- Dow, S&P and Nasdaq opened higher but that didn't last
- 10-year Treasury yield jumps
- Walmart raises guidance after strong second quarter
4:21pm: 10-year Treasury yields rise to highest level since October
The Dow closed Thursday down 292 points, 0.8%, at 34,475, the Nasdaq Composite lost 158 points, 1.2%, to 13,317 and the S&P 500 declined 34 points, 0.8%, to 4,370. The small-cap Russell 2000 shed 21 points, 1.2%, to 1,850.
The benchmarks started in the black but went into reverse in the afternoon, losing for the third consecutive session.
Meanwhile, the 10-year US Treasury yield reached its highest level since October on Thursday after the Federal Reserve’s July meeting minutes indicated that the central bank remains concerned about inflation and may continue to raise interest rates.
“We’ve felt after the strong rally in the first half, and even continuing into July, that some caution was warranted,” said Commonwealth Financial Network portfolio manager Chris Fasciano. “So certainly what’s happening now [isn’t] unexpected, and a bit of pullback could ultimately ended up being a being healthy for the market in general.”
12:00pm: US markets go into reverse, bond yields near 16-year high
US markets went into reverse after a bright start led by tech heavyweights as stocks looked poised to extend their losing run into a third day.
At midday, Dow Jones Industrial Average was down 45.58 points, 0.1%, at 34,720.16, the S&P 500 was down 3.67 points, 0.1%, at 4,400.66 and the Nasdaq Composite was down 47.05 points, 0.4%, at 13,427.58.
Chris Beauchamp, chief market analyst at IG said: "Global stock markets remain on the back foot.”
“Bond yields continue to move higher, unsettling investors and diminishing the appeal of equities after their generally positive year so far."
"Signs of fear are everywhere, from a rising Vix to a surging put/call ratio, and for the moment buyers are few and far between," he noted.
The warning by the Federal Reserve that upside risks to inflation were "significant" put investors on red alert for further rate rises even though many economists expect a slowing growth picture to prove these worries unfounded.
“This week’s data hasn’t given them any reason to let their guard down,” said Mike Loewengart at Morgan Stanley (NYSE:MS) Global Investment Office, quoted by Bloomberg.
“With housing starts, retail sales, and jobless claims all reinforcing the picture of a robust economy, another rate hike can’t be ruled out, even if the Fed remains on hold next month.”
The 10-year Treasury yield rose as much as 6 basis points to 4.31%, approaching the highest level since 2007.
9:40am: US markets attempt to break two-day losing streak
US pushed higher at the open on Thursday, attempting to shrug aside inflationary worries, global concerns and the August blues which have seen markets on the back foot.
Shortly after the opening bell the Dow Jones Industrial Average was up 90.80 points, 0.3%, at 34,856.54, the S&P 500 was up 10.50 points, 0.2%, at 4,414.83 and the Nasdaq Composite was up 12.23 points, 0.1%, at 13,486.86.
Sentiment was given a lift by better-than-expected second quarter results from Walmart, which raised guidance again as sales and profit topped expectations.
The world’s largest retailer reported revenue of $161.6 billion in the three months to July, up 5.7% from the same period last year and ahead of the $160.3 billion forecast by analysts in a Refinitiv poll. But market reaction was lukewarm with shares up 0.7%.
Weekly jobless claims of 239,000 in the week ended August 12, were down by 11,000 from a revised 250,000 the week prior, but broadly in line with the FXStreet cited consensus of 240,000.
Better news from the August Philly Fed manufacturing index which jumped to 12.0 from negative 13.5, and well above the consensus, of negative 10.0.
It was the first positive reading since last August, and the highest since last April.
But Kieran Clancy at Pantheon Macroeconomics said: “The August improvement in the Philly Fed conflicts with the previous low-and-flatlining trend, and is in stark contrast to the plunge in the August Empire State manufacturing index.”
“In short, we need much more convincing signals before we believe that the outlook for manufacturing is materially improving.”
Stocks on the move include Cisco Systems (NASDAQ:CSCO) Inc which rose 4.0% after a strong 4Q earnings report that came in ahead of expectations last night while Synopsys Inc (NASDAQ:SNPS) also benefited from well-received results after the closing bell Wednesday with shares up 2.4%.
But heading south were shares in CVS Health Corp, down 8.1%, after The Wall Street Journal reported that Blue Shield of California will no longer be using CVS Health's Caremark as its current pharmacy-benefit manager
9:00am: Weekly jobless claims in line
New claims for US unemployment support were broadly in line with expectations, figures on Thursday showed.
According to the Department of Labor, initial jobless claims totalled 239,000 in the week ended August 12, falling by 11,000 from a revised 250,000 the week prior.
The latest reading outperformed the FXStreet cited consensus, which had anticipated a fall to 240,000.
Continuing jobless claims for the week ended August 5 amounted to 1.716 million, up by 32,000 from an unrevised 1.684 million the week prior.
Futures are still pointing to a bright start on Wall Street.
8:45am: Walmart back-n-forth in premarket; Wolfspeed woes overshadow other semis
Walmart Inc (NYSE:WMT) saw back-n-forth dealing in premarket – at first popping up to trade near US$161, before falling back as opening bell approached. At US$157.98 the stock was down 0.8% with under an hour to the start of regular market hours. For the three months to July 31, 2023, the flagship retailer reported revenue rose 5.7% to $161.6 billion from $152.9 billion the year before, ahead of forecasts of $160.27 billion, while adjusted EPS rose 4% to $1.84 from $1.77, compared to the $1.71 consensus.
Dole stock was up more than 3% after it reported solid growth in revenue and earnings in the second quarter driven by a strong performance in its fresh fruit business. Net income for the quarter rose 8.1% to $52.3 million, while adjusted Ebitda totalled $122.7 million, up from $111.8 million last year.
Cisco Systems (NASDAQ:CSCO) stock was on the rise in Thursday’s premarket deals, after a strong 4Q earnings report that came in ahead of expectations last night. Revenue came in at $15.2 billion for the quarter, vs Wall Street consensus of $15.05 billion, whilst earnings per share came in at $1.14 which was better than the forecasted $1.06.
Wolfspeed stock plummeted 16% lower ahead of Thursday’s open after the semiconductor firm reported a wider-than-expected loss – 42 cents per share vs Wall Street consensus of 20 cents.
Semiconductor peer Synopsys fared better, with its stock up 1.6% this morning, as its quarterly results beat expectations – with earnings of $2.88 per share on revenue of $1.49 billion, vs forecasts for $2.47 and $1.48 billion, respectively.
Coach and Kate Spade parent Tapestry Inc (NYSE:TPR) stock was on the back foot in Thursday’s premarket, reporting its fourth-quarter earnings slightly light of market expectations.
08:03am: Walmart ups guidance after sales and profit beat
A positive update from Walmart Inc (NYSE:WMT) which has raised its guidance for the second quarter in a row after reporting revenue and earnings above expectations.
The Bentonville, Arkansas-based firm said the increase reflected "Q2 upside, confidence in continued business momentum and ongoing customer response to its value proposition."
For the three months to July 31, the flagship retailer reported revenue rose 5.7% to $161.6 billion from $152.9 billion the year before, ahead of forecasts of $160.27 billion, while adjusted EPS rose 4% to $1.84 from $1.77, compared to the $1.71 consensus.
Doug McMillon president and chief executive said: "We had another strong quarter," adding, "food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter."
For financial 2024, Walmart now anticipates that consolidated net sales will rise between 4.0% and 4.5%, with consolidated operating income increasing between 7.0% and 7.5%. Adjusted EPS are expected between $6.36-6.46.
Shares are up 1.2% in pre-market trading.
07:00am: Wall Street looks to break two-day losing streak
US stocks look set to rally on Thursday as investors digest comments from the Federal Reserve and developments in China.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.2%.
All three major indices nursed hefty losses on Wednesday after the US central bank said upside risks to inflation were "significant" and suggested further interest rate increases may be necessary.
"With inflation still well above the committee's longer-run goal and the labour market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," minutes from the July Federal Open Market Committee showed.
But will the rhetoric translate to higher interest rates? Economists weren’t so sure.
James Knightley at ING Economics notes the minutes "show officials continue to have a bias to hike further," but he doesn't think the Fed "will carry through with that final forecast hike."
He thinks the Fed will be on hold for a number of months. "Our base case continues to be interest rate cuts from March 2024 onwards as monetary policy is relaxed to a more neutral footing."
Kieran Clancy at Pantheon Macroeconomics thinks the upcoming inflation numbers will favour a pause at the Fed's next meeting but said August's payroll report is a "wild card."
Company news sees results from retail giant Walmart while the economic calendar has weekly jobless claims figures which are expected to have fallen to 240,000 in the week ending August 12, less than the 248,000 in the previous week, according to economists polled by Refinitiv.
Shares on the move include Ball Corporation (NYSE:BLL) which is 5% higher in pre-market trading after selling its aerospace business to BAE Systems for $5.5 billion.
Cisco Systems (NASDAQ:CSCO) Inc is 2.3% to the good after it delivered a strong 4Q earnings report that came in ahead of expectations on Wednesday after market close.
The communications firm reported revenue of $15.2 billion for the quarter compared to the $15.05 billion expected by the Street, while its adjusted earnings per share came in at $1.14 versus $1.06 expected.
Double-digit growth in software revenue, product ARR and outstanding contracts led to greater visibility and predictability, according to the company.