The Wednesday Market Minute
- Global stocks trade higher as European earnings lift regional shares to a fresh record high and concern over a crackdown on video game companies eases in China.
- Toyota and Honda see chip shortage lasting into 2022, while COVID infections, supply-chain disruptions and tight labor markets trim PMI growth forecasts in Europe.
- Payroll processing group ADP publishes its national employment report at 8:15am Eastern time, with analysts looking for a headline gain of 695,000.
- U.S. equity futures suggest a mixed open on Wall Street ahead of second quarter earnings from CVS Health, General Motors and Kraft Heinz as well as ADP jobs data at 8:15 am Eastern time.
Wall Street futures traded mixed Wednesday, with the S&P 500 retreating modestly from last night's record high, as investors continue to ride the wave of an impressive earnings season while gingerly awaiting to key job market readings that could show the Federal Reserve's policy hand.
Payroll processing group ADP will publish its national employment report at 8:15 am Eastern time, with analysts looking for a headline reading of around 700,000 new private sector jobs for the month of July.
A stronger-than-expected tally, however, could add to speculation that Friday's non-farm payrolls -- the final major reading before the Jackson Hole meeting of global central bankers -- may mark the unofficial start of the Fed's long-term plans to normalize interest rates, starting with the tapering of its $120 billion in monthly bond purchases.
On the flip side, however, is the bond market itself, where benchmark 10-year Treasury note yields have held onto their recent rally -- and continue to move in the opposite direction to tapering concerns -- as COVID infections, supply-chain shortages and a tight labor market continue to test growth prospects.
The only clearly indicated market, it seems, is stocks, where U.S. earnings are on track to rise 89.8% from last year to a share-weighted $432.4 billion over the second quarter, and European earnings are likely to surge by 140% from last year's pandemic-induced trough.
That said, U.S. equity futures are treading water ahead of the ADP reading, with contracts tied to the Dow Jones Industrial Average indicating an 80 point opening bell dip and those linked to the S&P 500 priced for a 7 point pullback ahead of second quarter earnings from General Motors (GM) - Get General Motors Company (GM) Report, CVS Health (CVS) - Get CVS Health Corporation Report and Kraft Heinz (KHC) - Get Kraft Heinz Company (KHC) Report.
Nasdaq Composite futures are indicating a small 10 point opening bell decline.
Pfizer (PFE) - Get Pfizer Inc. Report shares were active in pre-market trading, rising 0.5% to $45.90 each, amid a New York Times report that its coronavirus vaccine could receive full FDA authorization by Labor Day.
Video game maker Activision Blizzard (ATVI) - Get Activision Blizzard, Inc. Report was also on the rise, leaping 5.35% to $84.10 each, after posting stronger-than-expected second quarter earnings that shed concern for a crackdown on the gaming sector in China.
Robinhood (HOOD) - Get Robinhood Report shares were surging, as well, and were marked 8.75% higher at $50.89 each -- well ahead of their IPO price of $38.00 -- amid a two-day rally powered in part by retail traders sharing information on the r/wallstreetbets chatroom in Reddit.
In overseas markets, European stocks extended their recent winning streak to a third consecutive session, taking the Stoxx 600 to a fresh record high, thanks in part to the strength of the second quarter earnings season and PMI data showing a solid start to third quarter economic activity.
Overnight in Asia, concerns over a crackdown on gaming from Beijing helped regional shares after a state-backed newspaper removed an editorial calling the sector "spiritual opium".
The region-wide MSCI ex-Japan index was marked 0.95% higher heading into the final hour of trading while Japan's Nikkei 225 closed 0.21% lower at 27,584.08 points amid a heavy earnings session highlighted by blue chip first quarter numbers from Toyota, Honda and Sony.