Morning in New York: buyers set for revenge

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The focus of investors' attention is on the political risks that have escalated after President Donald Trump unexpectedly fired the head of the Bureau of Labor Statistics (BLS), Erica McEntarfer. The decision drew sharp reactions from economists, ex-officials and the business community as it is negative for the credibility of official macro statistics. The White House attributed its move to dissatisfaction with the massive revision of employment data, but no evidence of manipulation or other clear justification for the claims was given. A new candidate to head the BLS will be unveiled in the coming days, and a challenger to retiring Adriana Kugler is also expected to be nominated for a seat on the Fed's Board of Governors. Market participants will keep a close eye on personnel appointments, assessing the risk of politicization of statistical agencies and the regulator.

The most important macro publication today will be the data on industrial orders for June (consensus: -5% mom, May: +8.2%). Also, the final estimate of the June number of applications for durable goods will be presented. According to preliminary data, the indicator declined by 9.3% mom. The cooling in the real sector of the economy may support expectations of the Fed's imminent move to easing monetary conditions and increase interest in protective assets.

ON Semiconductor (ON), Wayfair (W) and IDEX (IDX) will report quarterly results before the open of trading. Palantir (PLTR), Vertex Pharmaceuticals (VRTX), Axon Enterprise (AXON) and Hims & Hers Health (HIMS) will release their financial results at the post-market.

Futures on American stock indices are trading in the plus. We assess the balance of risks for the upcoming session as neutral with an average level of volatility. We focus on S&P 500 movements in the range of 6200-6300 points (from -0.6% to +1% of the previous session's closing level).

- More than 3,200 Boeing (BA) employees assembling fighter jets in St. Louis have gone on strike after rejecting a new contract. The company is employing temporary staff to support production.

- Berkshire Hathaway (BRK.B) posted a 4% decline in operating profit in the second quarter and warned of business risks from higher import duties. The fund wrote down $3.8 billion on its investment in Kraft Heinz to $8.4 billion. It holds about $344 billion in cachet.

- Mitsubishi (8058.T) reported a 43% YoY decline in quarterly profit to $1.4 billion due to a lack of one-time gains and weak results from its coal division, but the result beat expectations. The outlook for the full fiscal year was left unchanged.

- The OPEC+ members will increase production by 547 thousand barrels per day in September. The basis for this decision was stable demand and low inventories. Thus, the alliance fully and early canceled the largest reduction in production. The decline in oil prices will limit the risks of disruptions in the supply of Russian oil to India, which, despite the threats of the United States, intends to continue its purchases.

- BYD (1211-HK) sold 341 thousand electric cars in July after 377 thousand in June. The decline in the indicator, noted for the first time since the beginning of the year, was due to the ongoing price war, due to which the company had to reduce the cost of a number of models by almost 30%.

- Amphenol (APH) may this week finalize the purchase of CommScope's (COMM) cable TV and broadband services business, including debt.

August 1 trades on American stock exchanges ended in the negative. S&P 500 fell by 1.6%, Nasdaq 100 collapsed by 1.96%, Dow Jones fell by 1.23%, and Russell 2000 collapsed by 2.03%. The quotes were pressured by weak macroeconomic data and disappointing quarterly reports from Apple (AAPL: -2.5%) and Amazon (AMZN: -8.57%). The entire "Magnificent Seven" closed in negative territory. Most sectors went down. Outsiders were cyclical consumer goods providers (XLY: -2.41%) amid a drop in Amazon's quotations. The healthcare industry (XLV: +0.54%) showed relative resistance to the correction.

The main driver of the decline was the July report of the Ministry of Labor, according to which the number of new jobs outside agriculture amounted to only 73 thousand with a consensus of 110 thousand. At the same time, the estimates for May and June were reduced by 258 thousand. The unemployment rate last month rose to 4.2%. Against this background, representatives of the Fed's leadership Christopher Waller and Michelle Bowman reiterated the validity of their arguments in favor of lowering the key rate. The situation strengthens expectations of a soon easing of monetary policy. Against this background, yields of short-term bonds showed the maximum decrease for three years.

The ISM manufacturing index for July fell to 48 points, while the consensus was 49.5. The most pronounced decline was recorded by the employment component, which reached 43.4. The survey participants noted difficulties in planning and increased costs caused by uncertainty in foreign trade policy. Positive signals came from the production component, as well as from the decrease in prices, which may indicate a decrease in inflationary pressure. At the same time, consumer sentiment continued to improve for the second consecutive month. The final estimate of the corresponding index from the University of Michigan for July was 61.7. Inflation expectations on the horizon of the year have weakened.

An additional pressure factor was the White House's announcement of a phased introduction of duties ranging from 10% to 39% depending on the trade balance between the trading partner and the States. For Canada the tariff is planned to be raised to 35%, for Switzerland - to 39%, for India - to 25%. Significant import duty increases are also expected for a number of Asian countries. These statements contribute to increased uncertainty about the prospects for international trade in general.

 - Kimberly-Clark (KMB: +4.8%) reported second-quarter organic sales growth of 3.9%, which was above consensus. Management reported its highest results in five years, improving its full-year outlook and emphasizing reduced tariff pressure.

- Revenue from the Roku platform (ROKU: -15.1%) increased by 18% in the reporting quarter, and the company's subscriber base expanded. However, the management forecasted a decline in revenues from the devices segment, which caused a sharply negative reaction of quotations, despite the announced $400 mln buy back program.

- Stryker's quarterly results (SYK: -3.8%) exceeded expectations and the guidance for the year was improved. Strong sales in the MedSurg and Ortho segments, margin and revenue growth in the product line were perceived positively. At the same time, the weak results of the knee implants segment and the high comparison base drew the attention of market participants.

- Moderna (MRNA: -6.6%) exceeded revenue and earnings guidance for the third quarter on the back of strong Spikevax sales. However, the company lowered its full-year revenue guidance cap by $300 million due to a shift in the timing of deliveries to the UK. The company's cash on hand fell to $7.5 billion.

This article was AI-translated and verified by a human editor