Early Look

Friday, July 5, 2024

Investors return from the July 4^th holiday to a flattish market, awaiting the June payroll numbers at 8:30 AM where 190K jobs are expected to be added (down from 272K the prior month) and 160K private payrolls (down from 229K in May). Stocks on Wednesday’s abbreviated trading day (markets closed at 1:00), finished at the highs for a third straight day to kick off the July trading month with fireworks. On Wednesday, the S&P 500 registered a record high close for second day in a row, while the Nasdaq posted a record high close for third day in a row, led again by semi’s and large cap leaders as the Technology sector (XLK) extends its YTD gains to above +20%, with Communications (XLC) next +18.5% YTD and Financials the only other double-digit percentage leader +10.5% YTD; REITs (XLRE) the only sector down YTD at -4.75%. In Asian markets, The Nikkei Index dipped slightly to 40,912, the Shanghai Index fell -7 points to 2,949, and the Hang Seng Index declined -228 points to 17,799. In Europe, the German DAX is up 155 points to 18,605, while the FTSE 100 is up 12 points to 8,253. Shares exposed to the British domestic economy saw their best gains of the year after Keir Starmer’s Labour party won a landslide victory in the UK election. The Stoxx 600 rises 0.5%. The pound also gains, adding 0.2% against the greenback. Bitcoin prices fell over -5% to $55,000, its lowest levels since February even as stocks hit record as Bloomberg notes risks include creditors selling tokens returned by Mt. Gox while noting short-term correlation between Bitcoin and stocks is fraying.

• The Dow Jones Industrial Average dipped -23.85 points, or 0.06%, to 39,308.00.
• The Nasdaq Composite surged 159.54 points, or 0.88%, to 18,188.30.
• The Russell 2000 Index advanced 2.75 points, or 0.14% to 2,036.62.

• 8:30 AM ET                  Nonfarm Payrolls for June…est. +190K (prior 272K)
• 8:30 AM ET                  Private Payrolls for June…est. +160K (prior 229K)
• 8:30 AM ET                  Manufacturing Payrolls for June…est. +6K (prior 8K)
• 8:30 AM ET                  Unemployment Rate for June…est. +4.0%
• 8:30 AM ET                  Average Hourly Earnings M/M for June…est. +0.3% (prior +0.4%)
• 1:00 PM ET                   Baker Hughes Weekly rig count data

• Bulls fall to 41.7% from 44.5%, Neutrals rise to 32.2% from 27.2%, Bears fall to 26.1% from 28.3%.
• German industrial production slumped in May as car manufacturing tailed off, as overall industrial output declined 2.5% on month in May, on a seasonally and calendar-adjusted basis, much weaker than the 0.1% increase in April, and below economists’ expectations for a much smaller 0.2% decline.
• Minutes from the June FOMC meeting 6/11-6/12 showed Federal Reserve officials acknowledged the U.S. economy appeared to be slowing and that “price pressures were diminishing,” but still felt a wait-and-see approach was warranted before committing to interest rate cuts. The minutes noted a weak May CPI reading as one among “a number of developments in the product and labor markets” that supported a view that inflation was falling. Wage growth had slowed, a few participants noted, while others pointed to price cutting among major retailers and reports from their own business contacts that “pricing power had declined.” Officials “did not expect that it would be appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward” the 2% target, the minutes said.

• HBC, parent company of Saks Fifth Avenue, has entered into a definitive agreement to acquire Neiman Marcus Group, parent company of Neiman Marcus and Bergdorf Goodman, for a total enterprise value of $2.65B. HBC will establish Saks Global, a combination of world-class luxury retail and real estate assets, including Saks Fifth Avenue
• Nio Inc. (NIO) announces management change as Steven Wei Feng has resigned as chief financial officer (CFO) as the company promotes senior vice president of finance, Mr. Stanley Yu Qu, as new chief financial officer.

• Shell Plc (SHEL) said it expects as much as $2 billion of impairments in its Q2 earnings related to a delayed biofuels plant under construction in the Netherlands and its chemicals facility in Singapore.
• Teck (TECK) plans up to $2B share buyback of Class B shares.
• Volvo Group (VLVLY) and Westport Fuel Systems (WPRT) joint venture celebrated the official launch of their partnership with an exclusive event at the University of British Columbia.

• Roche’s (RHHBY) drug tiragolumab, which is part of a new class of drugs known as anti-TIGIT, failed a lung cancer treatment trial on Thursday. Compugen (CGEN) has colorectal, ovarian and lung cancer treatments in development that work by acting on the TIGIT receptor, which suppresses the proliferation and activation of cells of the immune system.