Linea Mercati Interview 7/24/24
July 25, 2024
Wall Street opens close to equilibrium, stabilization after the air hole
July 25, 2024By Ankika Biswas and Lisa Pauline Mattackal
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights, opens new tab
- Summary
- Companies
- US economic growth regains steam in Q2; inflation slows
- Ford slumps as higher costs, EV unit dent profit growth
- IBM gets lift from software, AI demand as consulting slips
- American Airlines drops after FY profit forecast cut
- Futures: Dow up 0.11%, S&P 500 and Nasdaq flat each
July 25 (Reuters) – The Nasdaq and S&P 500 were set to open flat on Thursday after futures largely reversed their losses as investors drew comfort from a stronger-than-expected GDP growth.
Data showed the U.S. economy expanded 2.8% in the second quarter versus estimates of 2%, but inflation subsided, leaving intact expectations of a September rate cut.
Separate reports showed durable goods orders fell sharply by 6.6% in June, versus the 0.3% rise expected by economists polled by Reuters. Weekly jobless claims came in at 235,000, lower than the anticipated 238,000.
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“The growth rate was higher than we were looking for, but the good news is that the economy expanded as consumers spent more as inflation dropped in the second quarter,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“This is a good sign in terms of the economy.”
Bets of a 25-basis-points cut in September were steady at 78%, although lower than the 90% from the previous day, as per CME’s FedWatch Tool.
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Market participants are also pricing in at least two rate cuts by December this year, according to LSEG data.
The personal consumption expenditures (PCE) price index data, due on Friday, will be a crucial test for bets of an early start to Federal Reserve rate cuts after the recent trend of easing inflation and some weakness in the labor market.
At 8:52 a.m. ET, Dow e-minis were up 43 points, or 0.11%, S&P 500 e-minis were down 1.25 points, or 0.02%, and Nasdaq 100 e-minis were down 1.75 points, or 0.01%.
Welcome to Sectors Up Close, I’m Elena Casas.
Lackluster earnings from Alphabet (GOOGL.O), opens new tab and Tesla (TSL.O), opens new tab soured investor sentiment towards megacaps on Wednesday, knocking back the high-momentum ‘Magnificent Seven’ group of tech stocks.
All three major Wall Street indexes closed at multi-week lows, with the Nasdaq ending 3.6% lower.
Megacaps were mixed in premarket trading on Thursday. Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab, Tesla and Alphabet <GOOGL.O> were down 0.4% and 0.6%, while Amazon.com (AMZN.O), opens new tab was up 1.2%.
While the group of heavyweight stocks has powered the stock market to all-time highs this year, Wednesday’s selloff following the first set of second-quarter tech earnings was a wake-up call for investors, adding weight to fears that these stocks might be over-stretched and in for more turbulence.
Futures tracking the Russell 2000 <RTYcv1> edged up 0.1 after the small-cap index <.RUT> slumped over 2% in Wednesday’s broad-based market decline, even as investors now see more value in shifting to lagging sectors.
Wall Street’s “fear gauge” CBOE market volatility index (.VIX), opens new tab also eased, but hovered around its highest since April 19 hit in early trade.
Semiconductor stocks also broadly fell, led by a 10.6% tumble in Teradyne (TER.O), opens new tab after the chip-testing equipment maker forecast lower-than-expected third-quarter revenue.
Ford (F.N), opens new tab slumped 13.7% after the automaker’s second-quarter adjusted profit missed estimates by a wide margin, while American Airlines (AAL.O), opens new tab dropped 3.1% after cutting its annual profit forecast.
IBM (IBM.N), opens new tab climbed 3.4% after beating second-quarter revenue estimates and raising its annual growth forecast for its software business.
KLA (KLAC.O), opens new tab rose 1.6% after forecasting revenue and profit for its fiscal first quarter above expectations, while Edwards Lifesciences (EW.N), opens new tab slumped 22.7% after missing second-quarter revenue estimates.
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Reporting by Ankika Biswas and Lisa Pauline Mattackal in Bengaluru; Editing by Savio D’Souza and Saumyadeb Chakrabarty
Our Standards: The Thomson Reuters Trust Principles., opens new tab
