Sentiment has reversed from Thursday’s weakness, as the market looks ahead to support from earnings catalyst. Intel Corp. INTC and Roku, Inc. ROKU are among the stocks that are getting a nice lift from their earnings reports. Bond yields have eased since Thursday’s spike. More details on inflation’s trajectory could be gleaned from the personal income and spending report due ahead of the market opening.
Cues From Thursday’s Trading:
Better-than-expected second-quarter GDP report sapped the risk appetite of traders on Thursday, overriding the positive mood engendered by some encouraging earnings reports. The major averages opened higher but gave back their gains over the course of trading to close moderately lower.
The weakness also reflected fears over the Bank of Japan adjusting its monetary policy, which it did promptly after the U.S. market closed.
Small-cap stocks underperformed relative to their bigger counterparts. More importantly, the Dow Industrials ended its 13-session winning streak, the longest since early 1987.
Financial, real estate and utility stocks came under intense selling pressure, while gains seen among communication services stocks in the wake of Meta Platforms, Inc.’s META helped mitigate some of the negativity.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.55% | 14,050.11 |
| S&P 500 Index | -0.64% | 4,537.41 |
| Dow Industrials | -0.67% | 35,282.72 |
| Russell 2000 | -1.29% | 1,954.90 |
Analyst Color:
The U.S. economy may prove more resilient in the second half of 2023 than many forecasters had expected, according to Morgan Stanley’s Ellen Zenter. “Our forecast for GDP growth shows that the economy is not declining enough for the Federal Reserve to start cutting rates,” she said.
The core inflation and job creation, however, are moving in the right direction. This, the analyst said, strengthens the case for a soft landing for the U.S. economy in 2023.
“As a result, we continue to believe that the federal funds rate has peaked this year at 5.375% (the midpoint of the 5.25%-5.5% range announced on July 26), with the first cut coming in March 2024.”
Futures Today
Futures Performance On Friday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.78% |
| S&P 500 | +0.37% |
| Dow | +0.16% |
| R2K | +0.16% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY rose 0.36% to $454.14 and the Invesco QQQ ETF QQQ gained 0.76% to $379.48, according to Benzinga Pro data.
Upcoming Economic Data:
The Bureau of Economic Analysis is scheduled to release its June personal income and spending report at 8:30 a.m. EDT. Personal income may have increased at a 0.5% month-over-month clip compared to a 0.4% increase in May. The personal spending growth may have accelerated from 0.1% to 0.5%. The annual rate of price consumption expenditure index, the Fed’s preferred inflation gauge, is expected to ease from 4.6% to 4.2%.
The Labor Department is due to release its second-quarter employment cost index data at 8:30 a.m. EDT. The index may have increased by 1.1% quarter-over-quarter compared to a 1.2% increase in the first quarter.
The University of Michigan will release its final consumer sentiment reading for July at 10 a.m. EDT. The headline consumer sentiment index is expected to be left unrevised at the flash reading of 72.6, the highest level since Sept. 2021, up from 64.4 in June. The inflation expectations readings of the report could also create ripples in the market.
See also: Best Futures Brokers
Stocks In Focus:
- Ford Motor Co. F fell over 1.8% in premarket trading after it pushed out electric vehicle adoption goals despite the beat-and-raise quarter.
- Intel rallied about 6.75% and Roku climbed close to 10%, while Enphase Energy, Inc. ENPH tumbled close to 15% following their earnings releases. First Solar, Inc. FSLR climbed more than 8.5% and KLA Corp. KLAC over 1.80%, also in reaction to their quarterly reports.
- Those companies reporting before the market open include AstraZeneca plc AZN, Chevron Corp. CVX, Exxon Mobil Corp. XOM, Procter & Gamble Co. PGand Sanofi SNY
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures retreated 0.36% to $79.80 in early European session on Friday after Thursday’s 1.66% rally.
The benchmark 10-year Treasury note pulled back by 0.033 percentage points to 3.979% after a spike past the 4% level on Thursday in reaction to the strong GDP data and fears of BoJ tightening.
The Asian markets had another mixed session on Friday, with Japan’s Nikkei 225 average pulling back by 0.40% after the BoJ loosened its yield curve control, sending the country’s bond yields to the highest level in nine years.
The central bank, however, kept the short-term interest rate target at -0.1% and the 10-year government bond yield around 0%. While maintaining the 10-year yield to move 0.5% around the 0% target, the central bank said those would be reference levels and not rigid limits.
Also moving to the downside were the Australian, New Zealand, Indian and Malaysian markets. The Chinese, Hong Kong, Taiwanese, South Korean and Singaporean markets, however, advanced.
European stocks traded narrowly mixed in late-morning trading.
This illustration was generated using artificial intelligence via MidJourney
Image and article originally from www.benzinga.com. Read the original article here.