Stock Market Update

The S&P 500 futures are up 50 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 220 points and are trading 1.2% above fair value, and the Dow Jones Industrial Average futures are up 270 points and are trading 0.6% above fair value.

There's a positive bias in early trading, supported by pre-open gain in mega cap and semiconductor shares. Contracts tied to the Nasdaq 100 are more than 1% higher. The vibe could shift, though, following the release of the June Personal Spending and Income report, which features the Fed's preferred gauge on inflation in the form of the PCE Price Indexes.

The vibe in the Treasury market, which shows modest gains now, could also shift following the report. The 10-yr note yield is down two basis points to 4.24%.

Market participants are also digesting some mixed earnings news. Dexcom (DXCM) is down sharply ahead of the open after disappointing FY24 revenue guidance. Meanwhile, Norfolk Southern (NSC) shows a solid pre-open gain after above-consensus earnings. 

In corporate news:

• Dexcom (DXCM 66.72, -41.13, -38.1%): beats by $0.04, misses on revs; guides Q3 revs below consensus; guides FY24 revs below consensus; also announces a $750 mln share repurchase program
• L3Harris (LHX 243.32, +0.05, +0.02%): beats by $0.06, reports revs in-line; guides FY24 EPS in-line, revs in-line
• Mohawk (MHK 155.00, +20.50, +15.2%): beats by $0.25, misses on revs; guides Q3 EPS above consensus
• 3M (MMM 109.54, +6.15, +6.0%): beats by $0.25, beats on revs; raises FY24 EPS in-line
• Norfolk Southern (NSC 240.00, +17.10, +7.7%): beats by $0.20, reports revs in-line
• Baker Hughes (BKR 36.25, +0.67, +1.9%): beats by $0.08, beats on revs
• Juniper Networks (JNPR 37.10, -0.39, -1.0%): misses by $0.13, misses on revs
• Deckers Outdoor (DECK 945.00, +103.50, +12.3%): beats by $1.03, beats on revs; raises FY25 EPS guidance; reaffirms FY25 revenue guidance; Key product launches have been selling through strongly
• Coursera (COUR 9.24, +1.83, +24.7%): beats by $0.08, beats on revs; guides Q3 revs below consensus; guides FY24 revs in-line

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the week on a mostly higher note, rebounding from recent weakness, while Japan's Nikkei (-0.5%) continued this week's underperformance. Japan's Nikkei: -0.5% (-6.0% for the week), Hong Kong's Hang Seng: +0.1% (-2.3% for the week), China's Shanghai Composite: +0.1% (-3.1% for the week), India's Sensex: +1.6% (+0.9% for the week), South Korea's Kospi: +0.8% (-2.3% for the week), Australia's ASX All Ordinaries: +0.7% (-0.7% for the week).
  • In economic data:
    • Japan's July Tokyo CPI 2.2% yr/yr (expected 2.3%; last 2.3%) and Tokyo Core CPI 2.2% yr/yr, as expected (last 2.1%). May Leading Index 111.2 (expected 111.1; last 110.9) and Coincident Indicator 1.9% m/m (expected 1.3%; last 1.0%)
    • Singapore's Q2 URA Property Index 0.9% qtr/qtr (expected 1.1%; last 1.4%). June Industrial Production -3.8% m/m (expected -0.5%; last 0.5%); -3.9% yr/yr (expected 0.0%; last 2.3%)
  • In news:
    • Demand for Chinese debt drove yields on shorter tenors to levels last seen at the depth of the coronavirus pandemic while the 10-yr yield slipped to levels not seen in over 20 years.
    • The Chinese government plans CNY300 bln in special bonds for a trade-in program for old industrial and household appliances.
    • The Monetary Authority of Singapore made no changes to its policy.
• Major European indices are looking for a mostly higher finish to the week. STOXX Europe 600: +0.5% (+0.2% week-to-date), Germany's DAX: +0.3% (+1.0% week-to-date), U.K.'s FTSE 100: +0.6% (+1.0% week-to-date), France's CAC 40: +0.8% (-0.7% week-to-date), Italy's FTSE MIB: +0.2% (-1.2% week-to-date), Spain's IBEX 35: -0.4% (+0.2% week-to-date).
  • In economic data:
    • France's July Consumer Confidence 91 (expected 90; last 90)
    • Italy's July Consumer Confidence 98.9 (expected 98.0; last 98.3) and Business Confidence 87.6 (expected 87.0; last 86.9)
    • Spain's June Retail Sales 0.3% yr/yr (last 0.2%). Q2 Unemployment Rate 11.27% (expected 11.4%; last 12.3%)
  • In news:
    • German steelmaker Thyssenkrupp lowered its revenue guidance for the year.
    • The Bank of England will meet next week and the expectations for a rate cut are now essentially a toss-up.
    • The U.K. is looking at a GBP19 bln budget gap.
    • The Olympic Games are starting in Paris today.