact on margins. The company has annual sales of approximately $19.4 billion. consensus of $19.2 billion and GAAP EPS of $16.00 to $18.00 versus consensus of $15.99.
Inter Parfums (IPAR) issued an upward guidance in its June quarter with revenue of $309 million versus consensus of $281.8 million. The company noted that its product sales in Europe increased 19% year-on-year to $198 million, while its product sales in the United States increased 42% year-on-year to $111 million.
cybersecurity company Thales (THLEF) shared, it will buy Imperva from software investment firm Thoma Bravo in a deal worth $3.6 billion, a move that would likely add $500 million to revenue and expand its data and application security offerings.
Reports suggest Apple (AAPL) could face a potential $1 billion class action lawsuit from more than 1,500 UK app developers over its App Store charges.
In the short term, the timeline for such activity seems rather slim. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.
After today’s market close
Alphabet (GOOGL), Microsoft (MSFT), Snap (SNAP), Teladoc (TDOC), Texas Instruments (TXN), Visa (V), And Waste Management (WM) are expected to release their quarterly results after the shares halt trading. Those interested in learning more about upcoming quarterly earnings reports should head to the Nasdaq Earnings Calendar.
on the horizon
Wednesday July 26
- US: Weekly MBA Mortgage Applications
- United States: Sales of new homes – June
- United States: EIA Weekly Crude Oil Inventories
- United States: FOMC rate decision
Thursday July 27
- China: Industrial profits since the start of 2023 – June
- Germany: GfK consumer sentiment – August
- European Central Bank decision on interest rates
- United States: Initial and Continuing Weekly Unemployment Claims
- United States: 2Q GDP
- United States: Sustainable orders – June
- United States: pending home sales – June
- United States: EIA Weekly Natural Gas Inventories
friday july 28
- Japan: Consumer Price Index – July
- Euro zone: Business and consumer survey – July
- Germany: consumer price index – July
- United States: personal income and expenditure, PCE price index – June
- United States: employment cost index – 2nd quarter 2023
- United States: University of Michigan Consumer Confidence Index – July
Thought of the day
“Always leave things better than you found them.” ~Barbie
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.