Daily Markets: Amazon's Prime Day a Litmus for U.S. Consumer Spending

Today’s Big Picture

Asia-Pacific equity markets finished the day ahead on increased speculation about Chinese government real estate stimulus. Japan’s Nikkei ended the day close to flat, eking out a 0.04% gain. India’s SENSEX rose 0.42%, China’s Shanghai Composite added 0.55%, Hong Kong’s Hang Seng advanced 0.97%, and Taiwan’s TAIEX and Australia’s ASX All Ordinaries closed 1.46% and 1.51% higher, respectively. South Korea’s KOSPI posted a 1.66% gain, on a broad rally led by the Electronic Technology sector. European markets are up in midday trading except for Nordic markets and U.S. equity futures point to a positive open.

We are once again in a holding pattern for the market as investors wait for tomorrow’s June Consumer Price Index (CPI) data and the latest core CPI reading. As they wait, Amazon’s (AMZN) 2023 Prime Day has begun, an event that sees competing offers from the likes of Best Buy (BBY), Walmart (WMT), and Target (TGT). Insider Intelligence sees Amazon making approximately $12.9 billion from Prime Day this year, up 11% YoY, with close to $8 billion in U.S. sales. While Amazon sees the event being “bigger and better than ever” many will view it as a litmus test for consumer demand.

Data Download

International Economy

Top state-run financial newspapers in China ran reports today flagging the likely adoption of more property-supportive policies, along with measures to boost business confidence. Reports suggest China is considering a new basket of measures, such as reducing down payments in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases.

The annual inflation rate in Germany was confirmed at 6.4% in June, rising from May’s 14-month low of 6.1% and well above the European Central Bank's target of 2%. The core inflation rate, which excludes volatile items such as food and energy, stood at 5.8% in June, up from 5.4% in May. The ZEW Indicator of Economic Sentiment for Germany dropped to -14.7 in July from the previous month's reading of -8.5 and below market expectations of -10.5. Morale hit its weakest level since December as investors predicted a further deterioration in the economic situation by year-end due to the expectation of rising short-term interest rates in the Eurozone and the U.S.

The ZEW Indicator of Economic Sentiment for the Euro Area fell to -12.2 in July from -10 in the prior month. The July figure was the lowest reading since December amid a deteriorating economic outlook due to the prospect of rising interest rates in the eurozone and the US.

The unemployment rate in the United Kingdom rose to 4.0% in May from 3.8% the prior month and the expected level of 3.8%.

Leaders from the 31 countries in NATO are meeting in Lithuania for the start of their two-day event. The war in Ukraine, defense spending, and Sweden and Ukraine's membership are on the agenda. Ahead of the event, Sweden is one step closer to joining NATO as Turkey agreed to back its bid to become a part of the alliance. This follows Sweden agreeing to bolster its anti-terrorism efforts and support Turkey's bid to join the European Union.

Domestic Economy

The NFIB Small Business Optimism Index rose to 91.0 in June, up from 89.9 the prior month but the June figure marks the 18th consecutive month below the 49-year average of 98. Inflation and labor quality are tied as the top small business concerns with 24% of owners reporting each as their single most important problem. The net percent of owners raising average selling prices decreased three points to a net 29% seasonally adjusted, still a very inflationary level but trending down. 59% of owners reported hiring or trying to hire in June, down four points from May. Of those hiring or trying to hire, 92% reported few or no qualified applicants for the positions they were trying to fill.

Federal Reserve Bank of New York President John Williams is expected to moderate a discussion organized by the Economic Club of New York.

Markets

Monday saw a similar pattern to Friday in that the Russell 2000 saw the most significant gains. What was different from Friday is that the other major equity indexes also saw gains, with the Nasdaq Composite adding 0.18%, the S&P 500 advancing 0.24%, and the Dow closing 0.62% higher. Sector leaders included Industrials (1.42%) and Energy (0.78%) while Utilities (-0.43%) and Technology (-0.26%) saw some selling. In individual names, Amazon saw shares trade down 2.04% in advance of the company’s annual Prime Day as traders had questions about the resiliency of the U.S. consumer.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 2.40%
• S&P 500: 14.85%
• Nasdaq Composite: 30.76%
• Russell 2000: 7.61%
• Bitcoin (BTC-USD): 83.10%
• Ether (ETH-USD): 56.87%

Stocks to Watch

Before U.S. equity markets begin trading today, AngioDynamics (ANGO) is expected to report its quarterly results.

Meta Platforms' (META) Twitter rival Threads crossed 100 million sign-ups within five days of launch dethroning ChatGPT as the fastest-growing online platform to hit the milestone.

In a move to expand its retail channels in China, Apple (AAPL) opened an online store on Tencent’s (TCEHY) WeChat social media platform.

AirScult Technologies (AIRS) announced upside guidance for its June quarter with revenue of ~$55.7 million vs. the $53.69 million consensus. The company reiterated its 2023 revenue outlook for $187-$192 million vs. the $190.84 million consensus.

Mercedes-Benz Group (MBGAF) reported a 6% YoY increase in 2Q 2023 sales to 515,700 vehicles with passenger car battery electric vehicle sales hitting 56,300 units during the quarter, a 123% increase YoY,

Microsoft (MSFT) announced fresh layoffs impacting an undisclosed number of employees in customer service, support, and sales, according to multiple media sources. Layoffs are not uncommon for Microsoft as it restructures part of its businesses at the start of its new fiscal year.

Payoneer (PAYO) announced plans to reduce its workforce by approximately 9%.

The United Auto Workers union said it will open contract talks with Detroit's Big Three automakers - General Motors (GM), Ford Motor (F), and Chrysler Stellantis (STLA) — starting on Thursday, ahead of the mid-September expiration of the current four-year labor deal.

IPOs

Near-term the calendar for such activity looks rather thin. Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

MillerKnoll (MLKN) is slated to report its quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Wednesday, July 12

• Japan: Core Machinery Orders – May
• Japan: Producer Price Index – June
• US: Weekly MBA Mortgage Applications
• US: Consumer Price Index – June
• US: Weekly EIA Crude Oil Inventories
• US: Fed Beige Book

Thursday, July 13

• China: Imports/Exports – June
• UK: GDP, Industrial Production, Manufacturing Production – May
• Eurozone: Industrial Production – May
• OPEC Monthly Report
• US: Weekly Initial and Continuing Jobless Claims
• US: Producer Price Index – June
• US: Weekly EIA Natural Gas Inventory

Friday, July 14

• Japan: Industrial Production & Capacity Utilization - May
• US: Import/Export Prices – June
• US: The University of Michigan Consumer Sentiment Index (Preliminary) – June

Thought for the Day

“If you risk nothing, then you risk everything.” — Geena Davis

Disclosures

• Walmart (WMT) is a constituent of the Tematica BITA Big Spenders & Savers Index
• Apple (AAPL), Microsoft (MSFT) are constituents of the Tematica Research Thematic Dividend All-Stars Index

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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