Market Update

Today’s S&P 500 Index is up by 0.21%, while the Dow Jones Industrial Index has dipped slightly by 0.02%. The Nasdaq 100 Index is showing a more significant increase of 0.56%. E-Mini S&P Futures saw a 0.15% rise this September, with E-Mini Nasdaq Futures climbing by 0.50%.

Stock markets are, on the whole, trending upward today, with both the S&P 500 and Nasdaq 100 reaching new highs. This upward momentum can be attributed to strong quarterly corporate earnings and positive trade news. According to Commerce Secretary Lutonic, a 90-day extension of the trade pause with China appears to be the result of ongoing discussions between the two countries in Stockholm. Additionally, U.S. economic data indicates a surprising reduction in the June Advance Goods trade deficit to $86 billion.

Mergers and acquisitions are also helping bolster stocks, with Union Pacific agreeing to buy Norfolk Southern for approximately $85 billion, or about $320 per share. Baker Hughes has entered the market, acquiring a company in the charting sector for $9.6 billion, at roughly $210 per share.

Meanwhile, the Dow Jones has seen a decline of 6% in Merck & Co after announcing a suspension of Gardasil vaccine shipments to China until at least the end of the year. UnitedHealth Group faced a disappointing Q2, reporting a lower adjusted EPS than anticipated, which is down more than 5% as its forecast for the full year falls below expectations.

The S&P CoreLogic Composite-20 Home Price Index has registered an increase of 2.79% year-over-year, although it’s the weakest increment seen in 75 years.

Looking ahead to this week, trade contract negotiations will take center stage as Friday’s deadline approaches. Later today, job openings for June are expected to decrease from 269,000 to 700,000. Moreover, the U.S. Consumer Trust Index is projected to rise from 93.0 to 96.0. The FOMC will begin a two-day meeting on Tuesday, and a shift in the Fed’s fund target range from 4.25% to 4.50% is anticipated when the meeting concludes on Wednesday. Additionally, ADP’s employment change for July is expected to see an uptick to 80,000. An expansion of 2.4% in Q2 GDP is projected, with the Core PCE Price Index expected to ease from 3.5% in Q1 to 2.3%. On Thursday, initial unemployment claims are anticipated to rise to 223,000, and the second-quarter employment cost index may increase by 0.8%. Personal expenditures and incomes for June are expected to grow by 0.4% and 0.3% month-over-month, respectively. The June Core PCE price index, the Fed’s preferred gauge for inflation, might rise to 0.3% month-over-month and 2.7% year-over-year. Chicago PMI is predicted to increase from 40.4 to 42.0 for July. Finally, on Friday, non-farm payrolls are expected to grow by 109,000 in July, with the unemployment rate rising slightly to 4.2%. Hourly earnings are forecasted to increase by 0.3% month-over-month and 3.8% year-over-year. The July ISM manufacturing index is also expected to tick up to 49.5, with consumer sentiment remaining steady at 61.8.

The market is, quite possibly, bracing for President Trump’s impending trade deal deadline on August 1st. Trump recently mentioned he would notify over 150 countries of their tariff rates, which will either be set at 10% or 15%. Just last Wednesday, he stated, “We have straightforward tariffs of 15% to 50%.”

Federal Funds Futures pricing is reflecting a 3% chance of a 25 basis point rate cut at the upcoming FOMC meeting on September 16th-17th.

This week is particularly busy for earnings, with 38% of S&P 500 stocks reporting, which is double last week’s figures. It’ll be a crucial week for major players, as Microsoft and Meta Platforms are scheduled to report on Wednesday, while Apple and Amazon will follow suit on Thursday. Bloomberg Intelligence indicates that second-quarter revenues in the S&P 500 are exceeding expectations, reflecting a yearly increase of 2.8%. About one-third of S&P 500 firms have reported, with around 82% surpassing profit estimates.

Globally, stock markets are displaying mixed results. The Euro Stoxx 50 has gained 1.16%, China’s Shanghai Composite has increased by 0.33%, while Japan’s Nikkei Stock 225 has closed down by 0.79%.

On the bond market front, September 10th T-Notes are up by 4 ticks today. The yield on 10-year T-notes is down to 4.396%, a slight dip of 1.4 basis points. Short covering ahead of the FOMC meeting has lifted T-note prices, although there’s supply pressure to consider as the Treasury auctions two-year floating rate notes worth $30 billion and seven-year T-notes worth $44 billion. The strength of the stock market is influencing a reduced demand for safe haven T-Notes.

European government bond yields are also trending upward, with Germany’s 10-year yield climbing to 2.705%, up by 1.6 basis points, and UK yields reaching 4.681%, a weekly high.

Inflation expectations from the ECB for June have eased slightly to 2.6%, down from 2.8% in May, while three-year expectations remain steady at 2.4%

The market is pricing in a 15% chance that the ECB might cut rates by 25 basis points during its upcoming meeting on September 11th.

Notable Stock Movements

Today, semiconductor stocks are gaining traction, with Advanced Micro Devices (AMD), ON Semiconductor Corporation, and Marvell Technology (MRVL) all up by more than 2%. Broadcom, NVIDIA, and several others are also witnessing increases above 1%.

Sarepta Therapeutics (SRPT) is up over 27% after U.S. regulators suggested that patients who can walk should be allowed access to the company’s gene therapy, Elevidys, once more.

Amkor Technology has jumped more than 21% after revealing second-quarter net sales that surpassed the consensus of over $1.51 billion, projecting third-quarter sales between $1.88 and $1.98 billion, exceeding earlier estimates.

Chart Industries (GTLS) has risen by over 16% due to Baker Hughes acquiring the firm for $13.6 billion, translating to around $210 per share.

Cadence Design Systems has increased by over 9%, leading gains in the S&P 500 and Nasdaq 100 after a strong second-quarter revenue report of $128 billion, which exceeded the $1.25 billion estimate.

Corning (GLW) has seen gains of more than 7% after projecting second-quarter EPS above consensus expectations.

CBRE Group (CBRE) shares have risen over 7% following a positive second-quarter revenue report, boosting its full-year core EPS estimate.

On the flip side, Brown & Brown has dropped more than 9%, leading losses in the S&P 500 after reporting disappointing organic revenue figures for the second quarter.

Whirlpool has fallen by more than 8% after its Q2 net sales missed expectations and cutting its annual EPS forecast.

Stanley Black & Decker has also declined over 8% after announcing weaker-than-expected sales figures.

Carrier Global is down more than 8% after providing a conservative free cash flow forecast.

Royal Caribbean Cruises has dropped over 8% after predicting underwhelming Q3 adjusted EPS figures.

UPS has seen a decline of more than 7% following its cautious guidance due to ongoing market uncertainty.

Merck & Co. has fallen over 6%, leading the Dow Jones losses due to the extended suspension of Gardasil vaccine shipments to China.

Lastly, UnitedHealth Group has dropped more than 5%, reporting weaker Q2 adjusted EPS and also lowering its full-year expectations.