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Yahoo
2 days ago
- Business
- Yahoo
S&P Futures Muted With Focus on Earnings and Trade Deals
September S&P 500 E-Mini futures (ESU25) are trending down -0.04% this morning as investors brace for a raft of corporate earnings reports and continue to keep a close eye on any trade developments between the U.S. and key trading partners as the August 1st deadline approaches. White House Press Secretary Karoline Leavitt said that U.S. President Donald Trump could issue additional unilateral tariff letters before August 1st. She added that more trade deals could also be reached before the deadline. Meanwhile, Philippine President Ferdinand Marcos Jr. will become the latest foreign leader eager to strike a deal before the deadline as he meets with Trump in the Oval Office later today. More News from Barchart Opendoor Stock Is Surging Higher in a Frenzied Retail Rally. How Should You Play OPEN Shares Here? This Penny Stock Wants to Become the MicroStrategy of Dogecoin Robinhood Stock Stumbles as S&P 500 Inclusion Is Once Again Off the Table for HOOD Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! In yesterday's trading session, Wall Street's main stock indexes ended mixed, with the S&P 500 and Nasdaq 100 notching new all-time highs. Verizon Communications (VZ) climbed over +4% and was the top percentage gainer on the S&P 500 and Dow after the carrier posted upbeat Q2 results and raised the lower end of its full-year adjusted EPS growth forecast. Also, chip stocks gained ground, with Arm Holdings (ARM) rising more than +3% to lead gainers in the Nasdaq 100 and Qualcomm (QCOM) advancing over +2%. In addition, Block (XYZ) surged more than +7% after S&P Dow Jones Indices announced that the stock would be added to the S&P 500 index on Wednesday, July 23rd. On the bearish side, Bruker (BRKR) plunged over -12% after the maker of scientific instruments posted weaker-than-expected preliminary Q2 results. Economic data released on Monday showed that the Conference Board's leading economic index for the U.S. fell -0.3% m/m in June, weaker than expectations of -0.2% m/m. 'While stocks may be due for a breather, we believe the bull market remains intact. We maintain our June 2026 S&P 500 price target of 6,500, and recommend using volatility as an opportunity to phase into markets,' said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. Second-quarter corporate earnings season is ramping up. Investors will be closely monitoring earnings reports today from notable companies like Coca-Cola (KO), Philip Morris International (PM), RTX Corp. (RTX), Texas Instruments (TXN), Intuitive Surgical (ISRG), Danaher (DHR), Lockheed Martin (LMT), and General Motors (GM). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +3.2% increase in quarterly earnings for Q2 compared to the previous year, slightly above the pre-season forecast of +2.8%. On the economic data front, investors will focus on the U.S. Richmond Fed Manufacturing Index, which is set to be released in a couple of hours. Economists foresee this figure coming in at -2 in July, compared to the previous value of -7. Meanwhile, Fed Chair Jerome Powell is scheduled to deliver opening remarks later today at a conference focused on capital frameworks for large banks. With Fed officials in a blackout period before the July 29-30 policy meeting, Mr. Powell is likely to avoid commenting on interest rates. U.S. rate futures have priced in a 97.4% probability of no rate change and a 2.6% chance of a 25 basis point rate cut at the upcoming monetary policy meeting. In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.389%, up +0.23%. The Euro Stoxx 50 Index is down -0.65% this morning amid growing concerns that the U.S.-EU trade agreement may not be finalized before the August 1st deadline. Chemical stocks underperformed on Tuesday, with Akzo Nobel ( falling over -2% after the Dulux paint maker cut its full-year core profit guidance. The European Central Bank said on Tuesday, based on a survey of the bloc's largest lenders, that loan demand from Eurozone businesses increased last quarter despite pressure from geopolitical and trade tensions, and another increase is expected this quarter. Meanwhile, the European Union still seeks a trade agreement with the U.S., but the bloc is said to be preparing its countermeasures as Trump adopts a hardline stance and increases the chances of a no-deal outcome. The Wall Street Journal reported that U.S. officials told the EU's trade chief last week they anticipate President Trump will demand additional concessions from the bloc to reach a deal, including a baseline tariff on most European goods that could be set at 15% or higher. At the same time, EU diplomats said the bloc was weighing a wider range of countermeasures against Washington, which could include targeting U.S. services or restricting access to public tenders if the deal isn't reached. In other corporate news, Sartorius Stedim Biotech ( plunged more than -8% after the French lab supplies manufacturer's half-year results failed to impress investors. Also, Givaudan Sa ( slid over -5% after reporting weaker-than-expected half-year sales. The European economic data slate is mainly empty on Tuesday. Asian stock markets today settled mixed. China's Shanghai Composite Index (SHCOMP) closed up +0.62%, and Japan's Nikkei 225 Stock Index (NIK) closed down -0.11%. China's Shanghai Composite Index closed higher today, with sentiment remaining upbeat as the country began construction of the world's biggest hydropower dam in Tibet and reports emerged of a potential meeting between the leaders of the world's two largest economies. Construction and power stocks extended their rally on Tuesday after China announced over the weekend the start of construction on a $170 billion hydropower dam in Tibet. Citi analysts said in a note that the project is macro relevant and could offer some demand support, likely alleviating concerns about growth and the labor market to some extent. Also boosting sentiment, Reuters reported that aides to U.S. President Donald Trump and Chinese President Xi Jinping have discussed the possibility of a meeting between the two leaders during Trump's planned trip to Asia later this year. Meanwhile, U.S. Treasury Secretary Scott Bessent said on Monday that Washington and Beijing are set to hold talks 'in the very near future,' with discussions potentially covering China's purchases of Iranian and Russian oil. Investor focus is also on the July Politburo meeting, expected to take place in the coming days, where policymakers will deliberate on economic policies for the second half of the year. Economists stated that Beijing is unlikely to roll out broad-based stimulus in the near term, as real GDP growth in the first half surpassed this year's 'around 5%' target. Policymakers are likely to reaffirm their commitment to boosting domestic demand and stabilizing exports, employment, and the property market. In corporate news, Yangzhou Yangjie Electronic Technology gained over +1% after the semiconductor spare components developer and manufacturer provided a robust H1 net profit forecast. Japan's Nikkei 225 Stock Index closed slightly lower today as investors returning from a long holiday weekend weighed policy uncertainty after the ruling Liberal Democratic Party's historic loss in Sunday's upper house election. Pharmaceutical stocks led the declines on Tuesday. While the outcome of the vote was in line with market expectations, concerns surrounding the future direction of policy, especially in terms of government spending and trade, dampened sentiment. Several opposition parties that secured seats in the election have proposed reducing the sales tax to ease the burden of rising living costs. However, Japan's Prime Minister Shigeru Ishiba, who vowed to remain in office, has dismissed calls for tax cuts in favor of cash handouts funded by tax revenues, and Finance Minister Katsunobu Kato reiterated on Tuesday that sales tax reductions are not appropriate. Ishiba's weakened domestic position also raises uncertainty over Japan's tariff negotiations with the U.S., with the August 1st deadline looming. Still, three members of JPMorgan's Global Markets Strategy said in a note that the election outcome is expected to have minimal impact on domestic stock prices. 'Despite concerns about fiscal expansion and Japan-U.S. tariff agreement delays, the stock market has held broadly flat, supported by corporate reforms and fund flows,' the members said. In corporate news, Kansai Electric Power Co. rose over +3% after the company said it is considering building Japan's first new nuclear reactor since the 2011 Fukushima disaster. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -7.39% to 22.92. Pre-Market U.S. Stock Movers NXP Semiconductors N.V. (NXPI) slumped over -6% in pre-market trading as the chipmaker's Q3 revenue guidance failed to impress investors. Lululemon Athletica (LULU) fell more than -1% in pre-market trading after JPMorgan downgraded the stock to Neutral from Overweight. Medpace Holdings (MEDP) soared more than +42% in pre-market trading after the clinical research company posted upbeat Q2 results and raised its full-year guidance. You can see more pre-market stock movers here Today's U.S. Earnings Spotlight: Tuesday - July 22nd Coca-Cola (KO), Philip Morris (PM), RTX Corp. (RTX), Texas Instruments (TXN), Intuitive Surgical (ISRG), Danaher (DHR), Chubb (CB), Lockheed Martin (LMT), Sherwin-Williams (SHW), Capital One Financial (COF), Northrop Grumman (NOC), Canadian National Railway (CNI), General Motors (GM), PACCAR (PCAR), MSCI (MSCI), DR Horton (DHI), Baker Hughes (BKR), CoStar (CSGP), EQT (EQT), Equifax (EFX), IQVIA Holdings (IQV), Synchrony Financial (SYF), PulteGroup (PHM), KeyCorp (KEY), Quest Diagnostics (DGX), Halliburton (HAL), Pentair (PNR), Genuine Parts (GPC), Tenet Healthcare (THC), East West Bancorp (EWBC), Avery Dennison (AVY), Manhattan Associates (MANH), MakeMyTrip (MMYT), Invesco (IVZ), Pegasystems (PEGA), IPG (IPG), Range Resources (RRC), Old National Bancorp (ONB), Badger Meter (BMI), Valmont Industries (VMI), Matador (MTDR), PennyMac Financial (PFSI), Cal-Maine (CALM), Enphase (ENPH), Renasant (RNST), First Bancorp (FBP), Cathay (CATY), Community Bank System (CBU), Trustmark (TRMK), Vicor (VICR), Karooooo (KARO), National Bank Holdings (NBHC), Hope Bancorp (HOPE), Forestar (FOR), Peoples Bancorp (PEBO), PennyMac Mortgage (PMT), Mercantile (MBWM). On the date of publication, Oleksandr Pylypenko 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 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
Yahoo
03-07-2025
- Business
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After a New Record High, Will the S&P 500 Soar in the Second Half? Here's What History Says.
The S&P 500 struggled earlier in the year but has since rebounded. Historical trends often repeat themselves, making it useful to consider them when looking for clues about what might happen next. These 10 stocks could mint the next wave of millionaires › The S&P 500 (SNPINDEX: ^GSPC) hit rough waters earlier this year amid concern that President Trump's tariff plan would hurt the economy, but the index since recovered and even closed the quarter and first half of the year at a record level. Will the index continue to soar from here in the second half? History suggest the answer is yes. Let's check out the details. So, first, let's quickly recap what happened over the past few months. The S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average all declined as investors worried about the effects of the president's import tariffs on the consumer's wallet and companies' budgets -- and that created a potential problem for corporate earnings. The idea was that players across industries could lose as prices rise and their customers spend less. As a result, investors avoided stocks, but particularly growth ones, as growth stocks generally rely the most on a bright economic situation in order to expand. That means any threat to the economy could weigh on appetite for these sorts of stocks. And this is exactly what happened to artificial intelligence (AI) stocks, the players that led market gains last year. In recent weeks, though, investor sentiment has improved as the U.S. embarked on trade talks with various countries and even signed deals with the U.K. and China. It became clear that tariff levels wouldn't be as high as originally expected, representing less of a headwind for growth. On top of that, growth players from Nvidia to Alphabet delivered strong earnings reports, and messages from companies showed they continue to invest and spend. Meta Platforms even increased its capital spending forecast and just recently went on a hiring spree to boost its AI program. All of this has been good news for the stock market, and as a result, all three major indexes finished the first half of the year in positive territory. Now let's look to history for clues about the S&P 500's path from here. The benchmark made the following moves over the past several years: Year S&P 500 First-Half Performance S&P 500 Full-Year Performance 2018 1.6% (6.2%) 2019 17% 28% 2020 (4%) 16% 2021 14% 26% 2022 (20%) (19%) 2023 15% 24% 2024 14% 23% Data sources: YCharts, Macrotrends. What's most compelling here is the trend in the late part of the first half generally predicted the full-year outcome. For example, the index finished the first half of 2018 in the positive, but it was on the decline from an earlier high -- and it went on to decrease for the full year. Conversely, in 2020, though the index fell in the first half, it finished that period on the rise, and the index rose for the full year. So over the past seven years, history shows us that the tone at the end of the first half sets the stage for what happens next. If the index has climbed or is on the rebound from a lower point, it's generally finished the year with a gain. This suggests that the S&P 500, even after reaching a record high, could be on track for a win in the second half of 2025 and even could climb by double digits. Of course, it's important to remember that the stock market doesn't always follow historical trends and could make a move that will surprise us. But, by considering what's happened in the past, we can get a general sense of what might be ahead. And if history is right this time around, there's reason to be optimistic about the second half of this year, especially since, as mentioned above, investor sentiment has improved. The element weighing on investors -- the trade situation -- has progressed in a positive direction, and if more satisfactory deals are signed, this could fuel stock market gains. That's fantastic, but here's the best news of all: Regardless of the S&P 500's direction this year, the index always has gained over the long term -- and that greatly increases your chance of scoring a big investing win if you buy and hold. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $397,573!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $39,453!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $697,627!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of June 30, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. After a New Record High, Will the S&P 500 Soar in the Second Half? Here's What History Says. was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
29-06-2025
- Business
- Yahoo
Globalization has been great for U.S. corporate profit margins
A version of this post first appeared on The prospect of higher tariffs and other unfriendly trade policies is bad news for everyone exposed. By definition, tariffs raise costs, which is bad for inflation, productivity, economic activity, and corporate earnings. And what's bad for corporate earnings is bad for the stock market. Policies that facilitate global trade have enabled countries to focus on their strengths and trade with others that can produce certain goods and services more efficiently. It's a basic economic concept called "comparative advantage," and it explains why international trade is a win-win. "U.S. companies have clearly benefited from globalization," Societe Generale analysts wrote. "The S&P 500 (ex-Financials) has benefited on the cost front too, with its cost of goods sold as a % of sales having dropped by 700bps since China joined the WTO." This chart from Societe Generale is striking. The cost of goods, as a percentage of sales, has been falling for years, helping explain why profit margins have been expanding. Costs of goods sold have been falling as a percentage of S&P 500 sales. (Source: Societe Generale) Some of this chart can be explained by technology companies, which boast relatively high margins, accounting for a larger share of the S&P. But as the analysts observed, eight of 11 sectors experienced gross margin expansion since China joined the WTO. Most sectors have benefited from globalization. (Source: Societe Generale) This trend could be blunted or potentially reversed depending on how aggressive any new protectionist trade policies are. That's assuming all other things are held constant. It's worth mentioning that Corporate America continues to be very good at figuring out how to maintain profitability and profit growth despite emerging challenges. So it's possible that many companies will find creative ways to navigate Washington's tariff roller coaster. That said, it's hard to see how new tariffs or any other policy that disincentivizes globalization wouldn't eventually lead to higher cost inflation, lower economic activity, or some combination of both. To that end, Q2 earnings season will be informative as Corporate America updates us on how the uncertain trade policy outlook is affecting business conditions. There were several notable data points and macroeconomic developments since our last review: 🛍️ Consumer spending ticks lower. According to BEA data, personal consumption expenditures declined 0.1% month over month in May to an annual rate of $20.59 trillion. Adjusted for inflation, real personal consumption expenditures fell by 0.3%. For more on consumer spending, read: 🛍️ and 📉 💳 Card spending data is mixed. From JPMorgan: "As of 17 Jun 2025, our Chase Consumer Card spending data (unadjusted) was 1.2% above the same day last year. Based on the Chase Consumer Card data through 17 Jun 2025, our estimate of the US Census June control measure of retail sales m/m is 0.41%." From BofA: "Total card spending per HH was down 0.5% y/y in the week ending Jun 21, according to BAC aggregated credit & debit card data. Relative to last week, in our categories, department stores, entertainment & transit saw the biggest decline in y/y spending. Meanwhile, lodging, airlines and home improvement saw the biggest increase relative to last week." For more on consumer spending, read: 🛍️ 🎈 Inflation remains cool. The personal consumption expenditures (PCE) price index in May was up 2.3% from a year ago. The core PCE price index — the Federal Reserve's preferred measure of inflation — was up 2.7% during the month, up from April's 2.6% rate. While it's above the Fed's 2% target, it remains near its lowest level since March 2021. On a month-over-month basis, the core PCE price index was up 0.1%. If you annualized the rolling three-month and six-month figures, the core PCE price index was up 1.7% and 2.9%, respectively. For more on inflation and the outlook for monetary policy, read: ✂️ and 🧐 ⛽️ Gas prices tick higher. From AAA: "U.S. airstrikes over the weekend caused petroleum futures to spike Sunday evening, with oil creeping up to $78/bbl. That quickly dissipated by Monday, and as of this morning, oil prices are back to what they were pre-conflict. With Independence Day around the corner, and 61.6 million holiday travelers preparing to hit the road next week, gas prices may increase slightly. The national average for a gallon of regular gasoline is $3.22, two cents higher than last week and 27 cents cheaper than this time last year." For more on energy prices, read: 🛢️ 🏭 Business investment activity improves. Orders for nondefense capital goods excluding aircraft — a.k.a. core capex or business investment — increased 1.7% to $76.0 billion in May. Core capex orders are a leading indicator, meaning they foretell economic activity down the road. For more on core capex, read: ⚠️ 👎 CEOs are concerned. From the Business Roundtable's Q2 CEO Economic Outlook Survey: "The overall Index dropped by 15 points from last quarter to 69, well below its historic average of 83. The decline is the result of decreases in all three subindices, driven by a downward shift in CEO plans and expectations, most notably in the employment subindex." 👎 CFOs are concerned. From the Richmond Fed's Q2 CFO survey: "Financial decision-makers' outlooks deteriorated in the second quarter of 2025, amid record concern about the impact of trade policy. Forty percent of respondents indicated tariffs and trade policy were a pressing concern for their firm this quarter, a record share of respondents citing the same concern going back to the second quarter of 2020." 👎 Consumer vibes deteriorate. The Conference Board's Consumer Confidence Index ticked 5.4 points lower in June. From the firm's Stephanie Guichard: "The decline was broad-based across components, with consumers' assessments of the present situation and their expectations for the future both contributing to the deterioration. Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory, in line with the still-solid labor market. The three components of the Expectations Index—business conditions, employment prospects, and future income—all weakened. Consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded slightly." Relatively weak consumer sentiment readings appear to contradict relatively strong consumer spending data. For more on this contradiction, read: 🙊 and 🛫 👎 Consumers feel worse about the labor market. From The Conference Board's June Consumer Confidence survey: "Consumers' views of the labor market cooled somewhat in June. 29.2% of consumers said jobs were 'plentiful,' down from 31.1% in May. 18.1% of consumers said jobs were 'hard to get,' down slightly from 18.4%." Many economists monitor the spread between these two percentages (a.k.a., the labor market differential), and it's been reflecting a cooling labor market. For more on the labor market, read: 💼 💼 New unemployment claims tick lower. Initial claims for unemployment benefits declined to 236,000 during the week ending June 21, down from 246,000 the week prior. This remains at a level historically associated with economic growth. For more context, read: 💼 🏠 Mortgage rates tick lower. According to Freddie Mac, the average 30-year fixed-rate mortgage declined to 6.77%, down from 6.81% last week. From Freddie Mac: "Borrowers should find comfort in the stability of mortgage rates, which have only fluctuated within a narrow 15-basis point range since mid-April. Although recent data show that home sales remain low, the resulting available inventory provides homebuyers with a wider range of options to consider when entering the market." There are 147.8 million housing units in the U.S., of which 86.1 million are owner-occupied and about 34.1 million are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates. For more on mortgages and home prices, read: 😖 🏚 Home sales tick higher. Sales of previously owned homes increased by 0.8% in May to an annualized rate of 4.03 million units. From NAR chief economist Lawrence Yun: "The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market. Increasing participation in the housing market will increase the mobility of the workforce and drive economic growth. If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs." Prices for previously owned homes increased from last month's levels and year ago levels. From the NAR: "The median existing-home sales price for all housing types in May was $422,800, up 1.3% from one year ago ($417,200) – a record high for the month of May, and the 23rd consecutive month of year-over-year price increases." 🏘️ New home sales fall. Sales of newly built homes fell 13.7% in May to an annualized rate of 623,000 units. 🏠 Home prices cool. According to the S&P CoreLogic Case-Shiller index, home prices were up 2.7% year-over-year in April but declined 0.4% month-over-month. From S&P Dow Jones Indices' Nicholas Godec: "The housing market continued its gradual deceleration in April, with annual price gains slowing to their most modest pace in nearly two years. What's particularly striking is how this cycle has reshuffled regional leadership—markets that were pandemic darlings are now lagging, while historically steady performers in the Midwest and Northeast are setting the pace. This rotation signals a maturing market that's increasingly driven by fundamentals rather than speculative fervor." 🏢 Offices remain relatively empty. From Kastle Systems: "Peak day office occupancy was 64.2% on Tuesday last week, up nearly a full point from the previous week. However, occupancy in all tracked cities was down on the prior Thursday and Friday, leading up to political protests over the weekend across the country. Washington, D.C. experienced the largest decline, falling 6.7 points to 52.6% on Thursday and 8.7 points to 27.1% on Friday. The average low was on Friday at 34.2%, down a full point from the previous week." For more on office occupancy, read: 🏢 👎 Activity survey deteriorates. From S&P Global's June U.S. PMI: "The June flash PMI data indicated that the US economy continued to grow at the end of the second quarter, but that the outlook remains uncertain while inflationary pressures have risen sharply in the past two months. Although business activity and new orders have continued to grow in June, growth has weakened amid falling exports of both goods and services. Furthermore, while domestic demand has strengthened, notably in manufacturing, to encourage higher employment, this in part reflects a boost from stock building, in turn often linked to concerns over higher prices and supply issues resulting from tariffs. Such a boost is likely to unwind in the coming months." Keep in mind that during times of perceived stress, soft survey data tends to be more exaggerated than actual hard data. For more on this, read: 🙊 🇺🇸 Most U.S. states are still growing. From the Philly Fed's May State Coincident Indexes report: "Over the past three months, the indexes increased in 42 states, decreased in six states, and remained stable in two, for a three-month diffusion index of 72. Additionally, in the past month, the indexes increased in 38 states, decreased in eight states, and remained stable in four, for a one-month diffusion index of 60." 📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed's GDPNow model sees real GDP growth rising at a 2.9% rate in Q2. 🚨 The Trump administration's pursuit of tariffs threatens to disrupt global trade, with significant implications for the U.S. economy, corporate earnings, and the stock market. Until we get more clarity, here's where things stand: Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices. Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Job creation, while cooling, also remains positive, and the Federal Reserve — having resolved the inflation crisis — shifted its focus toward supporting the labor market. But growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less "coiled" these days as major tailwinds like excess job openings and core capex orders have faded. It has become harder to argue that growth is destiny. Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor's perspective, what matters is that the hard economic data continues to hold up. Stocks are not the economy: Analysts expect the U.S. stock market could outperform the U.S. economy, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth. Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets. Investing is never a smooth ride: There's also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened. Think long-term: For now, there's no reason to believe there'll be a challenge that the economy and the markets won't be able to overcome over time. The long game remains undefeated, and it's a streak that long-term investors can expect to continue. A version of this post first appeared on
Yahoo
25-06-2025
- Business
- Yahoo
S&P Futures Muted With Focus on Powell's Testimony
September S&P 500 E-Mini futures (ESU25) are trending up +0.01% this morning as investors shift their focus to fundamentals, with Federal Reserve Chair Jerome Powell's congressional testimony set to resume later in the day. The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday, with both sides declaring victory in the war. Trump's Middle East envoy said late on Tuesday that talks between the U.S. and Iran were 'promising' and that Washington remained hopeful for a long-term peace agreement. Investors are now turning their attention back to the U.S. economy and how trade tensions and fiscal pressures could impact corporate earnings and growth. In yesterday's trading session, Wall Street's three main equity benchmarks closed higher. Chip stocks rallied, with Intel (INTC) and Advanced Micro Devices (AMD) climbing over +6%. Also, DexCom (DXCM) surged more than +9% and was the top percentage gainer on the Nasdaq 100 after U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced that his agency is launching one of the largest campaigns in history to promote the use of wearable health devices. In addition, Uber Technologies (UBER) gained over +7% after the company announced that it would begin offering driverless Waymo rides to its customers in Atlanta. On the bearish side, Dollar General (DG) fell more than -1% after Goldman Sachs downgraded the stock to Neutral from Buy. Economic data released on Tuesday showed that the U.S. Conference Board's consumer confidence index unexpectedly fell to 93.0 in June, weaker than expectations of 99.4. Also, the U.S. April S&P/CS HPI Composite - 20 n.s.a. eased to +3.4% y/y from +4.1% y/y in March, weaker than expectations of +4.0% y/y. In addition, the U.S. Richmond Fed manufacturing index unexpectedly rose to -7 in June, stronger than expectations of -10. Fed Chair Jerome Powell told lawmakers on Tuesday that the central bank is not in a hurry to cut interest rates as officials await greater clarity on the economic effects of President Trump's tariffs. 'The effects of tariffs will depend, among other things, on their ultimate level,' Powell said in remarks before the House Financial Services Committee. 'For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.' Should inflation come in below expectations or the labor market weaken, Powell said, the Fed could cut rates sooner. Cleveland Fed President Beth Hammack said that interest rates are only modestly restrictive and that policymakers may keep borrowing costs steady 'for quite some time.' Also, New York Fed President John Williams said that 'maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,' while policymakers assess the full impact of U.S. policy changes. In addition, Boston Fed President Susan Collins said that monetary policy is in the right place, emphasizing that the 'modestly restrictive' stance of monetary policy is 'necessary.' Finally, Fed Governor Michael Barr stated that he expects tariffs to push inflation higher and voiced support for maintaining a wait-and-see approach on interest rates. Meanwhile, U.S. rate futures have priced in an 81.4% chance of no rate change and an 18.6% chance of a 25 basis point rate cut at the July FOMC meeting. Today, investors will closely watch Fed Chair Jerome Powell's semi-annual monetary policy testimony before the Senate Banking Committee. On the economic data front, investors will focus on U.S. New Home Sales data, which is set to be released in a couple of hours. Economists foresee this figure coming in at 694K in May, compared to 743K in April. U.S. Crude Oil Inventories data will be released today as well. Economists expect this figure to be -1.200M, compared to last week's value of -11.473M. On the earnings front, notable companies like Micron Technology (MU), Paychex (PAYX), General Mills (GIS), and Jefferies Financial (JEF) are set to report their quarterly figures today. In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.287%, down -0.07%. The Euro Stoxx 50 Index is down -0.13% this morning, taking a breather after yesterday's rally spurred by the ceasefire between Israel and Iran. Bank and media stocks underperformed on Wednesday, while automobile and defense stocks advanced. Final data from the National Statistics Institute confirmed on Wednesday that Spain's economy expanded by 0.6% in the first quarter, slightly slower than the 0.7% growth seen in the previous quarter. Separately, data showed that France's consumer confidence was unchanged in June and remained well below its long-term average. Meanwhile, investors are focusing on the NATO summit in the Netherlands, where defense spending will take center stage. The military alliance's 32 member states, except Spain, have reportedly agreed to raise their defense spending target to 5% of gross domestic product. In corporate news, Stellantis N.V. ( gained over +4% after Jefferies upgraded the stock to Buy from Hold. Also, Babcock International Group Plc ( surged more than +12% after the British warship maker boosted its mid-term profit target. France's Consumer Confidence and Spain's GDP data were released today. The French June Consumer Confidence stood at 88, weaker than expectations of 89. The Spanish GDP has been reported at +0.6% q/q and +2.8% y/y in the first quarter, in line with expectations. Asian stock markets today closed in the green. China's Shanghai Composite Index (SHCOMP) closed up +1.04%, and Japan's Nikkei 225 Stock Index (NIK) closed up +0.39%. China's Shanghai Composite Index closed higher and hit a more than 6-month high today as the ceasefire between Israel and Iran appeared to hold, with sentiment further lifted by Beijing's push toward a consumer-driven economy. Brokerage and defense stocks led the gains on Wednesday. China on Tuesday issued guidelines aimed at using financial tools to stimulate consumption, with commitments to support employment and boost household incomes as part of wider efforts to strengthen the economy. The guidelines, jointly drafted by six government departments and published by the People's Bank of China, stated that China would assist eligible companies across the consumer industry chain in raising funds through stock market listings and other channels. China will 'guide financial institutions to strengthen financial services from both the supply and demand sides of consumption, meet the diversified financing needs of various entities and promote the expansion of high-quality consumption,' the PBOC said. Meanwhile, China's Premier Li Qiang stated on Wednesday that he was confident the world's second-largest economy could sustain a 'relatively rapid' growth pace as it shifts from a manufacturing-based model to one driven by consumption. 'China's economy showed steady improvement in the second quarter,' Li added. He also stated that China's consumption potential would create vast new market opportunities for global businesses. In other news, Beijing said it would take action in response to Taiwan's decision to add several Chinese firms, including Huawei, to an export-control list that restricts their access to advanced technology. In corporate news, New Oriental Education & Technology climbed over +8% in Hong Kong after JPMorgan upgraded the stock to Overweight from Neutral. Japan's Nikkei 225 Stock Index ended higher and hit a more than 4-month high today as the truce between Israel and Iran appeared to hold, buoying investors' risk appetite. Chip-related stocks outperformed on Wednesday, tracking overnight gains in their U.S. peers. Bank of Japan data released on Wednesday showed that a key gauge of Japan's service-sector inflation stood at 3.3% in May, sustaining expectations of additional interest rate hikes by the central bank. Separately, data from the Cabinet Office showed that Japan's leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, was revised upward in April. Meanwhile, a summary of opinions from the BOJ's June policy meeting showed on Wednesday that some policymakers supported holding interest rates steady for now amid uncertainty over the impact of U.S. tariffs on the Japanese economy. Others on the nine-member board said that inflation was running above expectations, with one member suggesting the BOJ might have to raise interest rates 'decisively' at some point, even if economic uncertainty persists. BOJ board member Naoki Tamura said on Wednesday that the central bank should consider further interest rate hikes without delay as inflation could reach its target earlier than expected despite trade uncertainty. On the trade front, Japan's tariff negotiator Ryosei Akazawa is reportedly planning his seventh trip to the U.S. for as early as June 26th, seeking to end tariffs that are weighing on Japan's economy. Investors also await Japan's retail sales and Tokyo CPI data, scheduled for release on Friday, which will help guide the BOJ's next policy decisions. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.63% to 23.29. The Japanese May Corporate Services Price Index came in at +3.3% y/y, stronger than expectations of +3.1% y/y. The Japanese April Leading Index stood at 104.2, stronger than expectations of 103.4. Pre-Market U.S. Stock Movers FedEx (FDX) slumped over -5% in pre-market trading after the shipping giant issued below-consensus FQ1 adjusted EPS guidance. BlackBerry (BB) surged more than +14% in pre-market trading after the cybersecurity company posted better-than-expected Q1 results and raised its full-year sales guidance. QuantumScape (QS) jumped over +33% in pre-market trading after the company announced it had successfully integrated its advanced Cobra separator process into baseline cell production. You can see more pre-market stock movers here Today's U.S. Earnings Spotlight: Wednesday - June 25th Micron (MU), Paychex (PAYX), General Mills (GIS), Jefferies Financial (JEF), H B Fuller (FUL), Novagold (NG), Worthington Steel (WS), Steelcase (SCS), MillerKnoll (MLKN), Winnebago Industries (WGO), Daktronics (DAKT). On the date of publication, Oleksandr Pylypenko 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
Bloomberg
13-06-2025
- Business
- Bloomberg
Look for Inflation-Protected Income: Sundar
Sitara Sundar, Head of Alternative Investment Strategy at JPMorgan Private Bank, discusses the resilience of corporate earnings and opportunities in markets as the S&P 500 nears all-time highs. She speaks to Bloomberg's Jonathan Ferro and Dani Burger on 'Bloomberg Surveillance.' (Source: Bloomberg)
