Daily Markets: Investors Watch Jobs and Durable Orders Data

Today’s Big Picture

Equity markets in Asia-Pacific closed mixed today with Hong Kong’s Hang Seng down 0.2%, China’s Shanghai Composite up 0.4%, and Japan’s Nikkei down 0.3% while South Korea’s Kospi declined 0.1%. By midday trading equity markets in Europe were mixed and U.S. equity futures point to a modest fall. Before markets open for trading, investors will be eyeing the latest weekly jobs data, as well as the April Durable Orders data, as they try to gauge how the Fed will react to these metrics. Ahead of the Memorial Day weekend that will have U.S. equity markets closed on Monday, May 31, trading volumes are expected to taper today and even more so tomorrow.

Data Download

International Economy

Scientists in Germany believe they have solved the puzzle of rare occurrences of blood clots linked to the AstraZeneca (AZN) and Johnson & Johnson (JNJ) vaccines and think they can be slightly adjusted to stop the reaction from happening.

Industrial profits in China rose a whopping 57% YoY in April.

Germany’s GfK Consumer Confidence rebounded to -7 in June from -8.8 in May but missed the reading of -5.2.

Italy’s Business Confidence in May rose to 110.2 from an upwardly revised 106 in April, beating the expected 106.4. May Consumer Confidence jumped to 110.6 from 102.3 the prior month, topping the expected 104.4.

The government of Switzerland has backed away from talks to build a new framework agreement with the European Union. The decision means that as the current treaties lapse, trade and immigration between it and the Eurozone both trade and immigration could be significantly reduced.

Reports indicated the U.S. Trade Representative Katherine Tai and Chinese Vice Premier Liu He had a “candid, pragmatic and constructive” conversation but there were no details released on trade developments or the rollback of Trump administration tariffs.

Domestic Economy

Half of all adults in the United States are now fully vaccinated against the coronavirus, according to data from the Centers for Disease Control and Prevention and at least 9 states have already reached President Biden’s goal of having 70% receive their first shot by July 4. Amongst those ages 65 and up, just under 74% have been fully vaccinated.

A group of Senate Republicans is expected to send a $1 trillion counteroffer this week to the Biden administration’s $1.7 trillion infrastructure proposal. This is an increase from last week’s $568 billion GOP framework.

Yesterday, the Atlanta Fed updated its monthly report on business expectations and uncertainty which saw Employment Growth Expectations pullback after hitting a record level the prior month. Uncertainty concerning future revenue remains elevated, relative to pre-covid levels.

In contrast to the majority of statements recently from Fed officials, Randal Quarles, a Fed vice-chair said yesterday in a discussion at the Brookings Institution that even after “discounting temporary factors,” the increase in U.S. inflation since December would “prove sufficient” to taper its asset purchases later this year.

Later today we will get reports that include Durable Goods Orders, GDP Price Index, Corporate Profits, the usual weekly Jobless Claims, PCE Prices, Pending Home Sales, and the Kansas Fed Manufacturing Index.

Markets

After briefly dropping into negative territory in the morning, U.S. equity markets closed mostly in the green yesterday. The Russell 2000 rose 2.0%, the Nasdaq Composite added 0.6%, the S&P 500 gained 0.2%, and the Dow was essentially flat while the VIX fell 7.9%. The yield on the 10-year closed at 1.579%, barely changed. After closing in the green for nine consecutive days, gold closed lower.

Stocks to Watch

Among quarterly reports out before U.S. equity markets open are those from Best Buy (BBY), Dollar General (DG), and Sanderson Farms (SAFM).

Yesterday Amazon (AMZN) announced that it had signed an agreement for the acquisition of MGM for $8.45 billion. Jeff Bezos also announced that he will be formally stepping down from his role as CEO on July 5, the 27th anniversary of the company’s incorporation date, and moving into the role of executive chairman, handing the reins over to Andy Jassy.

In keeping with the more flexible theme of working from anywhere, Snowflake (SNOW) announced in its earnings release yesterday that it no longer has a corporate headquarters as its workforce of around 2,500 is “globally distributed.” The company is now designating Bozeman, Montana as its principal executive office, as it is required by the SEC to have one designated. Its prior announcements had listed San Mateo, California as its headquarters.

Nvidia’s (NVDA) April quarter results topped top and bottom line expectations led primarily by the 106% YoY increase in Gaming and the 79% YoY increase in Data Center. Nvidia issued upside guidance for the current quarter calling for revenue of ~$6.174-$6.426 billion vs. the $5.48 billion consensus. The company also reported that it booked $155 million in revenue from new processors specifically designed for mining crypto.

Tesla (TSLA) is reportedly looking to pay in advance for chips to ensure its supply of the critical parts and is discussing with operators in Taiwan, South Korea, and the U.S.

HSBC Holdings PLC (HSCB) will exit from its U.S. retail and small-business banking operations

April quarter results at Williams-Sonoma (WSM) simply demolished consensus expectations as comparable brand revenue growth accelerated +40.4%, with all brands accelerating sequentially, including Williams Sonoma at +35.3%, Pottery Barn at +41.3%, Pottery Barn Kids and Teen at +27.6%, and West Elm at +50.9%. For 2021, the company sees low double-digit to mid-teen net revenue growth and YoY non-GAAP operating margin expansion.

American Eagle (AEO) eked out an April quarter EPS beat as revenue for the quarter jumped 87.5% YoY to $1.03 billion vs. the expected $1.02 billion. All the gains were had online as the company’s digital revenue increased 57% while in-store revenue was flat YoY. American Eagle shares its quarter-to-date business momentum has accelerated with Executive Chairman of the Board and Chief Executive Officer Jay Schottenstein saying he believes “we are on pace to deliver our 2023 operating profit target well ahead of schedule."

Shares of GrowGeneration (GRWG) surged yesterday following the announcements of its acquiring The Harvest Company, a hydroponic supply center and cultivation design innovator based in Northern California.

Walt Disney (DIS) California-based parks will start to allow non-California customers starting June 15.

General Motors (GM) and Lockheed Martin (LMT) say they are teaming up to develop a new lunar rover for any future NASA manned flight to the moon.

Gap (GPS) and Walmart (WMT) announced a strategic partnership to introduce Gap Home, a new brand of home essentials available exclusively at Walmart.

After more than a year of suspended operations as a result of the pandemic. on June 26, Royal Caribbean (RCL) will mark a long-awaited return with Celebrity Cruises' Celebrity Edge departing from Port Everglades in Fort Lauderdale.

After today’s market close, Box (Box), Costco Wholesale (COST), Dell (DELL), Gap (GPS), Guess (GES), and Ulta Beauty (ULTA) are among the handful of companies slated to report their quarterly results. Those looking to get a jump on those reports and others to be had in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

• May 28: Personal Income & Spending, PCE Price Index, Goods Trade Balance, Wholesale Inventories, Chicago PMI, Michigan Consumer Sentiment
• May 31: US equity markets closed for the Memorial Day holiday
• June 1: Markit Manufacturing PMI (final), Construction Spending, ISM Manufacturing PMI, IBD/TIPP Economic Optimism, Dallas Fed Manufacturing, Total Vehicle Sales
• June 2: Weekly API Crude Oil Stocks
• June 3: ADP Employment for May, weekly Jobless Claims, Unit Labor Costs Q1, Markit Services PMI, ISM Non-Manufacturing PMI, EIA Crude Oil Stocks, EIA Crude Oil Stocks, and EIA Gasoline Stocks
• June 4: Non-Farm Payrolls for May and Factory Orders
• June 8: Balance of Trade, JOLTs Report, API Crude Oil Stocks
• June 9: Wholesale Inventories, Gasoline & Crude Oil Stocks
• June 10: Inflation, weekly Jobless Claims, Monthly Budget Statement
• June 11: Michigan Consumer Sentiment
• June 15: Retail Sales, PPI, NY Empire State Manufacturing, Industrial Production, Business Inventories, NAHB Housing Market Index, Tic Flows, Foreign Bond Investment, weekly API Crude Oil stock
• June 16: Building Permits, Housing Starts, Import/Export Prices, weekly energy stocks, FOMC Economic Projections, and Interest Rate decision
• June 17: weekly Jobless Claims, Philadelphia Fed Manufacturing
• June 21: Chicago Fed National Activity Index
• June 22: Existing Home Sales, weekly API Crude Oil Stock
• June 23: Current Account, Markit Manufacturing & Service PMI, New Home Sales, EIA Energy Stock
• June 24: Durable Goods Orders, Wholesale Inventories, Weekly Jobless Claims, GDP Price Index Q1, Goods Trade Balance, Corporate Profits Q1
• June 25: Personal Income & Spending, PCE Price Index, Michigan Consumer Sentiment

Thought for the Day

“Indecision is the thief of opportunity.” ~Marcus Tullius Cicero

Disclosures

• Nvidia (NVDA) is a constituent of the Tematica BITA Digital Infrastructure and Connectivity Index.
• Costco Wholesale (COST), Lockheed Martin (LMT), Walmart (WMT), Williams-Sonoma (WSM) are constituents of Tematica Research's Thematic Dividend All-Stars Index.
• Tesla (TSLA) is a constituent of Tematica Research’s Cleaner Living 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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