September S&P 500 E-Mini futures (ESU26) are up +0.38%, and September Nasdaq 100 E-Mini futures (NQU26) are up +0.85% this morning as strong growth in Microsoft’s cloud business reassured investors that massive investments in AI are beginning to pay off.
Microsoft (MSFT) surged over +8% in pre-market trading after the technology giant reported that revenue in its cloud-computing unit grew at the fastest pace in four years in FQ4, while Chief Financial Officer Amy Hood said she expected growth to accelerate further in the current quarter. Hood also signaled that Microsoft would hold the line on new capital spending this year.
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Meanwhile, the price of WTI crude was little changed even after U.S. forces carried out strikes against Iran late Wednesday in what the U.S. military described as a “powerful response” to Iran’s missile attacks on U.S. forces in Jordan on Tuesday.
Investors are now awaiting a slew of U.S. economic data, including the Fed’s favorite inflation gauge and the advance estimate of second-quarter GDP, as well as a new round of megacap tech earnings.
In yesterday’s trading session, Wall Street’s three main equity benchmarks closed sharply lower. Chip and AI infrastructure stocks cratered, with KLA Corp. (KLAC) sinking over -10% and Micron Technology (MU) slumping more than -9%. Also, Lennox International (LII) tumbled about -21% and was the top percentage loser on the S&P 500 after the HVAC company posted downbeat Q2 results and cut its full-year EPS guidance. In addition, Vertiv Holdings (VRT) tanked over -17% after the maker of data-center infrastructure reported weaker-than-expected Q2 revenue. On the bullish side, Garmin (GRMN) jumped more than +16% and was the top percentage gainer on the S&P 500 after the GPS maker reported better-than-expected Q2 results and raised its full-year guidance.
The Federal Reserve left interest rates unchanged yesterday. The Federal Open Market Committee voted 9-3 to keep the federal funds rate in a range of 3.50% to 3.75%. Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed President Neel Kashkari dissented in favor of a quarter-point rate hike. It marked the first time since 2016 that three officials dissented in the same direction on a policy change. The committee issued the same post-meeting statement as it did in June, when it also left interest rates unchanged. Officials reiterated their commitment to “deliver price stability.”
At a press conference, Fed Chairman Kevin Warsh underscored his board’s commitment to returning inflation to the 2% target. “For some households, businesses and market professionals, five years of high inflation have left a mistaken impression—that’s hard to shake—that the Fed’s implicit inflation target was somehow above 2%,” Warsh said. “Let me reiterate: There is no soft inflation target. There is no soft implicit target, not on this committee’s watch.”
“Keeping rates on hold instead confirms that Warsh is putting a little space – conceptually and in time – between reasserting credibility on inflation and assessing whether this then requires operationalizing in the form of one or more rate increases,” said Krishna Guha at Evercore.
Meanwhile, U.S. rate futures have priced in a 63.2% chance of a 25 basis point rate hike and a 36.8% chance of no rate change at the next FOMC meeting in September.
Second-quarter corporate earnings season continues in full flow. Today, market participants will pay close attention to earnings reports from Magnificent Seven companies Apple (AAPL) and Amazon.com (AMZN). Notable companies such as Mastercard (MA), Altria Group (MO), Valero Energy (VLO), Coinbase Global (COIN), and Strategy (MSTR) are also set to report their quarterly figures today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +26% jump in quarterly earnings for Q2 compared to the previous year.
On the economic data front, all eyes are on the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will rise +0.2% m/m and +3.3% y/y in June, compared to +0.3% m/m and +3.4% y/y in May.
The U.S. Commerce Department’s advance estimate of second-quarter gross domestic product will also be closely monitored today. Economists expect the U.S. economy to expand at an annual rate of 2.1% in the second quarter, fueled by consumer spending and business investment.
U.S. Personal Spending and Personal Income data will be released today. Economists project June Personal Spending to rise +0.4% m/m and Personal Income to grow +0.3% m/m, compared to the May figures of +0.7% m/m and +0.7% m/m, respectively.
U.S. Initial Jobless Claims data will be released today as well. Economists expect this figure to be 201K, compared to last week’s number of 187K.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.70%, up +0.43%.
The Euro Stoxx 50 Index is up +0.63% this morning as positive corporate news and stronger-than-expected GDP data from the region boosted sentiment. Construction stocks led the gains on Thursday, with Vinci (DG.FP) climbing over +5% after it posted strong first-half results. Chemical stocks also climbed, led by a more than +12% jump in DSM-Firmenich (DSFIR.A.DX) after the company reported better-than-expected Q2 core earnings and said it expects full-year sales growth to reach the upper end of its guidance. In addition, bank stocks advanced, helped by a more than +3% gain in Spanish lender BBVA (BBVA.E.DX) after its Q2 net profit exceeded estimates. Preliminary data from Eurostat released on Thursday showed that the Eurozone economy expanded more than expected in the second quarter as robust AI-related investment, ample government spending, and several one-off factors helped offset the drag from the Middle East conflict. Separately, preliminary data showed that Spain’s annual inflation rate picked up more than expected in July, reaching its highest level since May 2024. Investor focus now turns to the interest rate decision from the Bank of England later in the day. The BoE is widely expected to leave rates unchanged at 3.75%, with potentially seven members voting to hold and two voting for a rate increase. The central bank will likely signal its readiness to raise borrowing costs should renewed hostilities in the Middle East threaten a broad and sustained rise in inflation. In other corporate news, Adidas (ADS.D.DX) plunged over -16% after the sportswear company’s marketing spending for the football World Cup weighed on quarterly profit, which came in below expectations.
Spain’s CPI (preliminary), Eurozone’s GDP (preliminary), Eurozone’s Business and Consumer Survey, Eurozone’s Consumer Confidence, and Eurozone’s Unemployment Rate were released today.
The Spanish July CPI rose +0.2% m/m and +3.5% y/y, compared to expectations of +0.2% m/m and +3.4% y/y.
Eurozone’s GDP rose +0.4% q/q and +1.0% y/y in the second quarter, stronger than expectations of +0.2% q/q and +0.5% y/y.
Eurozone’s July Business and Consumer Survey stood at 96.9, stronger than expectations of 96.0.
Eurozone’s July Consumer Confidence came in at -15.9, in line with expectations.
Eurozone’s June Unemployment Rate was 6.3%, weaker than expectations of no change at 6.2%.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.62%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.71%.
China’s Shanghai Composite Index closed lower today, dragged down by weakness in the tech sector. Semiconductor and other AI-related stocks cratered on Thursday as investors continued to rotate out of the AI trade. Notably, trading activity in exchange-traded funds favored by China’s state-backed national team increased during the afternoon session, coinciding with a narrowing of losses in some tech-heavy indexes. Turnover in the ChinaAMC STAR 50 ETF climbed to 15 billion yuan, while turnover in the E Fund ChiNext ETF reached nearly 17 billion yuan, marking the second-highest levels on record for both. The Shanghai Composite Index’s losses were limited as liquor, consumer, and bank stocks climbed, reflecting investors’ rotation into defensive sectors. Meanwhile, investors reacted little to the readout from the Politburo meeting, which was released roughly 30 minutes before the close of trading. The government plans to “roll out pragmatic and effective new policies in a timely manner,” according to a Xinhua News Agency readout. However, it offered few details on the potential new measures to be introduced. In corporate news, Zhongji Innolight fell more than -2% in its Hong Kong trading debut after the data center optical components maker raised $6.8 billion in the city’s largest share sale this year. Investor attention now shifts to China’s official PMIs for July, scheduled for release on Friday, which will offer fresh insight into business sentiment in the world’s second-largest economy. Economists expect the manufacturing PMI to slip into contraction territory, reflecting a pullback in major commodity prices earlier this month, while growth in the non-manufacturing sector is projected to stall due to adverse summer weather.
Japan’s Nikkei 225 Stock Index closed higher today, supported by a jump in chip sector heavyweight Advantest. Advantest surged more than +10% after the chip-testing equipment maker raised its full-year operating profit forecast by 35% on strong AI-driven demand for its equipment. The company’s upbeat outlook boosted other chip-related stocks. Sentiment toward the chip sector also improved after Microsoft reported its fastest cloud-computing growth in four years, signaling that its massive AI investments were paying off. Gains in conglomerate and software stocks also supported the benchmark index. At the same time, financial stocks slumped. “This is a typical trend in recent sessions where AI-related shares are strong, value shares such as banks are sold off,” said Kazuaki Shimada at IwaiCosmo Securities. Meanwhile, Japanese government bond yields jumped on Thursday, tracking a surge in Treasury yields amid uncertainty over the Fed’s policy outlook. Elsewhere, Japan’s government on Thursday lowered its economic growth forecast for the current fiscal year to 0.9% from its January projection of 1.3%, reflecting expectations that higher oil prices stemming from Middle East tensions will dampen domestic demand. Investor focus now turns to the Bank of Japan’s monetary policy decision. The BOJ is widely expected to leave its benchmark rate unchanged at 1.00% on Friday as policymakers assess the impact of their latest rate increase. For signals on the timing and pace of future policy moves, investors will scrutinize the bank’s updated projections for inflation and economic growth. Just hours before the BOJ announces its policy decision, a raft of Japanese economic data will be released, including June industrial production, retail sales, and jobless figures, as well as Tokyo Core CPI for July. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.68% to 39.79.
The Japanese July Household Confidence stood at 34.9, stronger than expectations of 34.2.
Pre-Market U.S. Stock Movers
Microsoft (MSFT) surged over +8% in pre-market trading after the technology giant reported that revenue in its cloud-computing unit grew at the fastest pace in four years in FQ4, while Chief Financial Officer Amy Hood said she expected growth to accelerate further in the current quarter.
Meta Platforms (META) slumped more than -8% in pre-market trading after the social media giant gave a disappointing Q3 revenue forecast.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - July 30th
Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), Stryker (SYK), Bristol-Myers Squibb Company (BMY), Altria Group (MO), The Southern Company (SO), Trane Technologies (TT), Valero Energy (VLO), KKR & Co. (KKR), Intercontinental Exchange (ICE), Enterprise Products Partners (EPD), Quanta Services (PWR), The Cigna Group (CI), American Electric Power Company (AEP), Regeneron Pharmaceuticals (REGN), TC Energy (TRP), Arthur J. Gallagher & Co. (AJG), Air Products and Chemicals (APD), Monolithic Power Systems (MPWR), Corteva (CTVA), ArcelorMittal (MT), Xcel Energy (XEL), Exelon (EXC), Coinbase Global (COIN), Yum! Brands (YUM), Live Nation Entertainment (LYV), Alnylam Pharmaceuticals (ALNY), The Hershey Company (HSY), Roblox (RBLX), Reddit (RDDT), Strategy (MSTR), Martin Marietta Materials (MLM), Ingersoll Rand (IR), Ameren (AEE), Edison International (EIX), Willis Towers Watson (WTW), EMCOR Group (EME), DexCom (DXCM), Pembina Pipeline (PBA), Illumina (ILMN), TechnipFMC (FTI), Eversource Energy (ES), Mettler-Toledo International (MTD), LPL Financial Holdings (LPLA), Carpenter Technology (CRS), Tradeweb Markets (TW), Labcorp Holdings (LH), XPO, Inc. (XPO), Rivian Automotive (RIVN), International Paper Company (IP), MasTec (MTZ), First Solar (FSLR), Brookfield Infrastructure Partners (BIP), Guardant Health (GH), Alliant Energy (LNT), Neurocrine Biosciences (NBIX), Weyerhaeuser Company (WY), Hyatt Hotels (H), Stellantis (STLA), APi Group (APG), Jones Lang LaSalle (JLL), Yum China Holdings (YUMC), Madison Air Solutions (MAIR), WESCO International (WCC), Blue Owl Capital (OWL), Check Point Software Technologies (CHKP), Lincoln Electric Holdings (LECO), Nextpower (NXT), DT Midstream (DTM), GoDaddy (GDDY), American Homes 4 Rent (AMH), Gaming and Leisure Properties (GLPI), Erie Indemnity Company (ERIE), Avery Dennison (AVY), Baxter International (BAX), Madrigal Pharmaceuticals (MDGL), Ryan Specialty Holdings (RYAN), Leonardo DRS (DRS), Camden Property Trust (CPT), The Magnum Ice Cream Company (MICC), Huntington Ingalls Industries (HII), Sirius XM Holdings (SIRI), Saia, Inc. (SAIA), Cullen/Frost Bankers (CFR), Life Time Group Holdings (LTH), Agree Realty (ADC), CubeSmart (CUBE), Affiliated Managers Group (AMG), Gildan Activewear (GIL), Norwegian Cruise Line Holdings (NCLH), SPX Technologies (SPXC), Darling Ingredients (DAR), Virtu Financial (VIRT), AptarGroup (ATR), Solstice Advanced Materials (SOLS), A. O. Smith (AOS), AGCO Corporation (AGCO), Eldorado Gold (EGO), IDACORP (IDA), Lincoln National (LNC), Allegro MicroSystems (ALGM), First Majestic Silver (AG), Eastman Chemical Company (EMN), Healthcare Realty Trust (HR), Ralliant (RAL), PBF Energy (PBF), Tempus AI (TEM), Builders FirstSource (BLDR), Terex (TEX), Mohawk Industries (MHK), Ingram Micro Holding (INGM), Federal Signal (FSS), LKQ Corporation (LKQ), MSA Safety (MSA), Crocs (CROX), InterDigital (IDCC), GATX Corporation (GATX), Schneider National (SNDR), PTC Therapeutics (PTCT), Kite Realty Group Trust (KRG), Amneal Pharmaceuticals (AMRX), Floor & Decor Holdings (FND), BGC Group (BGC), Axos Financial (AX), Cousins Properties (CUZ), Laureate Education (LAUR), ADT Inc. (ADT), Piper Sandler Companies (PIPR), Colliers International Group (CIGI), Brunswick (BC), FTI Consulting (FCN), Granite Construction (GVA), Dolby Laboratories (DLB), CNO Financial Group (CNO), CNX Resources (CNX), Sphere Entertainment Co. (SPHR).
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.
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