Daily Markets: Federal Reserve, student debt relief to boost markets

The big picture today

Asia-Pacific equity indices ended today’s session higher across the board except India Sensex which closed 0.53% lower. Japan’s Nikkei rose 0.58%, Australia’s ASX All Ordinaries gained 0.68%, Taiwan’s TAIEX rose 0.87%, China’s Shanghai Composite rose 0.97% and South KOSPI -Korean closed ahead by 1.22%. Hong Kong’s Hang Seng had a good day, gaining 3.63%, led by names in healthcare, retail and basic materials. By midday, European equity indices are mixed and US futures are pointing to a healthy open later this morning.

Economic data released so far this week has led the Atlanta Fed’s GDPNow model for the current quarter to fall to 1.4% from 1.6% last week and its reading of 2.1% end of July. Comments from Fed leaders ahead of the annual Jackson Hole rally also lowered expectations for a 75 basis point rate hike at the Fed’s monetary policy meeting in September. Before US-listed stocks start trading, we’ll get the second reading of GDP for Q2 2022, which will contain another look at the GDP price index for the quarter, as well as one of the Fed’s favorite inflation measure, the PCE price. Quarter index.

With most second glances at the data, the question is how the revised reading will compare to the preliminary reading of 8.9% for the GDP price index and 7.1% for the price index. PCE. Warmer numbers will likely tip expectations for Fed Chair Powell’s hawkish comments in Jackson Hole tomorrow, but if cooler readings emerge, there’s a good chance stocks will applaud what they see as progress. in the fight against inflation. For us, however, the real PCE number to watch will be tomorrow’s reading for July and how it compares to recent months.

Data download

International economy

Germany’s Q2 2022 GDP grew 1.7% year-on-year, a much faster pace than indicated by the preliminary stable reading.

The Ifo business climate indicator for Germany fell slightly to 88.5 in August, after an upward revision of 88.7 in July and an expected reading of 86.8. The Ifo Current Conditions sub-index fell slightly to 97.5 in August from 97.7 in July, also better than the 96 expected. The Ifo Business Expectations sub-index fell slightly to 80.3 in August from an upwardly revised 80.4 in July and the expected figure of 79.

Domestical economy

At 8:30 a.m. ET, we will have several economic data to go through. These include the latest Initial and Continuing Weekly Unemployment Claims, which are expected to reach 253K and 1442K respectively, with estimates slightly up from previous releases. We will also get the second estimate of 2Q 2022 GDP, which is expected to remain unchanged from its initial reading of -0.9%. This report includes the GDP price index for the 2nd quarter of 2022, which is expected to reach 8.7% with a core index of 4.4%.

Markets

Yesterday, markets rallied after the previous few bearish or mixed sessions as all sectors participated in a mini Jackson Hole/student debt relief rally. The Dow gained 0.18%, the S&P 500 veered 0.29% and the Nasdaq Composite rose 0.41%. Small caps led the way as the Russell 2000 closed with a 0.84% ​​lead. There were no real standouts on Wednesday, although we saw Warner Brothers Discovery gain 5.71% on the back of some cost-cutting measures that delighted shareholders but left some subscribers and content creators unhappy. .

Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -9.27%
  • S&P 500: -13.12%
  • Nasdaq compound: -20.54%
  • Russell 2000: -13.81%
  • Bitcoin (USD-BTC): -53.93%
  • Ether (ETH-USD): -55.09%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Abercrombie & Fitch (ANF), Burlington Stores (BURL), Coty (COTY), Dollar General (DG), Dollar Tree (DLTR), Hain Celestial (HAIN), Hibbett (HIBB), Malibu Boats (MBUU), Peloton (PTON )and Sanderson Farms (SAFM) will be among the companies releasing their latest quarterly results and forecasts.

In addition to posting mixed results for the July quarter, Nvidia (NVDA) issued a lower outlook for its October quarter with revenue of $5.78 billion to $6.02 billion compared to the consensus of $6.92 billion. July quarter revenue increased 3.0% year-on-year to $6.7 billion, in line with consensus forecast, with data center revenue up 61% year-on-year to $3.81 billion and automotive up 45% year-over-year to $220 million. These gains were tempered by the 33% year-over-year decline in gaming revenue and the 4% decline in professional viewing revenue to $496 million. Both of these businesses are expected to decline further in the current quarter as OEMs and channel partners reduce inventory levels to align with current levels of demand and prepare for NVIDIA’s next generation of products. The company has $11.93 billion remaining under its share buyback authorization through December 2023.

Even though its July quarter results exceeded high and low expectations, Salesforce (CRM) issued a lower guidance for the current quarter and its fiscal year 23. For its October quarter, the company forecasts EPS of $1.20 to $1.21 versus consensus of $1.29 with revenue between $7.82 billion and $7.83 billion compared to the consensus of $8.07 billion. For the year, revenue is now expected to be between $30.9 billion and $31.0 billion versus the consensus of $31.73 billion. Part of the revenue variance is due to the continued strength of the US dollar as exchange rate “headwinds” impact the company’s sales. Salesforce also shared that in its July quarter, it began to see sales cycles for some deals stretch beyond previous estimates.

Snowflake (SNOW) Revenue for the July quarter easily beat consensus expectations, climbing 82.78% year-over-year to $497.2 million from consensus of $467.31 million. Product revenue for the quarter was $466.3 million, up 83% year-over-year. At the end of the July quarter, the company had 6,808 total customers and 246 customers with 12-month product revenue in excess of $1 million. For its FY23, Snowflake now sees product revenue in the $1.905-1.915 billion range compared to its previous guidance of $1.885-1.900 billion.

Results for the quarter from July to Splunk (SPLK) came in stronger than expected, boosted by the nearly 32% year-over-year increase in revenue to $787.75 million, well ahead of consensus of $747.92 million. Cloud revenue was $346 million, up 59% year-on-year and for the quarter the company had 723 customers with total ARR over $1 million, up 24 % over one year. Splunk issued a higher guidance for the current quarter and its fiscal year, with revenue for its fiscal year 23 now forecast at $3.35-3.40 billion, up from $3.30-3.35 billion. of dollars and the consensus of 3.33 billion dollars.

Honda engine (HMC) said its plant in the Chinese city of Chongqing would remain closed this week as the local government extended an order to reduce energy consumption and shut down plant operations. Local governments in Sichuan and Chongqing have ordered power cuts for factories and households as the region faces scorching heat and severe drought. Other reports say Honda will cut production plans by up to 40% in Japan in early September due to ongoing supply chain and logistics issues.

California is set to ban the sale of new gas-powered vehicles by 2035. The rule would be phased in, with 35% of new passenger vehicles sold by 2026 and 68% by 2030. The California is one of the biggest markets for car sales. worldwide, with nearly 15 million registered vehicles on the road and 1.85 million new vehicle registrations in 2021. companies like Tesla (TSLA) and also automakers shifting their production to electric vehicles like Engine Ford (F), GM (GM) and others as well as electric vehicle charging station companies such as Charging station (CHPT) and Flashing Charge (BLNK).

Citing difficult economic conditions, Sony (SONY) will increase the recommended retail price of the PlayStation 5 in certain markets in Europe, the Middle East, Africa, Asia-Pacific, Latin America and Canada. For now, no price increase in the United States is expected.

Callaway Golf (ELY) announced plans to change its name to “Topgolf Callaway Brands Corp.” and expects it to come into effect on or around September 6, 2022.

The Washington Post reports Amazon (AMZN) will shut down Amazon Care, the virtual and home health service it originally created for its employees, by the end of this year.

Apple (AAPL) announced that it will hold a press event on September 7 at 1 p.m. ET where it is expected to announce new iPhones.

The Senate Judiciary Committee announced a full Committee hearing to investigate allegations of widespread security failures at Twitter (TWTR) and interference by a foreign state actor on Tuesday, September 13.

IPOs

As of now, no IPO is expected to be priced this week. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Affirm (AFRM), Dell (DELL), Farfetch (FTCH), Gap (GPS), Marvell (MRVL), Ulta Beauty (ULTA), VMware (VMW) and Workday (WDAY) are expected to report quarterly results after stocks stop trading. negotiate today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

friday august 26

  • Japan: Tokyo CPI – August
  • Germany: GfK consumer sentiment – ​​September
  • United States: PCE price index – July
  • United States: personal income and expenditure – July
  • United States: Non-auto retailer inventories – July
  • United States: Michigan Consumer Sentiment Index (final) – August

Thought of the day

“Your reality belongs to you. Stop wasting time watching someone else’s reality without doing anything about yours. –Steve Harvey

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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