three themes: US stocks slip, Treasuries spike & the ASX to flounder
July 28, 2023
Linea Mercati Interview 7/28/23
July 31, 2023By Bansari Mayur Kamdar and Johann M Cherian
July 28, 20239:05 AM EDTUpdated 4 min ago
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023. REUTERS/Brendan McDermid/File Photo
- Summary
- Companies
- Ford slows EV ramp as Q2 commercial vehicle profit booms
- Chip stocks climb after Intel’s surprise quarterly profit
- Core June PCE at 4.1% vs est 4.2%
- Futures up: Dow 0.46%, S&P 0.67%, Nasdaq 1.10%
July 28 (Reuters) – Wall Street was set to open higher on Friday after data showing easing inflation pressures added to hopes that the Federal Reserve’s policy tightening was ending, while chip stocks surged as Intel posted a surprise quarterly profit.
U.S. annual inflation slowed considerably in June, likely pushing the Federal Reserve closer to ending its fastest interest rate hiking cycle since the 1980s.
In the 12 months through June, the PCE price index advanced 3.0%. That was the smallest annual gain since March 2021 and followed a 3.8% rise in May.
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“With inflation going in the right direction, this should give some breathing room for the stocks to refocus on earnings, which continue to outpace expectations,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Market expectations of another 25 basis point rate hike in November were largely unchanged at 29.9% after the data. IRPR
Chipmaker Intel‘s (INTC.O) results and forecast pointed to an improving PC market, sending its shares up 6.2% in premarket trading.
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Peers Nvidia (NVDA.O), Micron Technology (MU.O) and Marvell Technology (MRVL.O) gained over 1% each.
Global stock markets eased following Japan’s tweaks to its monetary policy.
The Dow snapped its longest winning streak since 1987 in the previous session as U.S. Treasury yields pressured stocks lower after news that the Bank of Japan will allow long-term interest rates to rise.
On Friday, the Bank of Japan made its yield curve control policy more flexible and loosened its defense of a long-term interest rate cap, in moves seen by investors as a prelude to an eventual shift away from massive monetary stimulus.
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The yield on the U.S. 10-year note slipped, but still hovered close to its 4% level hit in the previous session.
All three major U.S. indexes are on track to end the week marginally higher, supported by Big Tech earnings, hopes that the Fed’s monetary policy tightening was ending and the world’s largest economy was heading for a soft landing.
At 8:40 a.m. ET, Dow e-minis were up 163 points, or 0.46%, S&P 500 e-minis were up 30.75 points, or 0.67%, and Nasdaq 100 e-minis were up 171.5 points, or 1.1%.
Ford Motor (F.N) slid 1.7% after Chief Executive Jim Farley outlined a change in the automaker’s product strategy, slowing the ramp-up of money-losing EVs, shifting investment to its commercial vehicle unit and citing plans to quadruple sales of gas electric hybrids over the next five years.
First Solar (FSLR.O) jumped 11.5% after its second-quarter earnings beat estimates and the company announced plans to spend up to $1.1 billion on its fifth U.S. factory.
Enphase Energy (ENPH.O) fell 14.6% after the solar inverter maker’s third-quarter revenue forecast missed expectations,
Juniper Networks(JNPR.N) tumbled 7.0% after the network operator forecast third-quarter revenue below market estimates.
Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Maju Samuel
Our Standards: The Thomson Reuters Trust Principles.
