As the North American session begins, the Australian dollar is the strongest and the Swiss franc is the weakest. The US dollar is mixed with gains against the British pound, Japanese yen and Swiss franc, and declines against the euro, Canadian dollar, Australian dollar and New Zealand dollar.
Overnight, New Zealand's employment change for the first quarter came in at -0.2% versus +0.3% expected. The unemployment rate rose to 4.3% from 4.0% in the fourth quarter. The New Zealand dollar was mixed to start the US session.
Today is Fed Day. The Fed will announce its interest rate decision at 2 pm EST, and the Fed is expected to keep interest rates unchanged. The Fed Chairman will speak to the press starting at 2:30 PM ET
The question the markets want to know is how hawkish are the Fed members? We know that Chair Powell — and other Fed officials — have already pivoted to “stay no change for longer.” Will they hint at a more consistent stance where they keep the door open for cuts or walks?
The forecast is now a 50-50 chance of a cut in September following the release of the stronger than expected Employment Cost Index yesterday. Admittedly, consumer confidence data was also much worse than expected yesterday, offsetting some of the more recent data.
Highlighting the anxiety and uncertainty, Citibank analysts expect the S&P 500 to see its most significant move on a Federal Open Market Committee (FOMC) day since May 2023, with an expected volatility of 0.95%. These forecasts are based on an options strategy known as riding the money, which involves purchasing an equal number of call options and put options with the same strike price and expiration.
Expectations of interest rate cuts from the Federal Reserve
ADP employment data will be released at 8:15 AM EST for April with expectations at 175K vs. 184K last month. The US jobs report will be released on Friday with expectations of 250,000 non-farm payrolls. The unemployment rate is expected to remain unchanged at 3.8% while earnings are expected to rise by 0.3%.
ISM manufacturing data will be released at 10 AM EST with expectations at 50.0 vs. 50.3 last month. Prices paid are expected to fall to 55.0 from 55.8 last month. JOLTS will also be released for March with 8.6886M expected vs. 8.756M last month.
It is also a new month and is Labor Day in Europe. As a result, most European stock markets are closed today.
In profits after yesterday's close, Amazon exceeded expectations. Its shares are modestly higher. SMCI shares fell as it lost revenue, blaming supply chain issues on some key components. The market is not listening to excuses as stocks fell by more than -12%. Starbucks shares also fell after missing earnings per share and revenue.
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Stryker Corp (SYK) Q1 2024 (USD): Shares are trading down -0.45%
- Adjective. EPS: 2.50 (strike, hit 2.35)
- Revenue: 5.2 billion (expect 5.1 billion)
- Summary: Win
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Advanced Micro Devices Inc (AMD) Q1 2024 (USD): AMD shares are trading up 6.49%
- Adjective. EPS: 0.62 (hit, hit 0.61)
- Revenue: 5.47 billion (expect 5.46 billion)
- Summary: Win
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Mondelez International Inc (MDLZ) Q1 2024 (USD): Shares are trading down -2.70%
- Adjective. EPS: 0.95 (hit, hit 0.89)
- Revenue: 9.29 billion (expect 9.16 billion)
- Summary: Win
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Pinterest Inc (PINS) Q1 2024 (USD): PINS shares are trading up 16.05%
- Adjective. EPS: 0.20 (hit, hit 0.13)
- Revenue: 740 million (overcoming 700.3 million)
- Summary: Win
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Starbucks Corporation (SBUX) Q2 2024 (USD): SBUX shares are trading down -12.71%
- Adjective. EPS: 0.68 (missed, expected 0.79)
- Revenue: 8.56 billion (lost, expected 9.13 billion)
- Summary: missed
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Super Micro Computer (SMCI) Q3 2024 (USD): SMCI shares trade down -12.50%
- Adjective. EPS: 6.65 (strike, hit 5.78)
- Revenue: 3.85 billion (lost, expected 3.95 billion)
- Summary: Mixed
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Amazon.com Inc (AMZN) Q1 2024 (USD): Amazon shares are trading up 1.71%.
- EPS: 0.98 (hit, hit 0.83)
- Revenue: 143.3 billion (expect 142.5 billion)
- Summary: Won
Here's a summary of some of the key releases this morning. CVS shares fall after losing top and bottom lines. Yum! Branding has also missed and is being punished by day traders:
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Automatic Data Processing (ADP): Shares trade up 1.26%
- EPS: 2.88 (strike, hit 2.79)
- Revenue: $5.3 billion (expect $5.22 billion)
- Summary: Won
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Marriott International (MAR): Shares traded down -1.37%.
- Adjective. EPS: 2.13 (missed, expected 2.17)
- Revenue: $5.98 billion (expect $5.93 billion)
- Summary: Mixed
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Yum! Brands Inc (YUM): Shares are trading down -4.96%.
- EPS: 1.15 (missed, expected 1.20)
- Revenue: $1.6 billion (lost, expected $1.71 billion)
- Summary: missed
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Kraft Heinz Company (KHC): Shares trading down -4.61%
- Adjective. Earnings per share: 0.69 (expected 0.69)
- Revenue: $6.4 billion (lost, expected $6.43 billion)
- Summary: Mixed
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Pfizer Inc (PFE): Shares trade up 1.29%
- Adjective. EPS: 0.82 (hit, hit 0.52)
- Revenue: $14.879 billion (expect $14.01 billion)
- Summary: Won
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CVS Health Corp (CVS): Shares are trading down -11.55%.
- Adjective. EPS: 1.31 (missed, expected 1.69)
- Revenue: $88.4 billion (lost, expected $89.21 billion)
- Summary: missed
A snapshot of other markets is currently emerging as the North American session begins.
- Crude oil is trading down -$1.30 to $80.57. At this time yesterday, the price was at $83.11
- Gold is trading higher by $8.16, or 0.35%, at $2,293.46. At this time yesterday, the price was higher at $2,310.90
- Silver is trading up $0.17, or 0.66%, at $26.45. At this time yesterday, the price was at $26.52.
- Bitcoin is currently trading at $57,704. Today's high price was $60,786 while the low was $56,500. At this time yesterday, the trading price was at $60,966
In the pre-market, major US indices are trading lower after the April close with sharp declines cutting into the major indices' 5-month gains:
- Dow Jones Industrial Average futures point to a decline of -69 points. Yesterday, the index closed the market with a sharp decline of -570.17 points, or -1.49%, at the level of 37815.93. On a monthly basis, the index decreased by -5.0%.
- S&P futures indicate a decline of -16.94 points. Yesterday, the index fell by -80.46 points, or -1.57%, to 5035.70. During the month, the index decreased by -4.16%.
- Nasdaq futures point to a decline of -72 points. The index fell yesterday to minus 328.26. Point or -2.04% at 18687.82. On a monthly basis, the index decreased by -4.41%.
Aside from the UK's FTSE 100 index, other European markets are closed for the Labor Day holiday:
- The German DAX is closed. Yesterday the index decreased by -1.03%. The index decreased during the month by -3.03%
- France CAC, closed. Yesterday the index decreased by -0.99%. The index declined during the month by -2.69%.
- Britain's FTSE 100, -0.04%. Over the course of the month, the index increased by 2.41%.
- Spanish Ibex is closed. Yesterday the index decreased by -2.22%. The index decreased during the month by -1.99%
- Italy's FTSE MIB closed (10 minutes late). Yesterday the index was 1.60%. Monthly XL -2.89%
Shares in Asia-Pacific markets were mostly higher
- Japan's Nikkei 225 Index, -0.34%
- China's Shanghai Composite Index closed today
- The Hang Seng Index closed in Hong Kong today
- Australian S&P/ASX Index, -1.23%
Looking at the US debt market, yields fell slightly after rising yesterday on the back of stronger-than-expected Employment Cost Index data:
- The two-year yield is 5.029%, -1.7 basis points. At this time yesterday, the yield was at 4.974%.
- The 5-year yield is 4.710%, -1.3 basis points at this time yesterday, the yield was at 4.651%.
- The 10-year yield is 4.677%, -0.6 basis with. At this time yesterday, the yield was at 4.61%.
- The 30-year yield is 4.779%, -0.9 basis points. At this time yesterday, the yield was at 4.738%.
Looking at the Treasury yield curve, the spreads have moved more inverted:
- The profit margin for 2-10 years is -35.1 basis points. At this time yesterday, the spread was at -35.3 basis points
- The profit margin for 2-30 years is -25.0 basis points. At this time yesterday, the spread was at -23.3 basis points
Benchmark European 10-year bond yields rose: