Thursday market minute
- Global equities mixed, with weakness in Asia offset by strong gains in Europe and another upward march for US equity futures.
- Manufacturing activity continues to roar, with Europe posting a record PMI in June, but input costs are also rising, adding to short-term inflation concerns.
- Micron shares tumble despite a stronger-than-expected third quarter and a strong outlook as the mystery of semiconductor inventory levels deepens.
- US stocks post one of the best first-half returns since 1998, with the S&P 500 hitting a five-day streak of all-time highs and a fifth straight quarterly gain.
- CDC data shows that 154.8 million Americans have been fully vaccinated against the coronavirus, with about 326.5 million doses administered as of Wednesday.
- US stock futures suggest a firmer open on Wall Street ahead of weekly jobless claims data at 8:30 am ET and quarterly earnings from Walgreens Boots Alliance.
US equity futures rose on Thursday, extending a record run for the S&P 500 that was part of the strongest first-half performance in more than two decades as investors prepared for key labor market data and the start of the second quarter earnings season.
Fueled by low interest rates, favorable central banks and a waning pandemic, Wall Street enjoyed one of its best quarters in years during the three months ending in June, with the S&P 500 hitting a five-day streak of record highs and the Nasdaq adding 9.5% for the period.
Merger activity was also a major factor in earnings, with a world record $ 1.5 trillion in new deals announced during the quarter, including $ 700 million in the US, as investors sought to close deals before the Tax cuts proposed by President Joe. Biden while taking advantage of near-record borrowing costs.
Economic growth, docile bond markets and strong corporate earnings should also provide a similar supportive context for equities during the second half of the year, and if the Federal Reserve remains committed to not changing interest rates until at least 2023, while providing a long trail for any change in your $ 120 billion in monthly bond purchases, then a 4,500-point S&P 500 appears to be in your grasp before the end of the year.
Refinitv’s forecasts suggest that second-quarter earnings for the S&P 500 will rise 65.1% from last year to $ 378.9 billion weighted per shares, led by a strong return in consumer and industrial discretionary earnings.
However, labor market data could change the Fed’s expectations, and today’s weekly jobless claims, as well as Friday’s non-farm payrolls, will be closely watched for any signs of upward pressure beyond forecasts. current.
Put it all together and you’ll have another solid start to Wall Street trading on Thursday, with futures contracts pegged to the Dow Jones Industrial Average indicating an opening bell profit of 75 points and those pegged to the S&P 500 priced at 5.5 points.
Nasdaq Composite futures point to a modest 3.5 point drop even as 10-year Treasury yields hold at 1.482% after yesterday’s stronger-than-expected reading of sector labor earnings. private from the payroll processing group ADP.
Micron technology (MU) – Get report were a notable pre-market move, dropping 2% to 83.25 apiece after the chipmaker forecast solid current quarter sales of $ 8.2 billion amid rising demand for data centers following a report. stronger than expected third quarter earnings.
Elsewhere, U.S. crude prices approached the $ 75-a-barrel mark Thursday, following a 10% gain during the June quarter, following a larger-than-expected drop in domestic stocks of 6.2 million. of barrels reported yesterday by the Department of Energy.
Brent crude was also on the move, rising 83 cents to $ 74.44 a barrel, ahead of today’s OPEC + meeting in Vienna, and analysts are expecting a modest reduction in the group’s production cuts, which are likely to end. extend until April next year.
In Europe, stocks approached another all-time high in the first session, following a record reading for manufacturing output. But that was accompanied by a massive rise in input prices that likely heralds a short-term spike in regional inflation that could erode growth prospects.
Overnight in Asia, stocks fell back on Thursday, with volumes toned down by a holiday in Hong Kong as the region’s surge in Delta variant infections coupled with supply chain pressures and increases input prices offset a jump in business and manufacturing confidence. .