Stock Market Update

Equity futures are higher today following encouraging earnings reports from Microsoft (MSFT 556.75, +43.51, +8.5%) and Meta Platforms (META 779.00, +83.79, +12.1%) after yesterday's close.

Healthy beats on EPS expectations and revenues have enthused the futures market about AI growth potential, with the major averages poised to open notably higher than yesterday's mixed finish.

Early gains were largely negated yesterday afternoon after hawkish comments from Fed Chair Jerome Powell sent the probability of a September rate cut into coin flip territory. 

The market will have macro factors to navigate today as well, with a sizable batch of economic data releases that includes June PCE and the Q2 Employment Cost Index, which are critical inflation gauges.

Additionally, trade developments are likely to make headlines today as the imminent August 1 tariff deadline looms. President Trump will speak with Mexican President Claudia Sheinbaum ahead of the tariff deadline today, though Canadian Prime Minister Mark Carney said talks with the U.S. might not be completed before the deadline, according to Bloomberg. 

For the time being the market can take comfort in the confirmed trade deal with South Korea, which will feature a lower tariff rate of 15%.

In corporate news:

• Carvana (CVNA 387.60, +54.01, +16.2%) beat EPS expectations by $0.11 and beat on revenues. The company expects a sequential increase in retail units in Q3 compared to Q2.
• eBay (EBAY 87.75, +10.19, +13.1%) beat EPS expectations by $0.07, beat on revenues, and guided Q3 EPS in-line with revenues above consensus.
• Ford Motor (F 10.82, -0.05, -0.5%) beat EPS expectations by $0.04 and beat on revenues but warned tariffs would cut $2 billion from annual earnings.
• Meta Platforms (META 779.00, +83.79, +12.1%) beat EPS expectations by $1.26 and beat on revenues. The company guided Q3 revs above consensus, while narrowing FY25 total expense and capex guidance.
• Microsoft (MSFT 556.75, +43.51, +8.5%) beat EPS expectations by $0.27 and beat on revenues. The company's Azure and other cloud services saw revenue growth of 39%.
• Qualcomm (QCOM 149.75, -9.3, -5.9%) beat EPS expectations by $0.06, reported revenues in-line, and guided Q4 EPS in-line with reveneus in-line.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note. Japan's Nikkei: +1.0%, Hong Kong's Hang Seng: -1.6%, China's Shanghai Composite: -1.2%, India's Sensex: -0.4%, South Korea's Kospi: -0.3%, Australia's ASX All Ordinaries: -0.2%.

In news:

• South Korea will invest $350 bln in the U.S. as part of a trade deal that will result in a 15% tariff on imports from South Korea and no tariff on U.S. exports to South Korea. South Korea will also purchase $100 bln wort of energy products from the U.S.
• Separately, imports from India will be subject to a 25% tariff, starting tomorrow.
• The Bank of Japan's latest meeting concluded with no changes to policy.

In economic data:

• China's July Manufacturing PMI 49.3 (expected 49.7; last 49.7) and July Non-Manufacturing PMI 50.1 (expected 50.3; last 50.5)
• Japan's June Industrial Production 1.7% m/m (expected -0.7%; last -0.1%). June Retail Sales 2.0% yr/yr (expected 1.8%; last 1.9%). July Housing Starts -15.6% yr/yr (expected -16.3%; last -34.4%) and July Household Confidence 33.7 (expected 35.1; last 34.5)
• South Korea's June Industrial Production 1.6% m/m (last -3.3%); 1.6% yr/yr (last -0.3%). June Retail Sales 0.5% m/m (last -0.1%) Hong Kong's Q2 GDP 0.4% qtr/qtr (expected -0.2%; last 1.9%); 3.1% yr/yr (expected 2.8%; last 3.1%). June Retail Sales 0.7% yr/yr (last 2.4%)
• Australia's June Building Approvals 11.9% m/m (expected 1.8%; last 2.2%); 5.4% yr/yr (expected 8.0%; last 8.1%). June Private Sector Credit 0.6% m/m (expected 0.5%; last 0.5%) and June Private House Approvals -2.0% m/m (last -1.0%). Q2 Import Price Index -0.8% qtr/qtr (expected -0.5%; last 3.3%) and Export Price Index -4.5% qtr/qtr (last 2.1%). July Retail Sales 1.2% m/m (expected 0.4%; last 0.1%); Q2 Retail Sales 0.3% qtr/qtr (last 0.1%)
• Singapore's Q2 Business Expectations 5.00 (last -6.00)

Major European indices are mixed. STOXX Europe 600: -0.1%, Germany's DAX: -0.2%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.3%, Italy's FTSE MIB: -0.7%, Spain's IBEX 35: +0.5%.

In news:

• Italy's flash CPI for July was hotter than expected while Germany's full CPI report that will be released at 8:00 ET could also exceed expectations after regional readings showed accelerating inflation.
• Bundesbank President Nagel said that "the last mile of disinflation is the hardest" and that policy should not be loosened prematurely.
• BBVA and Societe Generale reported strong results while Rolls Royce issued strong guidance.

In economic data:

• Eurozone's June Unemployment Rate 6.2% (expected 6.3%; last 6.2%)
• Germany's July Import Price Index 0.0% m/m (expected -0.2%; last -0.7%); -1.4% yr/yr (expected -1.6%; last -1.1%). July Unemployment Change 2,000 (expected 15,000; last 10,000) and July Unemployment Rate 6.3% (expected 6.4%; last 6.3%)
• France's July CPI 0.2% m/m (expected 0.3%; last 0.4%); 1.0% yr/yr, as expected (last 1.0%). June PPI -0.2% m/m (last -0.9%); 0.2% yr/yr (last 0.0%)
• Italy's June Unemployment Rate 6.3% (expected 6.4%; last 6.5%). July CPI 0.4% m/m (expected 0.1%; last 0.2%); 1.7% yr/yr (expected 1.5%; last 1.7%). June PPI 1.5% m/m (last -0.7%); 2.5% yr/yr (last 1.7%)
• Spain's May Current Account surplus EUR6.44 bln (last surplus of EUR1.36 bln)
• Swiss June Retail Sales 3.8% yr/yr (expected 0.2%; last 0.3%)