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Daily markets: What will the July jobs report tell us?


The big picture today

Asia-Pacific equity indices ended today’s session up across the board. Hong Kong’s Hang Seng rose by 0.14%, India’s Sensex by 0.15%, Australia’s ASX All Ordinaries by 0.59%, South Korea’s KOSPI by 0.72%, Japan’s Nikkei by 0.87% and the Chinese Shanghai Composite 1.19%. Taiwan’s TAIEX gained 2.27% as concerns over China’s live-fire drills that saw missiles streak across the island to water-based targets surrounding the nation eased. Today’s rally was broad but supported by names in consumer staples, electrical technology and transportation. By midday, major European equity indices are down across the board and US futures are pointing to a mixed open later this morning.

Before the US market opens, we will have the July employment report; what it tells us about the strength of the economy and inflationary pressures will shape GDP expectations for the current quarter and what the Fed does next in terms of interest rates. Later today, readers should visit both the Atlanta Fed’s GDPNow model and the CME tool FedWatch for revisions following this jobs report.

Paradoxically, good jobs numbers will likely bring out the bears. Too much strength will be seen as a sign that the Fed still has work to do to slow the economy. How do they do this? More rate hikes, which would also increase the likelihood of them overshooting the sweet spot of the downturn, pushing the economy into a recession. That doesn’t mean it will happen, but it brings to mind that old adage, “Perception is reality.” Readers who thought the tightrope walk between fighting inflation and recession was over should expect the market to stay on edge until the data points to a much clearer economic picture. . We are not there yet.

Data download

International economy

Last night saw the release of annual growth in Japanese household income and consumption in June, with income down 1.40% and spending up 3.50%. Although these figures are lower than those of much of Europe and the West in general, they still echo the global trend of inflation which is putting pressure on consumers. Japan’s Flash Leading Index for June slipped to 100.6 from 101.2 the previous month, missing the consensus forecast of 101. It was the lowest reading since February. On a positive note, the country’s Coincident Economic Indicators Index, which consists of data such as factory output, employment and retail sales, hit a flash reading of 99.0 in June against the previous month, making it the highest reading since September 2019.

On top of all this, Japanese companies are temporarily closing offices or suspending production as they battle a record wave of COVID-19. Japan has recorded more than 1.4 million new COVID cases in the past week, according to data from the World Health Organization.

Germany’s industrial production unexpectedly rose by 0.4% MoM in June, easily beating forecasts of a 0.3% decline and the 0.1% drop recorded in May. The rebound came amid the easing of COVID-19 restrictions in China despite ongoing supply chain issues. Production of capital goods rose 1.0% while construction activity fell 0.8%, but increases in consumption, intermediate goods and energy production during the month . Year-on-year, industrial production fell 0.5% in June.

Domestical economy

At 8:30 a.m. ET, we’ll have the July jobs report, which is expected to show 250,000 jobs created during the month, compared to 372,000 the previous month, keeping the unemployment rate stable at 3.6%. The consensus forecast for the average hourly wage is 4.9% on an annual basis (+0.3% over one month), against 5.1% in June.

With all eyes on the consumer and their ability to spend in the coming months which contain several key spending events, including the holiday season, we will be watching the latest consumer credit report released at 10 a.m. ET. In particular, we will be watching revolving credit numbers, which include credit cards and lines of credit.

According to the Centers for Disease Control and Prevention (CDC), the United States. confirmed more than 6,600 cases of monkeypox during the outbreak. Yesterday the Biden administration declared the current monkeypox outbreak a public health emergency.

Markets

Although the overall market had a positive day yesterday, energy names, especially oil majors, exerted enough pressure on the markets to offset gains in most broad indices, the Energy light Nasdaq Composite rising 0.41% while the S&P 500 fell 0.08%, Russell 2000 shares fell 0.13% and the Dow Jones fell 0.26% on the day.

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

  • Dow Jones Industrial Average: -9.94%
  • S&P 500: -12.89%
  • Nasdaq compound: -19.03%
  • Russell 2000: -16.11%
  • Bitcoin (USD-BTC): -51.64%
  • Ether (ETH-USD): -55.08%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, AMC Networks (AMCX), American Axle (AXL), Canopy Growth (CGC), Cinemark (CNK), DraftKings (DKNG), Protolabs (PRLB), Stericycle (SRCL), and Trimble (TRMB) will be among the companies releasing their latest quarterly results and forecasts.

Beyond Meat (BYND) missed revenue and earnings expectations for its June quarter, guided 2022 revenue below consensus expectations and announced it would cut its workforce by approximately 4% as it focuses on cost reduction. For 2022, the company now sees revenue in the range of $470-520 compared to consensus of $561.2 million and its previous revenue forecast of $560-620 million.

Shares of Block (SQ) was under pressure last night following the company’s quarterly results that beat expectations, but shared that it sees gross payment volume (GPV) growth for the Square ecosystem moderating to 18% year-on-year annual and 23% on a three-year compound annual growth rate in July. This compares to an annual growth of 29% and a three-year CAGR of 24% in April.

Shares of Zillow (ZG) were under pressure last night following a pessimistic revenue forecast for the current quarter, which is only a modest surprise given the difficult real estate market. For the quarter, the company is forecasting revenue of $431 million to $461 million versus consensus of $561.9 million.

DoorDash (DASH) saw its shares appear on the secondary market last night after the delivery company beat consensus expectations for its June quarter. While its revenue for the quarter increased 30% year-on-year, the company shared that it expects “weaker consumer spending” and may deteriorate faster than DoorDash predicted.

Cloud Flare (NET) reported better-than-expected revenue for its June quarter, which rose 53.9% year-on-year to $234.5 million. The year-over-year increase was driven by strength in large customers and a record number of large customer additions, leading the company to raise its revenue guidance for both the current quarter and the year. year 2022. Despite this improved revenue outlook, the company maintained its outlook for 2022. EPS of $0.03 to $0.04.

Warner Bros. Discovery (WBD) signaled a shift in direction for its cinematic streaming strategy and talked about a combined direct-to-consumer brand coming in summer 2023. The combined service is targeting 130 million global subscribers by 2025, with a plan to break even by 2024 and reach $1 billion in EBITDA by 2025.

During his Cyber ​​Roundup, Tesla (TSLA) Elon Musk said the company aims to reach a circulation rate of 2 million vehicles by the end of the year. Shareholders also approved a 3:1 stock split. Musk also shared the view that “we are past peak inflation” and will likely see a “relatively mild recession for something like 18 months.” He also teased another factory location this year, commenting that Tesla would “probably end up building at least 10 or 12 Gigafactories.”

The Semiconductor Industry Association reported that global semiconductor sales totaled $152.5 billion during the 2nd quarter of 2022, an increase of 13.3% from the 2nd quarter of 2021 and 0.5% from compared to the 1st quarter of 2022.

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

No company is expected to release quarterly results after shares halt trading today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

monday august 8

  • Japan: current index of economic observers – July
  • Eurozone: Sentix Investor Confidence – August
  • United States: BC Employment Trends Index – July

Tuesday August 9

  • United States: Productivity and unit labor cost – 2nd quarter 2022

Wednesday August 10

  • Japan: producer price index – July
  • China: consumer price index, producer price index – July
  • Germany: consumer price index – July
  • Italy: Consumer Price Index – July
  • US: Weekly MBA Mortgage Applications
  • United States: Consumer Price Index – July
  • United States: Wholesale inventories – June
  • United States: EIA Weekly Crude Oil Inventories

Thursday August 11

  • Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index – August
  • United States: Initial and Continuing Weekly Unemployment Claims
  • United States: producer price index – July
  • United States: EIA Weekly Natural Gas Inventories

friday august 12

  • Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index – August
  • China: Monthly Thomson Reuters Ipsos Global Primary Consumer Sentiment Index – August
  • Euro zone: Industrial production – June
  • United States: Import/Export Prices – July
  • United States: University of Michigan Consumer Confidence Index (preliminary) – August

Thought of the day

“The best feeling is seeing things fall into place after watching them fall apart for so long.” ~ Anonymous

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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