Welcome back to your weekly preview of what’s about to explode on Wall Street and it’s the tech-laden Nasdaq just hours away from opening a new market. With Wednesday’s key CPI reading, all eyes are on Disney’s 2Q numbers, Coinbase’s life after its big date with Blackrock and the lure of US dating app Bumble.
Before the opening, things actually seem to be going extraordinarily well in the United States.
After the S&P 500 closed on Friday with a third straight weekly gain, US futures remain scruffy, but not dishonoured—US investors likely don’t appreciate their proximity to another all-important inflation report on Wednesday.
Futures contracts rose. on the Dow Jones and Nasdaq are still slightly higher – 0.02% and 0.16% – Sydney time on Monday. The S&P 500 is leading 0.02% above parity.
Wall Street’s gains last week were boosted by the surprisingly strong monthly jobs report which, despite the indicator’s recent volatility, helped further ease recession fears.
The United States added 528,000 full-time positions in July as the U.S. market returned to where it was before the COVID-19 pandemic destroyed 22 million U.S. jobs.
The ISM services index jumped to 56.7, much better than the consensus estimate of 53.5. US factory orders also impressed, another sign that the economy continues to improve.
This will be encouraging for the Federal Reserve, which will seek to continue to use rate hikes to stifle record inflation in the United States.
On the more worrying side of the ledger, as Eddy Sunarto points out, Wall Street seems determined to ignore the deepest yield curve inversion in about 18 months after the dotcom deboom.
The spread of the US 2-year vs. 10-year yield curve is now at 40bp.
It is a recession indicator and the higher the gap, the higher the likelihood of a recession, given an 18 month lag.
Business news this week
Amazon (AMZN) said it would acquire iRobot last week for $61 apiece, in an all-cash deal that brings the Roomba maker to $1.7 billion. The iRobot robotic vacuum has branched out into other home cleaning robots like mops and lawn mowers.
Oracle reportedly laid off hundreds of employees last week and reported it via Linkedin. The enterprise software provider is highlighting its healthcare IT services and cloud business, as Fox News priority reports suggested.
As always, we’ll be watching Elon and Twitter. Mr Musk says his A$62 billion takeover should be good if he can confirm details of how Twitter measures “spam bots”.
The billionaire and Tesla CEO tried to renege on his April deal to buy the social media company, leading Twitter to sue him and Mr Musk to counter-sue.
This week will end the second quarter reporting season.
More than 430 of the S&P 500 companies have already reported earnings and according to Refinitiv data, well over three quarters have exceeded expectations (using an EPS earnings per share measure).
According to Refinitiv, nearly 70% of companies posted quarterly revenue above analysts’ estimates.
Berkshire Hathaway reported on Saturday that its operating profits jumped 39% from a year ago in the second quarter despite fears of slowing growth. However, Warren Buffett’s conglomerate was not immune to the overall market turmoil with a whopping $53 billion loss on its investments in the quarter.
Coinbase Global (COIN) made news last week when it revealed a deal with major asset manager BlackRock (BLK), allowing BlackRock’s institutional investors to buy bitcoin through the cryptocurrency platform. . They report on Tuesday.
Other highlights include Palantir Technology (PNTR) on Monday, Ralph Lauren (RL) on Tuesday and bright beans will watch data from Disney (DIS) on Wednesday. DIS is expected to report fiscal Q3 results after Wednesday’s close in the United States. Analysts estimate earnings of $1.00 per share for the three months ending June 30 (+44.9% year-on-year), with revenue expected to jump 20.6% to 20.5 billions of dollars.
US online dating app Bumble (BMBL) has been somewhat popular so far in 2022, sharing around 10% year-to-date – easily outpacing the loss of around 13% of the wider market .
US Earnings Highlights and Economic Week Ahead:
News Corp (NWSA)
Palantir Tech (PNTR)
Carlyle Group (CN)
Coinbase Global (COIN)
Ralph Lauren (RPN)
U.S. Labor Costs and Productivity (June Quarter)
US consumer inflation expectations (July)
Walt Disney (DIS)
US Consumer Price Index (CPI, July)
U.S. Monthly Budget Statement (July)
Brookfield Asset Management (BAM)
U.S. Producer Price Index (PPI, July)
US Import and Export Prices (July)
Broadridge Financial (BR)