Nasdaq Futures Tick Higher Ahead of Nvidia Results, PMI Data in Focus

Oleksandr Pylypenko - Barchart - Wed Aug 23, 2023

September Nasdaq 100 E-Mini futures (NQU23) are trending up +0.15% this morning as market participants awaited crucial quarterly results from industry stalwarts Nvidia and Analog Devices while also gearing up for U.S. business activity data.

In Tuesday’s trading session, Wall Street’s major averages closed mixed. Dick’s Sporting Goods Inc (DKS) tumbled about -24% after the company posted downbeat Q2 results and slashed its FY23 EPS forecast. Also, bank stocks retreated after S&P Global Ratings lowered the credit ratings of five regional U.S. banks amid “tough operating conditions,” with Comerica (CMA) and KeyCorp (KEY) falling more than -4%. In addition, Macy’s Inc (M) plunged over -14% following the department store chain’s warning of weak consumer spending during the crucial holiday shopping season. On the bullish side, Lowe’s Companies Inc (LOW) rose more than +3% after the home improvement retailer posted a lesser-than-expected drop in quarterly comparable sales and topped estimates for profit.

Economic data on Tuesday showed that U.S. existing home sales fell to a 6-month low of 4.07M in July, weaker than expectations of 4.15M. At the same time, Richmond Fed’s manufacturing survey unexpectedly rose to a 7-month high of -7 in August, in line with expectations.

“There’s concern about interest rates moving up and whether inflation is going to continue to come down. These uncertainties that frankly were around in July when the market was going straight up, people are paying attention to now, and that’s the source of the sloppiness,” said Bob Doll, chief investment officer at Crossmark Global Investments.

Meanwhile, investors are anticipating Federal Reserve Chair Jerome Powell’s speech on Friday at the central bank’s annual conference for clues on the outlook for interest rates.

U.S. rate futures have priced in a 13.5% probability of a 25 basis point rate increase at the September FOMC meeting and a 37.8% chance of a 25 basis point rate hike at the November FOMC meeting.

On the earnings front, big-name companies like NVIDIA Corporation (NVDA), Analog Devices (ADI), Snowflake (SNOW), and Autodesk (ADSK) are set to report their quarterly figures today.

Today, all eyes are focused on the U.S. S&P Global Composite PMI preliminary reading in a couple of hours. Economists, on average, forecast that the August S&P Global Composite PMI will stand at 52.0, compared to the previous value of 52.0.

Also, investors are likely to focus on U.S. S&P Global Manufacturing PMI, which came in at 49.0 in July. Economists foresee the August preliminary figure to be 49.3.

U.S. S&P Global Services PMI preliminary reading will be reported today. Economists foresee this figure to stand at 52.3 in August, compared to the previous value of 52.3.

U.S. Building Permits data will also be closely watched today. Economists expect July’s figure to be 1.442M, compared to 1.441M in June.

U.S. New Home Sales data will come in today. Economists estimate this figure to stand at 705K in July, compared to the previous value of 697K.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -2.850M, compared to last week’s value of -5.960M.

In the bond markets, United States 10-Year rates are at 4.266%, down -1.45%.

The Euro Stoxx 50 futures are up +0.42% this morning as investors digested a slew of important regional economic data while awaiting quarterly earnings from chip maker Nvidia. Gains in mining and healthcare stocks are leading the overall market higher. A survey showed on Wednesday that the decline in Eurozone business activity deepened considerably this month, with a widespread decrease observed throughout the region, especially in Germany. In corporate news, Roche Holding Ag (ROG.Z.IX) climbed over +4% following an announcement from the Swiss pharmaceutical company that it had become aware of an inadvertent disclosure in a study involving its novel immunotherapy for patients with lung cancer. Also, Societe Generale (GLE.FP) rose about +2% after Morgan Stanley upgraded the French bank to Overweight from Equal Weight.

France’s Manufacturing PMI (preliminary), France’s Services PMI (preliminary), Germany’s Composite PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s S&P Global Composite PMI (preliminary), Eurozone’s Services PMI (preliminary), U.K.’s Composite PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), and U.K.’s Services PMI (preliminary) data were released today.

The French August Manufacturing PMI stood at 46.4, stronger than expectations of 45.0.

The French August Services PMI was at 46.7, weaker than expectations of 47.5.

The German August Composite PMI has been reported at 44.7, weaker than expectations of 48.3.

The German August Manufacturing PMI stood at 39.1, stronger than expectations of 38.7.

The German August Services PMI was at 47.3, weaker than expectations of 51.5.

Eurozone August Manufacturing PMI came in at 43.7, stronger than expectations of 42.6.

Eurozone August S&P Global Composite PMI stood at 47.0, weaker than expectations of 48.5.

Eurozone August Services PMI was at 48.3, weaker than expectations of 50.5.

U.K. August Composite PMI has been reported at 47.9, weaker than expectations of 50.3.

U.K. August Manufacturing PMI stood at 42.5, weaker than expectations of 45.0.

U.K. August Services PMI came in at 48.7, weaker than expectations of 51.0.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.34%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.48%.

China’s Shanghai Composite today closed lower as investors maintained caution amid a deepening crisis in the country’s real estate sector, with numerous share buyback announcements failing to boost confidence. In response to regulatory calls aimed at revitalizing the stock market and enhancing investor confidence, an increasing number of Chinese listed companies and asset managers have revealed their intentions to engage in share repurchases or fund products. Notably, A-share listed companies, including Shanghai United Imaging Healthcare Co Ltd and Xinjiang Daqo New Energy Co, were among the latest to announce share buyback plans. According to local media estimates, over 100 A-share listed companies have revealed their share buyback intentions in the past week. In corporate news, Anta Sports soared over +9% after the company’s first-half net profit jumped 32% year-on-year. Also, Baidu Inc gained more than +4% after the internet giant posted strong second-quarter earnings.

“Property downturn means Chinese interest rates and the currency remain tilted to the downside unless a much firmer fiscal response is implemented,” Goldman Sachs analysts said in a note.

At the same time, Japan’s Nikkei 225 Stock Index closed higher as investors digested the country’s business activity data while eagerly awaiting results from tech darling Nvidia. A private sector survey showed Wednesday that Japan’s factory activity contracted for a third consecutive month in August amid higher oil prices and uncertainties surrounding the global economic outlook, although the pace of decline moderated. Meanwhile, the benchmark 10-year Japanese government bond yield hit a 9-1/2-year high on Wednesday as the Bank of Japan chose not to intervene in the market. In corporate news, Central Japan Railway rose over +2% after the railway company conducted a stock split. At the same time, Shibaura Mechatronics Corp. plunged more than -9% after the semiconductor equipment manufacturer announced that its top shareholders, including Toshiba, would sell its shares in the market. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.49% to 18.39.

The Japanese August Manufacturing PMI stood at 49.7, stronger than expectations of 49.5.

The Japanese August Services PMI came in at 54.3, stronger than expectations of 53.9.

Pre-Market U.S. Stock Movers

Apellis Pharmaceuticals Inc (APLS) surged about +30% in pre-market trading after providing an update on injection kits supplied by the company and an update on the rare events of retinal vasculitis reported in real-world treatment with SYFOVRE.

Urban Outfitters Inc (URBN) climbed over +6% in pre-market trading after the retailer reported upbeat Q2 results.

Toll Brothers Inc (TOL) rose more than +2% in pre-market trading after the company posted better-than-expected Q3 results and raised its FY23 deliveries guidance.

VTEX (VTEX) gained over +5% in pre-market trading after UBS upgraded the stock to Buy from Neutral.

Avery Dennison Corp (AVY) rose more than +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - August 23rd

NVIDIA (NVDA), Analog Devices (ADI), Snowflake (SNOW), Autodesk (ADSK), Splunk (SPLK), NetApp (NTAP), Grab Holdings (GRAB), Bath & Body Works (BBWI), Williams-Sonoma (WSM), Lancaster Colony (LANC), Advance Auto Parts (AAP), Kohl’s Corp (KSS), Peloton Interactive (PTON), Foot Locker (FL), Abercrombie&Fitch (ANF), Zuora (ZUO), John B Sanfilippo&Son (JBSS), Guess (GES), Tuya (TUYA), Navios Maritime Unit (NMM), Zhihu (ZH), Grupo Supervielle (SUPV), Ooma Inc (OOMA).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.