Stock Market Update

The S&P 500 futures are up 95 points and are trading 1.7 % above fair value, the Nasdaq 100 futures are up 420 points and are trading 2.2% above fair value, and the Dow Jones Industrial Average futures are up 491 points and are trading 1.2% above fair value.

Stock futures are in rally-mode this morning after a slightly lower finish for the major indices following yesterday's more pronounced rate decrease by the Fed.

The early upside bias stems from a belief that the economy is headed for a soft landing scenario and that the Fed will cut rates as needed to ensure that outcome. 

Pre-open gains in the mega caps and chipmakers have also contributed to the upside bias.

Weakening labor market data contributed to recent fears about growth prospects that led to a sharp sell off in stocks last month. So, participants will be focused on the 8:30 ET release of weekly jobless claims, which continue to run below recession-like levels.

The Bank of England maintained its bank rate at 5.00%, as expected.

The 10-yr yield is up three basis points to 3.71% and the 2-yr yield is down two basis points to 3.58%. 

In corporate news:

• Intel (INTC 21.20, +0.43, +2.1%): reaffirms majority stake in Mobileye (MBLY), emphasizes focus on growth and autonomous driving leadership
• Microsoft (MSFT 438.52, +7.71, +1.8%):  EC takes note of the withdrawal of referral requests by Member States concerning the acquisition of certain assets of Inflection by Microsoft
• Darden Restaurants (DRI 171.78, +12.64, +8.1%): misses by $0.08, misses on revs; reaffirms FY25 EPS guidance
• Five Below (FIVE 98.40, -1.80, -1.8%): downgraded to Underweight from Neutral at JPMorgan
• DoorDash (DASH 137.43, +4.95, +3.7%): upgraded to Buy from Neutral at BTIG Research
• IBM (IBM 217.00, +2.06, +1.0%): is cutting jobs, according to The Register
• AT&T (T 21.74, +0.01, +0.1%): replacing lead cables in Lake Tahoe, according to WSJ

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a higher note after yesterday's 50-bps rate cut from the FOMC. Japan's Nikkei: +2.1%, Hong Kong's Hang Seng: +2.0%, China's Shanghai Composite: +0.7%, India's Sensex: +0.3%, South Korea's Kospi: +0.2%, Australia's ASX All Ordinaries: +0.6%.
  • In economic data:
    • South Korea's August trade surplus $3.77 bln (last surplus of $3.83 bln). August Imports 6.0% yr/yr (last 6.0%) and Exports 11.2% (last 11.4%)
    • Hong Kong's August Unemployment Rate 3.0% (last 3.0%)
    • Australia's August Employment Change 47,500 (expected 26,400; last 48,900) and full employment change -3,100 (last 64,700). Unemployment Rate 4.2%, as expected (last 4.2%) and Participation Rate 67.1%, as expected (last 67.1%)
    • New Zealand's Q2 GDP -0.2% qtr/qtr (expected -0.4%; last 0.1%); -0.5% yr/yr, as expected (last 0.5%)
  • In news:
    • The Bank of Japan will meet overnight, but it is not expected to announce any policy changes.
    • Japanese equities outperformed overnight while property names in Hong Kong had a strong showing.
    • Australia reported growth in part-time employment in August while full-time employment decreased.
• Major European indices trade in the green. STOXX Europe 600: +1.3%, Germany's DAX: +1.5%, U.K.'s FTSE 100: +1.0%, France's CAC 40: +1.9%, Italy's FTSE MIB: +0.9%, Spain's IBEX 35: +0.7%.
  • In economic data:
    • Eurozone's July Current Account surplus EUR39.6 bln (expected surplus of EUR40.3 bln; last surplus of EUR51.0 bln)
    • Swiss August trade surplus CHF4.578 bln (expected surplus of CHF5.05 bln; last surplus of CHF4.877 bln)
  • In news:
    • The Bank of England maintained its bank rate at 5.00%, as expected, while Norway's central bank also held its policy steady.
    • British retailer Next reported solid results for the first half of the year and raised its guidance for the year.
    • Volkswagen is reportedly planning larger cost cuts that will include job cuts.
    • European Central Bank policymaker Centeno said that the ECB may need to step up the pace of rate cuts, so inflation doesn't undershoot the target.