The Friday Market Minute
- Global stocks extend gains as European PMI data shows growth resilience and bond markets hold steady despite lingering concerns for faster inflation.
- Markit's Eurozone Composite PMI reading for July rises to 60.6, the fastest since July 2000, as order books swell and factories around the region continue to hum.
- Benchmark 10-year note yields hold at 1.29% amid persistent concerns that input costs are adding to profit pressures as inflation remains elevated in major global economies.
- Twitter and Snap top Street forecasts, providing an earlier boost for tech stocks heading into next week's earnings and lifting Nasdaq futures Friday.
- U.S. equity futures suggest a firmer open on Wall Street ahead of second quarter earnings from Honeywell, American Express, Kimberley-Clark and Schlumberger as well as July Markit PMI data at 10:00 am Eastern time.
Wall Street futures powered higher Friday, lifting U.S stocks well into the green for the week, as stronger-than-expected tech earnings, improving growth metrics and a tame bond market set the table for further gains in the global equity rally.
A key reading of European economic activity over the month of July showed the fastest pace of growth in more than 10 years, with factories running at a near-record pace and new orders bulging in the face of improving global demand.
Similar assessments for the U.S. economy, in the form Markit Economics' PMI data, will be released later this morning, and could provide a solid contrast to yesterday's surprise bump in weekly jobless claims, which rose to 419,000 over the period ending July 17.
Solid second quarter earnings from Twitter (TWTR) - Get Twitter, Inc. Report and Snap Inc (SNAP) - Get Snap, Inc. Class A Report look set to give tech stocks a boost, as well, with the former estimating current quarter revenues well above Street forecasts and the latter posting the highest revenue and user growth rates in four years.
Intel (INTC) - Get Intel Corporation (INTC) Report, however, fell 1.9% after its solid 2021 revenue forecast of $73.5 billion implied a modestly weaker-than-expected fourth quarter thanks in party to sticky supply chain issues for the country's biggest chipmaker.
Bond markets were also holding firm, with benchmark 10-year notes trading south of the 1.3% mark, even as investors are starting to worry that inflation is bleeding deeper into to both corporate profit projections and the broader global supply chain.
This puts extra emphasis on next week's Federal Reserve rate-setting meeting, with markets now wondering if Chairman Jerome Powell will be brave enough to begin signaling an end to bond purchases when growth and employment prospects are so sensitive to the rise in Delta-variant infections.
For the moment, however, stocks continue to offer the only reasonable conduit through which investor cash can flow, given the paltry returns in other markets, and that continues to drive global equities higher.
Futures contracts tied to the Dow Jones Industrial Average suggest a 200 point opening bell gain for the Friday session, while those linked to the S&P 500 are priced for a 20 point advance.
Honeywell (HON) - Get Honeywell International Inc. (HON) Report, American Express (AXP) - Get American Express Company Report, Kimberly Clark (KMB) - Get Kimberly-Clark Corporation (KMB) Report and Schlumberger (SLB) - Get Schlumberger NV Report will round out the earnings week with second quarter updates before the opening bell.
Honeywell, in fact, will trade at a multi-decade high following stronger-than-expected earnings, as well as a bullish forecast, while American Express will hit a fresh all-time high after blasting Street forecasts and posting $10.24 billion in second quarter revenues.
Pre-market gains for Apple (AAPL) - Get Apple Inc. (AAPL) Report, Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report, alongside a 5% pop for Twitter and a 15.3% surge for Snap, have Nasdaq Composite futures indicating a 50 point gain to start the session.
American Airlines (AAL) - Get American Airlines Group, Inc. Report was also active, rising 0.8% to $21.32, after price target updates from Cowen & Co and Stifel following Thursday's snarrower-than-expected second quarter loss.
In Europe, stocks moved closer to their all-time highs Friday, with the Stoxx 600 gaining 0.76% to put the benchmark on pace for its fourth consecutive weekly advance following the stronger-than-expected PMI numbers and accelerating vaccination rates in Germany and France.
Overnight in Asia, where the Nikkei 225 remains closed for a two-day holiday ahead of today's Olympic Games opening ceremonies, the region-wide MSCI ex-Japan index ended the week with a 0.68% slide.