Today’s Big Picture
Asia-Pacific equity markets finished the day lower except for Japan’s Nikkei, which rose 0.32%, and India’s SENSEX, which added 0.31% as Technology gains offset regional worries on recent Chinese economic data. Australia’s ASX All Ordinaries declined 0.20%, China’s Shanghai Composite gave back 0.37%, South Korea’s KOSPI fell 0.43%, and Taiwan’s TAIEX lost 0.61%. Hong Kong’s Hang Seng closed 2.05% lower despite Producer Manufacturing companies posting gains, on a broad decline led by Health Services names. European markets are mixed in midday trading and U.S. equity futures point to a lower open.
While consumers were recently focused on Amazon’s (AMZN) 2023 Prime Day and competing efforts from Walmart (WMT), Target (TGT), Best Buy (BBY), and others, today investors will break down the June Retail Sales report. Headline retail sales ticked up 0.2%, lower than expectations of 0.5% MoM in June. We expect investors will plumb through the various line items found in the report to determine where consumers opened their wallets. Stocks reacted negatively to the weaker report, and as investors digest that data and its implications, they will likely turn their attention back to quarterly earnings reports out today and what they have to say about 2H 2023.
Data Download
International Economy
Japanese YoY Retail Sales for May posted a gain of 5.80%, ticking 0.10% higher than the previously reported figure for April.
Canadian CPI will be released this morning with expectations for a 0.30% MoM increase in June, which would translate to a YoY increase of 3.00%, 0.40% lower than the YoY result announced in May.
Domestic Economy
In addition to the June Retail Sales report mentioned above, today also brings June Industrial Production and Capacity Utilization. Given the summer heat, investors will be parsing the report to delineate between manufacturing data and utility usage once it is published at 9:15 AM ET. Soon after, the NAHB will publish its Housing Market Index for July, which the market sees inching up to 56 from 55 in June.
The rejection rate for U.S. credit applicants climbed to 21.8% in the twelve months through June, according to a Federal Reserve survey, representing the highest level seen since the same period five years ago. The rejection rate stood at 17.3% in February, a month before the failure of Silicon Valley Bank and other regional lenders. The rejection rate for auto loans exceeded the application rate for the first time since the Fed’s SCE Credit Access Survey started in 2013. In addition, the survey logged sharp increases in reported expectations that applications for new mortgages (46.1%), mortgage refinancing (29.6%), or increases in credit card limits (42.4%) would be rejected.
Following better than expected economic data and signs the Fed’s fight on inflation may not require a recession, Goldman Sachs (GS) revised the odds it sees for a recession in the next 12 months to 20% from 25%
Markets
Speculation regarding today’s retail sales report as well as overall sentiment regarding the potential for a soft landing saw Technology (1.28%) and Financials (0.96%) help lift broad indexes yesterday. The Dow gained 0.22%, the S&P 500 rose 0.39%, the Nasdaq Composite advanced 0.93% and the Russell 2000 closed 1.04% higher. In individual names, Ford Motor Company (F) traded down 5.94% after news of the company cutting prices 17% on its F-150 Lightning electric truck was released. The company cited lower raw material and battery costs as playing into the decision to reduce the MSRP.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 4.34%
- S&P 500: 17.80%
- Nasdaq Composite: 36.10%
- Russell 2000: 10.79%
- Bitcoin (BTC-USD): 81.63%
- Ether (ETH-USD): 59.59%
Stocks to Watch
Before U.S. equity markets begin trading today, Bank of America (BAC), BNY Mellon (BK), Charles Schwab (SCHW), Hasbro (HAS), Lockheed Martin (LMT), Morgan Stanley (MS), PNC (PNC), and Synchrony Financial (SYF) are expected to report their quarterly results.
Microsoft (MSFT) is in talks about an extension of its acquisition contract with video game maker Activision Blizzard (ATVI), which is set to expire on later today, so the two companies can overcome the remaining regulatory hurdles to their $69 billion deal. Meanwhile, a UK judge said he will grant a conditional adjournment of the UK antitrust regulator’s suit to block Activision’s sale to Microsoft.
Infosys (INFY), India’s second-largest software services company, signed a deal with an existing client to provide AI services, with the target spend over five years estimated at $2 billion.
Cybersecurity stocks such as Palo Alto Networks (PANW), Crowdstrike (CRWD), Fortinet (FTNT), and others are likely to react to the White House announcing a cybersecurity certification and labeling program to help Americans more easily choose smart devices (including smart refrigerators, smart microwaves, smart televisions, smart climate control systems, smart fitness trackers) that “are safer and less vulnerable to cyberattacks.”
Shares of monitoring technology company Masimo (MASI) tumbled after the company reported lower-than-expected preliminary 2Q 2023 revenue and announced cost cuts targeted for 2H 2023. Revenue for 2Q2023 is now expected to be $453-$457 million vs. the $539 million consensus.
Ross Stores (ROST) opened 18 Ross Dress for Less and nine dd’s DISCOUNTS stores across 14 different states in June and July. These new locations are part of its plans to add approximately 100 new stores — 75 Ross and 25 dd’s DISCOUNTS — during fiscal 2023.
IPOs
Oddity Tech (ODD), Fitell Corp. (FTEL), and SRM Entertainment (SRM) are expected to price their IPOs in the coming days. Readers looking to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Interactive Brokers (IKBR) and JB Hunt (JBHT) are slated to report their quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, July 18
- UK: Car Registrations, Consumer Price Index, Producer Price Index – June
- Italy, France, Germany: Car Registrations – June
- Eurozone: Consumer Price Index – June
- US: Weekly MBA Mortgage Applications
- US: Housing Starts & Building Permits – June
- US: Weekly EIA Crude Oil Inventories
Thursday, July 20
- Germany: Producer Price Index – June
- Eurozone: Consumer Confidence – July
- US: Weekly Initial & Continuing Jobless Claims
- US: Philadelphia Fed Index – July
- US: Existing Home Sales – June
- US; Leading Indicators – June
- US: Weekly EIA Natural Gas Inventories
Friday, July 21
- Japan: Consumer Price Index – June
- UK: Retail Sales – June
Thought for the Day
“Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do – it’s a matter of being different at what you do.” –Michael Porter
