Stock Market Update

Equity futures are mostly higher this morning following yesterday's session that saw stocks finish mostly lower after a disappointing July PPI report. Several mega-cap names performed well despite the broader market retreating, which helped the S&P 500 capture a slight gain for the day and with it a fresh all-time closing high. 

Yesterday's session was largely focused on the hotter-than-expected July PPI report and the effect that it had on rate cut probabilities. While a 25 basis point rate cut at the September FOMC meeting is still highly likely, arguments for a larger cut were damaged by yesterday's data.

The market anticipates a batch of economic data this morning that includes the Retail Sales report for July at 8:30 ET, the Industrial Production and Capacity Utilization report for July at 9:15 ET, and the preliminary August University of Michigan Consumer Sentiment Index at 10:00 ET. 

On the geopolitical front, The Wall Street Journal reports that President Trump will urge Russian President Putin to accept a ceasefire at the summit today, and if he does, Mr. Trump will bring Ukrainian President Volodymyr Zelensky into the discussion, though the summit has done little to move the market so far. 

In corporate news:

• Applied Materials (AMAT 163.74, -24.50, -13.0%) beat EPS expectations by $0.12, beat revenue expectations, and guided Q4 EPS and revenues below consensus. 
• Cisco (CSCO 69.10, -0.20, -0.3%) was downgraded to Hold from Buy at HSBC with a target of $69.
• Ford (F 11.43, -0.01, -0.1%) executives are in discussions to compete with Chinese electric cars, according to The Wall Street Journal.
• SanDisk (SNDK 42.35, -4.33, -9.3%) beat EPS expectations by $0.24, beat revenue expectations, and guided SepQ EPS in-line with revenues above consensus. 
• Target (TGT 102.83, -1.42, -1.4%) was downgraded to Underperform from Neutral at Bank of America Securities with a target of $76.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the week on a mostly higher note while markets in South Korea and India were closed for holidays. Japan's Nikkei: +1.7%, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: +0.8%, India's Sensex: HOLIDAY, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: +0.7%.

In news:

• China's growth data for July disappointed across the board with the unemployment rate increasing to 5.2% from 5.0% (expected 5.1%).
• Meanwhile, Japan's flash Q2 GDP (0.3% qtr/qtr; expected 0.1%) beat expectations by a solid margin.
• China's government reportedly warned foreign firms against stockpiling rare earth elements. Japanese advertiser Dentsu reported mixed results an announced job cuts.
• Standard & Poor's raised India's rating to BBB from BBB-.

In economic data:

• China's July Industrial Production 5.7% yr/yr (expected 6.0%; last 6.8%), July Retail Sales 3.7% yr/yr (expected 4.6%; last 4.8%), July Fixed Asset Investment 1.6% yr/yr (expected 2.7%; last 2.8%), and July House Prices -2.8% yr/yr (last -3.2%). July Unemployment Rate 5.2% (expected 5.1%; last 5.0%)
• Japan's Q2 GDP 0.3% qtr/qtr (expected 0.1%: last 0.1%); 1.0% yr/yr (expected 0.4%; last 0.6%). Q2 GDP Capital Expenditure 1.3% qtr/qtr (expected 0.5%; last 1.0%), Q2 GDP External Demand 0.3% qtr/qtr (expected 0.2%: last -0.8%), Q2 GDP Private Consumption 0.2% qtr/qtr (expected 0.1%; last 0.2%), and Q2 GDP Price Index 3.0% yr/yr (expected 3.1%; last 3.3%). June Industrial Production 2.1% m/m (expected 1.7%; last -0.1%) and Capacity Utilization -1.0% m/m (last 2.0%)
• Hong Kong's Q2 GDP 0.4% qtr/qtr, as expected (last 1.9%); 3.1% yr/yr, as expected (last 3.0%)
• New Zealand's July Business PMI 52.8 (last 48.8), July FPI 0.7% m/m (last 1.2%), and July Visitor Arrivals -2.5% m/m (last -0.5%)

Major European indices are seeking a higher finish to the week while Italy's MIB is closed for Assumption Day. STOXX Europe 600: +0.2%, Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.7%, Italy's FTSE MIB: HOLIDAY, Spain's IBEX 35: +0.6%.

In news:

• There is some hope that President Trump's scheduled meeting with Russia's President Putin at 15:30 ET will eventually lead to peace in Ukraine. Conglomerate ThyssenKrupp may sell a stake in its warship until to the German government. Supplier of electric cables, NKT, reported strong results and raised its outlook.

In economic data:

• Swiss Q2 GDP 0.1% qtr/qtr (last 0.5%)