S&P Futures Tick Higher Ahead of Key U.S. Payrolls Data, Amazon Surges on Upbeat Earnings

Oleksandr Pylypenko - Barchart - Fri Aug 4, 2023

September S&P 500 futures (ESU23) are trending up +0.08% this morning as market participants looked ahead to the crucial U.S. nonfarm payrolls report.

Amazon.com Inc (AMZN) surged over +8% in pre-market trading after the e-commerce giant reported better-than-expected Q2 results and delivered upbeat Q3 guidance.

In Thursday’s trading session, Wall Street’s major indexes closed lower. DXC Technology Co (DXC) plunged over -29% after the company reported weaker-than-expected Q1 results and cut its 2024 revenue guidance. Also, Qualcomm Incorporated (QCOM) slid more than -8% after the semiconductor company posted mixed Q3 results and offered weak Q4 guidance. In addition, PayPal Holdings Inc (PYPL) tumbled over -12% and was the top percentage loser on the tech-heavy Nasdaq 100 after the fintech company reported weaker-than-expected Q2 transaction revenue and operating margin. On the bullish side, MercadoLibre Inc (MELI) climbed more than +13% after posting upbeat Q2 results. Energy stocks also gained ground as the price of WTI crude rose over +2% after Saudi Arabia extended its production cut by another month.

Economic data on Thursday showed that the U.S. ISM services index came in at 52.7 in July, weaker than expectations of 53.0. Also, weekly initial jobless claims rose +6K to a seasonally adjusted 227K last week, slightly higher than the expected figure of 225K. In addition, U.S. unit labor costs rose +1.6% q/q in Q2, weaker than expectations of +2.6% q/q.

“The good news is that almost everyone agrees that an imminent recession isn’t very likely. That reduces the downside concerns about corporate earnings, but it increases the downside potential for the stock market’s valuation multiple if the bond yield continues to rise,” said Ed Yardeni, founder of Yardeni Research.

Meanwhile, analysts expect corporate earnings from S&P 500 companies to fall 5% year-over-year in Q2.

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that July Nonfarm Payrolls will come in at 200K, compared to the previous value of 209K.

Also, investors will likely focus on U.S. Private Nonfarm Payrolls data, which stood at 149K in June. Economists foresee the new figure to be 179K.

U.S. Average Hourly Earnings data will also be closely watched today. Economists expect July’s figures to be +0.3% m/m and +4.2% y/y, compared to the previous numbers of +0.4% m/m and +4.4% y/y.

U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to remain steady at 3.6% in July.

In the bond markets, United States 10-Year rates are at 4.187%, down -0.10%.

The Euro Stoxx 50 futures are up +0.58% this morning as investors digested more earnings reports as well as positive German factory orders data ahead of the release of the eagerly-awaited U.S. monthly labor report. Travel and leisure stocks advanced on Friday, while media and real estate stocks underperformed. Meanwhile, Germany’s factory orders unexpectedly surged the most in three years in June, signaling a potential stabilization of Europe’s largest economy. In corporate news, Wpp Plc (WPP.LN) plunged over -6% after the company slashed its annual revenue guidance. At the same time, Credit Agricole (ACA.FP) climbed over +5% after the French lender posted upbeat quarterly earnings.

Germany’s Factory Orders, U.K.’s Construction PMI, and Eurozone’s Retail Sales data were released today.

The German June Factory Orders stood at +7.0% m/m, stronger than expectations of -2.0% m/m.

U.K. July Construction PMI has been reported at 51.7, stronger than expectations of 48.0.

Eurozone June Retail Sales came in at -0.3% m/m and -1.4% y/y, compared to expectations of +0.2% m/m and -1.7% y/y.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.23%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.10%.

China's Shanghai Composite closed higher today as market sentiment improved on the back of the government’s promises of additional stimulus measures. In a joint statement on Friday, China’s top economic committees announced that the government would implement more measures to stimulate consumer spending and enhance local liquidity, though specific details were not provided. Also, the governor of China’s central bank pledged on Thursday to direct more financial resources toward the private economy, indicating renewed urgency from Beijing to boost confidence among private firms amid weakening economic momentum. Meanwhile, telecom stocks outperformed on Friday, with China United Network Communications Ltd climbing over +7%.

Japan’s Nikkei 225 Stock Index closed slightly higher today as investors exercised caution in anticipation of the release of U.S. nonfarm payrolls data. Chip-related stocks gained ground on Friday, with chip-making equipment maker Tokyo Electron rising about +1%. In corporate news, Nintendo Co., Ltd fell more than -2% even after the maker of the Switch console reported an 82% year-on-year surge in Q1 operating profit. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +5.89% to 20.66.

“The declines driven by the U.S. downgrade seem to have stopped so far, as a round of sell-offs by short-term investors ended,” said Takehiko Masuzawa, a trading head at Phillip Securities Japan.

Pre-Market U.S. Stock Movers

Apple Inc (AAPL) dropped more than -1% in pre-market trading after the U.S. tech giant reported its third consecutive quarter of declining sales and projected a similar performance in the current quarter.

Booking Holdings Inc (BKNG) climbed over +11% in pre-market trading after the company reported upbeat Q2 results.

DraftKings Inc (DKNG) soared more than +13% in pre-market trading after the company reported stronger-than-expected Q2 results and guided for positive adjusted EBITDA in 2024.

Atlassian Corp Plc (TEAM) gained about +23% in pre-market trading after the company reported upbeat Q4 results and issued solid Q1 revenue guidance.

Opendoor Technologies Inc (OPEN) slid more than -11% in pre-market trading after providing weaker-than-expected Q3 revenue guidance.

Tupperware Brands Corporation (TUP) spiked about +55% in pre-market trading after the beleaguered maker of iconic food containers announced a debt restructuring agreement.

Lamb Weston Holdings Inc (LW) rose over +1% in pre-market trading after Stifel upgraded the stock to Buy from Hold.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Friday - August 4th

Enbridge (ENB), Dominion Energy (D), Magna Intl (MGA), Evergy (EVRG), Brookfield Renewable (BEP), Corebridge Financial (CRBG), Icahn Enterprises (IEP), XPO (XPO), RBC Bearings (RBC), Essent Group Ltd (ESNT), Fluor (FLR), Frontier Communications Parent (FYBR), Brookfield Business (BBU), PNM Resources (PNM), Plains GP Holdings (PAGP), Gates Industrial Corp (GTES), Digitalbridge Group (DBRG), TransAlta Corp (TAC), TELUS International (TIXT), Alpha Metallurgical Resources (AMR), Fisker (FSR), Cinemark (CNK), Green Plains Energy (GPRE), Sunstone Hotel Investors (SHO), Tennant (TNC), United States Cellular (USM), Owens&Minor (OMI), Marcus & Millichap (MMI), GrafTech (EAF), Calumet (CLMT), Twist Bioscience (TWST), Fulgent Genetics (FLGT), Global Partners (GLP), AdvanSix (ASIX), American Axle&Manufacturing (AXL).

More Stock Market News from Barchart

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.