Daily markets: employment figures to shape today’s trading


The big picture of today

Asian stock indices ended the day on a generally lower note with modest declines in Hong Kong’s Hang Seng, China’s Shanghai Composite and South Korea’s Kospi, while Japan’s Nikkei recorded a rise 0.3%. At midday, European stock indices had hardly changed, while US futures are showing a moderately mixed open later this morning.

Ahead of the opening, we’ll receive the July Jobs Report, and as we discuss below, expectations for this report are ubiquitous. The consensus figure calls for the creation of 850,000 jobs during the month, but following the general failure of the ADP jobs report in July, the market will take a closer look. The pace of job creation has been delicate, with many indicating that the reopening rate and pandemic stimulus payments have kept potential workers on the sidelines. At the same time, employers continue to report a shortage of skilled workers, which contributes to shortages in the supply chain.

In addition to being a barometer of the national economy, the results of the June jobs report will also be measured against recent comments from Fed Chairman Jerome Powell, who has publicly said he would like to see some solid jobs reports before the Fed started cutting its $ 120 billion a month purchases of treasury and mortgage securities. As a reminder, these actions would be the first measures taken by the Fed to reverse its currently accommodative monetary policy. Needless to say, a robust job beaten this morning, combined with the growing amount of data in the face of inflation, would likely raise questions about this timeline and impact how stocks end the week.

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Coronavirus

The 7-day moving average of new coronavirus cases in the United States hit a 6-month high yesterday. Companies are delaying their plans to return to the office, and in-person events are canceled or postponed. Some businesses and regions require proof of vaccination and mask warrants are reinstated. On a more optimistic note, the pace of vaccinations is accelerating.

Moderna (mRNA) reported yesterday that his coronavirus vaccine remains 93% effective six months after the second dose and remains 98% effective against hospitalization. However, the company reiterated that it believes booster shots will be needed later this year.

Amazon (AMZN) postponed plans to return employees to the office until January 3, 2022. “As we continue to closely monitor conditions related to Covid-19, we are adjusting our guidance for corporate employees in the United States and in other countries where we had previously planned our employees would start coming regularly the week of September 7… We are now extending this date until January 3, 2022. “

The Wall Street Journal reports that the Food and Drug Administration expects to have a strategy on Covid-19 vaccine recalls by early September that would define when and who vaccinated people should receive follow-up injections.

International economy

Household spending in Japan fell 3.2% month-on-month in June, after falling 2.1% in May, bringing the year-on-year level to 5.1%. Average cash earnings fell -0.1% yoy in June, well below May’s pace of 1.9% yoy.

The Royal Bank of Australia kept its key rate unchanged at an all-time high of 0.1%, as expected. The yield curve control program was also maintained on the April 2024 bond maturity of 10 basis points. Policymakers have said third-quarter GDP is expected to decline thanks to the recent Covid-19 outbreaks and the outlook remains highly uncertain.

German industrial production fell 1.3% month-on-month in June, the third consecutive month of contraction, and compared to market expectations of 0.5% growth.

Italian industrial production rose 1.0% month-on-month against the 1.6% decline in May, matching the consensus forecast for the month.

Domestical economy

Yesterday’s trade balance for June showed a further widening of the trade deficit for goods and services. While US imports are at an all time high, driven by merchandise, merchandise exports are also at an all time high.

Yesterday’s weekly jobless claims report saw the law’s revised downward level for the week of 399,000 and this week’s is 2,000 above the expected decline to 383,000. Although technically, it was a failure, the level was the lowest since the pandemic low of 368,000 in the weeks of July 9 and June 25. the expected of just 3.26 million.

Minneapolis Federal Reserve Chairman Neel Kashkari said the highly transferable Delta variant could “wrinkle” the labor market’s recovery and the timing of a reduction in the asset purchase program of the Fed.

Later today we’ll have the wholesale inventories and the biggest data release of the week, nonfarm wages for July. After Wednesday’s ADP count for new jobs in July hit less than half of what was expected, today’s number will be closely watched with estimates ranging from 400,000 to 1.5 million and an average of around 845,000. Average hourly earnings are expected to increase 0.3% mo and 3.8% yoy.

Markets

Based on favorable economic data, the S&P 500 and the Nasdaq Composite both closed at record highs yesterday despite the increase in coronavirus cases. The Dow Jones Industrial Average rose 0.8%, matching the Nasdaq’s move of the day, but both lagged the 1.8% gain posted by the Russell 2000. Nine of the S&P 500’s 11 sectors had closed higher, advancing issuance outpaced declining issuance by about 2: 1 in margin on the NYSE and Nasdaq. Treasuries were under pressure with the 10-year yield rising to 1.22% while gold fell to $ 1,806 an ounce.

Actions to watch

Ahead of the opening of U.S. stock markets, investors will find their way through a plethora of quarterly earnings reports, including those from AMC Networks (AMCX), Canopy Growth (GCG), DraftKings (DKNG), Nuance Communications (NUAN), and Stericycle (SRCL).

Actions of Beyond Meat (BYND) Traded last night after mixed June quarter results which included better-than-expected revenue for the quarter and current quarter revenue guided below consensus forecast. For the September quarter, the company forecasts net sales of between $ 120 million and $ 140 million, up 27% to 47% year-over-year, from the consensus of $ 153 million.

Mixed quarterly results for the June quarter were also released by Galactic Virgo (SPCE) But the share rallied on news the company is reopening ticket sales after seeing strong interest in Unity Flight 22. Prices will start at $ 45,000 per seat. Not a cheap seat, that’s for sure. The company’s next flight is scheduled to take place in late September from Spaceport America in New Mexico.

Zillow (ZG) crushed expectations for the June quarter with EPS of $ 0.44 and revenue of $ 1.31 billion, up 70.5% year-on-year. Adjusted EBITDA jumped 1050% year-on-year to $ 182.8 million from previous guidance of $ 116 million to $ 140 million. For the current quarter, the company has released an upward forecast with revenue of $ 1.927 billion to $ 2.047 billion from the consensus of $ 1.44 billion.

Yelp (YELP) served positive EPS for its June quarter, well ahead of the consensus of – $ 0.09 per share. Revenue for the quarter jumped 52.2% year-on-year to $ 257.2 million from a consensus of $ 245.5 million. The company posted a forecast online for its 2021 fiscal year with revenue of $ 1.01 billion to $ 1.03 billion.

Cinemark (CNK) reported a larger-than-expected loss per share for the June quarter, even though revenue for the quarter was $ 294.7 million, well ahead of the consensus of $ 261 million. Coming out of the quarter, Cinemark had reopened its 323 national theaters and 152 of its 198 international theaters showing mostly new releases during reduced opening hours. The company will be holding a conference call to discuss its quarterly results this morning, and we believe ticket sales to date will be more than passing interest given the ramp-up of the Delta variant. We see these and other comments on the call setting the stage for next week’s favorite meme’s earnings report. AMC Entertainment (AMC).

With the acquisition of Beyond Yoga, a high-end sports and lifestyle clothing brand, Levi Strauss (LEVI) enters the sportswear category.

After today’s market closes, no company is expected to release quarterly results. Those looking to get a sneak peek at the earnings reports next week should visit Nasdaq earnings calendar page.

On the horizon

  • August 9: JOLT survey on job vacancies and workforce turnover
  • August 10: Non-farm productivity T2, unit labor costs, API crude oil inventories
  • August 11: Consumer Price Index (CPI), EIA energy stocks, monthly budget statement
  • August 12: Producer Price Index (PPI), weekly jobless claims
  • August 13: Import and export prices, University of Michigan consumer sentiment
  • August 16: NY Empire State Manufacturing, Long-Term ICT Net Flows, Overall Net Capital Flows, Foreign Bond Investment
  • August 17: NAHB Housing Market Index, Retail Sales, Industrial Production, Business Inventories
  • August 18: Building permits, housing starts, EIA energy stocks, FOMC report
  • August 19: Philadelphia Fed manufacturing index, weekly jobless claims
  • August 23: Chicago Fed National Activity Index, Markit Manufacturing, Services and Composites PMI, Existing Home Sales
  • August 24: New Home Sales, API Crude Oil Inventory Report
  • August 25: durable goods orders, EIA energy stocks
  • August 26: Unemployment claims, Q2 GDP growth, corporate profits
  • August 27: Personal Income and Expenditure, Wholesale Inventories, PCE Price Index, Merchandise Trade Balance, University of Michigan Consumer Sentiment Report
  • August 30: Pending home sales, Dallas Fed Manufacturing
  • Aug 31: S & P / Case-Shiller Home Price Index, Chicago PMI, Conference Board Consumer Confidence, API Crude Oil Inventory Report

Thought of the day

“Summer sings with joy and the beaches invite you with dancing waves.” – Debasish Mridha

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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