Stocks Supported by Fed Rate Cut Hopes
Stock indexes are moving higher today as they recover from some of last Friday's sharp losses. Strength in the Magnificent Seven technology stocks and semiconductor chip makers is supporting the broader market. Additionally, the expectation that last Friday's dismal payroll and ISM manufacturing reports will prompt the Fed to lower interest rates is underpinning equity prices. The chances of a Fed rate cut at the September FOMC meeting rose to 90% from 40% before the reports were released.
More News from Barchart
Find Winning Momentum Trades With This Moving Average Stock Screener
Tariffs, Earnings and Other Can't Miss Items this Week
This Blue-Chip Dividend Stock Is Stuck in the Tariff Crosshairs. Can Cost Cuts Save the Day?
Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else.
In the latest tariff news, President Trump last Thursday raised tariffs on some Canadian goods to 35% from 25% and announced a 10% global minimum, along with tariffs of 15% or higher for countries with trade surpluses with the US, effective after midnight on August 7. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.
The markets this week will focus on earnings reports and any fresh tariff or trade news. Later this morning, Jun factory orders are expected to fall -4.8% m/m. On Tuesday, the June trade deficit is expected to narrow to -$61.3 billion. Also on Tuesday, the July ISM services index is expected to climb by +0.7 to 51.5. On Thursday, weekly initial unemployment claims are expected to increase by +3,000 to 221,000. Also on Thursday, Q2 nonfarm productivity is expected to be +2.0% with unit labor costs rising +1.5%.
Federal funds futures prices are discounting the chances for a -25 bp rate cut at 90% at the September 16-17 FOMC meeting and 76% at the following meeting on October 28-29.
Early results show that S&P 500 earnings are on track to rise +4.5% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence. With over 66% of S&P 500 firms having reported Q2 earnings, around 82% exceeded profit estimates.
Overseas stock markets today are mixed. The Euro Stoxx 50 is up sharply by +1.35%. China's Shanghai Composite rebounded from a 2-week low and closed up +0.66%. Japan's Nikkei Stock 225 fell to a 1.5-week low and closed down -1.25%.
Interest Rates
September 10-year T-notes (ZNU25) today are up +4 ticks. The 10-year T-note yield is down -1.4 bp to 4.202%. Sep T-notes today recovered from overnight losses and rallied to a 3-month nearest-futures high, and the 10-year T-note yield fell to a 1-month low of 4.196%. T-notes are climbing on positive carryover from last Friday's weaker-than-expected payroll and ISM manufacturing reports, which boosted the chance of a Fed rate cut at next month's FOMC meeting to 90% from 40% before the reports. Also, today's -2% drop in WTI crude oil prices has reduced inflation expectations, a bullish factor for T-notes. In addition, today's strength in European government bonds is providing carryover support to T-notes.
Gains in T-notes are limited by a rebound in equity markets, which curbs safe-haven demand for government securities. Also, supply pressures are weighing on T-notes as the Treasury will auction $125 billion of T-notes and T-bonds in this week's August quarterly refunding, beginning with Tuesday's $58 billion auction of 3-year T-notes.
European government bond yields today are moving lower. The 10-year German bund yield fell to a 1.5-week low of 2.638% and is down -3.5 bp to 2.643%. The 10-year UK gilt yield dropped to a 1-month low of 4.502% and is down -1.6 bp to 4.512%.
The Eurozone Aug Sentix investor confidence index unexpectedly fell -8.2 to -3.7, weaker than expectations of an increase to 6.9.
Swaps are discounting the chances at 16% for a -25 bp rate cut by the ECB at the September 11 policy meeting.
US Stock Movers
Strength in the Magnificent Seven technology stocks is supporting gains in the broader market. Alphabet (GOOGL) is up more than +1%. Also, Nvidia (NVDA), Tesla (TSLA), Meta Platforms (META), Apple (AAPL), and Microsoft (MSFT) are up more than +1%.
Chip stocks are moving higher today, a supportive factor for the overall market. Advanced Micro Devices (AMD), Marvell Technology (MRVL), Broadcom (AVGO), Micron Technology (MU), and ARM Holdings Plc (ARM) are up more than +2%. Also, Lam Research (LRCX), ASML Holding NV (ASML), Applied Materials (AMAT), and Microchip Technology (MCHP) are up more than +1%.
Steelcase (SCS) is up more than +46% after being acquired by HNI for $2.2 billion or about $18.30 per share.
Idexx Labs (IDXX) is up more than +22% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $1.11 billion, better than the consensus of $1.07 billion, and raising its full-year EPS forecast to $12.40-$12.76 from a previous forecast of $11.93-$12.43, stronger than the consensus of $12.21.
Wayfair (W) is up more than +11% after reporting Q2 adjusted EPS of 87 cents, well above the consensus of 33 cents.
Tyson Foods (TSN) is up more than +4% after reporting Q3 sales of $13.88 billion, above the consensus of $13.55 billion.
Spotify (SPOT) is up more than +7% after it said it will increase the monthly cost of premium subscriptions in Markets across South Asia, the Middle East, Africa, Europe, and Latin America.
Walt Disney (DIS) is up more than +2% to lead gainers in the Dow Jones Industrials after Morgan Stanley raised its price target on the stock to $140 from $120.
BJ's Restaurants (BJRI) is up more than +1% after Benchmark Co. upgraded the stock to buy from hold with a price target of $44.
Bruker Corp (BRKR) is down more than -11% after reporting Q2 revenue of $797.4 million, below the consensus of $810.2 million.
ON Semiconductor (ON) is down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q3 adjusted gross margin of 36.5% to 38.5%, the midpoint weaker than the consensus of 37.7%.
Berkshire Hathaway (BRK.B) is down more than -2% after reporting Q2 operating earnings fell -3.8% y/y to $11.16 billion.
Waters (WAT) is down more than -2% after forecasting Q3 adjusted EPS of $3.15-$3.25, the midpoint below the consensus of $3.23.
Earnings Reports (8/4/2025)
Axon Enterprise Inc (AXON), Coterra Energy Inc (CTRA), Diamondback Energy Inc (FANG), Equity Residential (EQR), IDEXX Laboratories Inc (IDXX), Loews Corp (L), ON Semiconductor Corp (ON), ONEOK Inc (OKE), Palantir Technologies Inc (PLTR), SBA Communications Corp (SBAC), Simon Property Group Inc (SPG), Tyson Foods Inc (TSN), Vertex Pharmaceuticals Inc (VRTX), Waters Corp (WAT), Williams Cos Inc/The (WMB).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
24 minutes ago
- Yahoo
Watch These Novo Nordisk Stock Price Levels After Last Week's 33% Drop
Key Takeaways Novo Nordisk's U.S.-listed shares were slightly higher in recent trading after shedding a third of their value last week, when the company cut its full-year outlook and named a new CEO. The shares had resumed their steep downtrend last week on above-average volume, indicating selling conviction from larger market participants. Investors should watch major support levels on Novo Nordisk's chart around $36 and $29, while also monitoring key overhead areas near $60 and $ Nordisk's (NVO) U.S.-listed shares were up about 2% in recent trading after shedding about a third of their value last week, when the company cut its full-year outlook and named a new CEO, leading Wall Street analysts to downgrade the stock. Since hitting a record high in June last year, Novo Nordisk shares have lost roughly two-thirds of their value, pressured by increasing competition from rival Eli Lilly's (LLY) weight-loss drugs and challenges during trials of the company's next-generation obesity drugs. Below, we take a closer look at Novo Nordisk's weekly chart and use technical analysis to identify major price levels that investors will likely be watching after last week's dramatic sell-off. An Extended Downtrend With last week's drop, Novo Nordisk shares resumed their steep downtrend on above-average trading volume, indicating selling conviction from larger market participants. The sell-off coincided with the relative strength index (RSI) falling to its lowest levels since early May, signaling weakening price momentum, though the indicator neared its oversold threshold, increasing the chances for short-term bounces. It's also worth noting that the 50-week moving average continues to converge toward the 200-week MA, potentially setting the stage for an ominous death cross, a bearish pattern that forecasts lower prices. Let's identify two major support levels on Novo Nordisk's chart worth watching if selling resumes this week and also point out several key overhead areas to monitor during potential recovery efforts. Major Support Levels Worth Watching The first major lower level to watch sits around $36. This area would likely provide support near the upper range of a consolidation period that formed on the chart between October 2020 and April 2021. A more significant move lower could see the shares test lower support at the $29 level. Investors may look for buying opportunities in this area near a horizontal line that connects a range of corresponding price action on the chart between January 2018 and April 2020. Key Overhead Areas to Monitor An initial recovery effort could see the shares climb to overhead resistance around $60. The price may encounter selling pressure in this area near the prominent April trough and April 2022 peak. A more bullish upswing opens the door for a rally toward $78. Investors who have bought Novo Nordisk shares at lower levels may decide to lock in profits in this location near the June peak, which closely aligns with the completion of a pullback in July 2023. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own any of the above securities. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
24 minutes ago
- Yahoo
NCAA Tournament fields to remain at 68 teams in 2026, but future growth is possible
The NCAA men's and women's basketball tournaments will not expand beyond 68 teams in 2026, but future growth remains on the radar. 'Expanding the tournament fields is no longer being contemplated for the 2026 men's and women's basketball championships," Dan Gavitt, NCAA senior vice president of basketball, said in a statement on Monday. "However, the committees will continue conversations on whether to recommend expanding to 72 or 76 teams in advance of the 2027 championships.' NCAA President Charlie Baker has said adding teams could add value to the tournament, and he said the NCAA already has had 'good conversations' with TV partners CBS and Warner Bros., whose deal runs through 2032 at the cost of around $1.1 billion a year. ___ AP college basketball: and
Yahoo
24 minutes ago
- Yahoo
RGTI: Rigetti Shares Jump after Needham hikes target on U.S. quantum momentum
Aug 4 - Rigetti Computing (NASDAQ:RGTI) jumped more than 5% on Monday shortly after Needham raised its price target by $3, signaling fresh momentum in quantum computing. Warning! GuruFocus has detected 3 Warning Signs with RGTI. Analyst Quinn Bolton sees growing buzz around federal programs like DARPA's Quantum Benchmark Initiative (QBI) and the proposed Department of Energy Quantum Leadership Act. He believes those efforts could unlock new research funding and commercial opportunities. Rigetti leads a pack of startups racing to prove quantum machines can outperform classical systems. QBI aims to assess whether quantum devices deliver more value than their cost by 2033. Meanwhile, the DOE bill would allocate $2.5 billion over five years to boost quantum research. Investors weigh the promise of those programs against current realities: most quantum firms still run R&D losses and generate modest revenue. Bolton urges a cautious stance, recommending smaller, speculative positions. Yet his buy rating on Rigetti reflects confidence that government backing could pave the way for breakthroughs and higher stock gains. With Washington pulling out all the stops to keep the U.S. on the leading edge of high-tech, Rigetti advocacy demonstrates the crossroad of policy and private money. This is the place to keep an eye on future legislative actions and DARPA milestones to get new startup catalysts. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
