September S&P 500 E-Mini Futures (ESU24) The NASDAQ 100 E-Mini futures for September (NQU24) fell -0.14% and the Nasdaq 100 E-Mini futures for September (NQU24) fell -0.04% this morning, taking a breather from yesterday’s gains as investors focus on US consumer confidence data and comments from Federal Reserve officials.
Wall Street’s major stock indexes closed higher yesterday, with the benchmark S&P 500, the blue-chip Dow and the tech-heavy Nasdaq 100 hitting two-week highs. Ulta Beauty (ULTA) soared more than 11%, the biggest gainer in the S&P 500, after a 13F filing revealed that Warren Buffett’s Berkshire Hathaway bought about 690,000 shares of the company, valued at about $266 million, in the second quarter. Cisco Systems (CSCO) also rose more than 6%, the biggest gainer in the Dow, after the company reported strong fourth-quarter results, provided solid first-quarter guidance and announced plans to cut its global workforce by about 7%. Additionally, retail giant Walmart (WMT) rose more than 6% after it reported better-than-expected second-quarter results and raised its fiscal 2025 guidance. On the bear side, Dillard’s (DDS) plunged more than 10% after reporting weaker-than-expected second-quarter results.
Economic data released on Thursday showed that U.S. retail sales rose 1.0% in July, beating expectations of a 0.4% increase, the largest increase in a year and a half. U.S. core retail sales, excluding automobiles and parts, rose 0.4% in July, beating the consensus estimate of a 0.1% increase. The Philadelphia Fed’s August manufacturing index also fell to a seven-month low of -7.0, below the 5.4 estimate. Additionally, U.S. industrial production fell 0.6% in July, below expectations of a -0.3% increase, and U.S. manufacturing production fell 0.3% in July, below expectations of a -0.2% increase. Finally, the number of Americans filing new unemployment claims in the past week fell by 7,000 to a five-week low of 227,000, below the consensus estimate of 236,000.
“We’re back to a good news is good news, bad news is bad news environment,” said Brett Kenwell at Etoro. “Investors and consumers want lower inflation, but they’re not willing to do so at the expense of the economy.” [Thursday’s] The better-than-expected retail sales figures have eased some fears that the U.S. could slip into recession.”
Atlanta Fed President Raphael Bostic said in an interview with the Financial Times published on Thursday that he is open to a rate cut in September and that the Fed “cannot afford to be late” in easing monetary policy. “We can’t rule out something moving before the fourth quarter,” Bostic told the paper. St. Louis Fed President Alberto Mussallem also said he thinks the right time is approaching for the central bank to cut rates. “The risks on both sides seem more balanced in my view. So as we get closer to the upcoming meetings, the time may be approaching when it’s appropriate to adjust to a moderately tighter policy,” Mussallem said.
Meanwhile, U.S. interest rate futures are pricing in a 72.5% probability of a 25 basis point rate cut at the next FOMC meeting in September, and a 27.5% probability of a 50 basis point rate cut.
All eyes today are on the preliminary Michigan Consumer Sentiment Index, due to be released in a few hours. Economists are on average expecting the Michigan Consumer Sentiment Index to reach 66.7 in August, up from 66.4 last month.
Preliminary U.S. building permits and housing starts figures for July are also due to be released today. Economists expect building permits to reach 1.43 million and housing starts to reach 1.34 million, up from the previous figures of 1.454 million and 1.353 million.
Additionally, market participants are awaiting a speech from Chicago Fed President Austin Goolsbee.
In the bond market, the yield on the benchmark 10-year Treasury note was 3.913%, down -0.54%.
Euro Stoxx 50 futures rose +0.41% this morning, on track for a weekly gain of over +3%, buoyed by optimism that the US economy will avoid a recession. Auto stocks led Friday’s gains. Data from the UK Office for National Statistics released on Friday showed that UK monthly retail sales rose 0.5% in July, suggesting that the consumer-led economic recovery may continue. Meanwhile, upbeat data on US inflation, jobless claims and retail sales boosted investor confidence, suggesting the economy is poised for stable growth without high inflation. This helped global stocks recover from last week’s declines, which were triggered by recession fears in the world’s largest economy. In corporate news, Germany’s Bayer AG (BAYN.D.DX) surged over +10% after the company won a major victory in a long-running cancer lawsuit over its Roundup weedkiller. And UBS Group Ag (UBSG.Z.IX) rose about 1% after the Swiss bank said it would liquidate a $2 billion real estate fund it bought from Credit Suisse.
UK retail sales, UK core retail sales and Eurozone trade balance data were released today.
UK retail sales in July were +0.5% m/m and +1.4% y/y, beating expectations of +0.6% m/m and +1.4% y/y.
UK core retail sales in July were +0.7% m/m and +1.4% y/y, beating expectations of +0.8% m/m and +1.4% y/y.
The eurozone’s trade balance was €22.3 billion in June, beating expectations of €13.3 billion.
Asian stock markets ended higher today. China’s Shanghai Composite Index (SHCOMP) +0.07% up, while Japan’s Nikkei Stock Average (NIK) closed +3.64% up.
China’s Shanghai Composite Index closed slightly above flat today as the country’s mixed economic data dampened sentiment. Real estate and consumer services stocks were weak on Friday as July data showed the economy is struggling to regain momentum. At the same time, shares of Chinese antimony producers surged following Beijing’s decision to restrict exports of the strategic mineral, of which China is a major supplier. China’s Ministry of Commerce said Thursday it will impose export restrictions on antimony and related elements from September 15 for national security reasons. Meanwhile, sentiment remained weak after Beijing hinted at additional support measures. The People’s Bank of China Governor Pan Gongsheng said in an interview on Thursday that the central bank will step up efforts to effectively implement the monetary and fiscal policies introduced this year and take additional measures as requested by the State Council. Pan added that the central bank will also prepare “gradual policy measures” to help achieve its full-year growth target. In corporate news, Chinese online shopping giant JD.com Inc.’s shares rose about 9% in Hong Kong after the company reported better-than-expected quarterly net profit.
Japan’s Nikkei stock average closed significantly higher today, following an overnight rally on Wall Street, as better-than-expected U.S. economic data eased recession fears in the world’s largest economy. Electronics and financial stocks led Friday’s gains. The Ministry of Economy, Trade and Industry said Friday that Japan’s tertiary industry index unexpectedly fell month-on-month in June. Sentiment toward Japan improved this week as data revealed that Japan’s economy grew better than expected in the second quarter, outweighing concerns about a hawkish shift by the Bank of Japan. Meanwhile, the Japanese yen fell 1.3% against the dollar on Thursday and was trading around 148.6 yen on Friday, on track for its worst week since May. Nomura Holdings, Japan’s largest securities firm, said renewed yen weakness could encourage some hedge funds to return to carry trades that collapsed two weeks ago. In other news, foreign investors bought large amounts of Japanese stocks in the week ending August 10, following signals from policymakers to stabilize markets following recent turmoil. Cross-border investors made net purchases of 521.9 billion yen ($3.51 billion) in Japanese stocks during the week, reversing three straight weeks of net outflows, according to Finance Ministry data.The Nikkei volatility, which takes into account the implied volatility of Nikkei 225 options, closed at 26.54, down -2.61%.
Japan’s tertiary industry activity index for June was -1.3% m/m, below expectations of +0.3% m/m.
Pre-market US stock trends
H&R Block (HRB) rose more than 9% in premarket trading after the tax preparation company reported strong fourth-quarter earnings, issued fiscal 2025 guidance that beat market expectations, raised its quarterly dividend by 17%, and announced a new $1.5 billion share repurchase program.
Microchip Technology (MCHP) rose more than 2% in premarket trading after Piper Sandler raised the stock to overweight from neutral and set a $100 price target.
Fox Corporation (FOXA) rose more than 2% in premarket trading after Wells Fargo raised the stock from underweight to overweight with a $46 price target.
Bumble (BMBL) fell more than 3% in premarket trading after TD Cowen downgraded the stock from “buy” to “hold.”
Estee Lauder (EL) fell more than 1% in premarket trading after Bank of America downgraded the stock to “neutral” from “buy.”
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Today’s US Earnings Spotlight: Friday, August 16
Flowers Foods (FLO), Madison Square Garden Entertainment (MSGE), and Sunlands Tech (STG).
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On the date of publication, Oleksandr Pylypenko did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s disclosure policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
