Morning in New York: macro data will set the direction of stock market movement

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

The upcoming session will be rich in macroeconomic events. Retail sales data for June (consensus: +0.1% m/m, May: -0.9% m/m) will be in focus. The average forecast for the indicator excluding autos suggests a 0.3% m/m increase. Weekly initial jobless claims statistics will also be released. Analysts at Freedom Broker are focused on an increase in their number to 235 thousand after 227 thousand a week earlier.  

If retail sales and labor market indicators remain robust, this would be a sign of healthy consumer demand and could trigger an increase in yields on treasuries. In this case, pressure will increase on rate-sensitive sectors, including homebuilding and REITs;

This Thursday, import and export prices data for June will be released (consensus: +0.2% and 0.0% m/m respectively), business activity index from FRB Philadelphia  (consensus: -1, previous value -4). In addition, there will be data from the NAHB Housing Market Index (consensus: 33 points, previous value: 32), which may signal a further cooling of demand for mortgages due to high mortgage rates.  

All the above macro data will set the direction of movement on the stock market. If the releases confirm the slowdown in economic activity, it will lead to a decrease in the yields of debt instruments and will give a reason to fix positions on shares. The beneficiaries of strong statistics will be issuers from the Russell 2000 small and mid-cap index, as well as cyclical sectors related to consumption;

The day before, the U.S. House of Representatives  Congress approved the rules of procedure for consideration of three key cryptoasset regulation bills after the longest debate in history, sparked by a split in the Republican caucus.   

PepsiCo (PEP), Abbott Laboratories (ABT), Elevance Health (ELV), U.S. Bancorp (USB), Marsh & McLennan (MMC) and Travelers (TRV) will release quarterly results before the main session opens. Netflix (NFLX) and Interactive Brokers (IBKR) will release financial results at the postmarket. 

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with average volatility. We focus on S&P 500 fluctuations in the range of 6200-6320 points (from -1% to +0.9% to the previous session's closing level);

- Taiwan Semiconductor Manufacturing Company (TSMC) second-quarter net income rose 61% YoY to NT$398.27 billion with LSEG consensus at NT$377.86 billion, while revenue climbed 38.6% YoY, also exceeding average expectations. The strong results reflect TSMC's key role in global AI infrastructure. Despite geopolitical risks and the threat of increased duties on US shipments, the company remains optimistic. Its shares reacted to the release with a 4% rise on the pre-market;

- Quotes of United Airlines (UAL) fell 1.5% in the post-market after the publication of reports, as the carrier's own year-end guidance was assessed by the market as too cautious.  

- Sarepta Therapeutics (SRPT) shares soared 35% after unveiling a strategic restructuring and renewal plan for its ELEVIDYS gene therapy. Guidance guidance assumes revenue of $513 million, which is above market consensus. Sarepta may remain a buyer focus in the coming sessions. 

- MP Materials (MP) fell 5% after announcing a $500 million common stock offering.Given the strategic importance of rare earth metals and the intense debate over U.S. dependence on Chinese imports, the company remains at the center of industry debate and has attracted regulatory attention. 

- Shares of Alcoa (AA) reacted with 0.7% growth on the publication of quarterly reports. The company's revenue totaled $3.02 billion with a consensus of $2.91 billion, adjusted EPS beat average forecasts by 18% to $0.39. Aluminum supply volume guidance was confirmed, but management warned of pressure on results from import tariffs. Related costs totaled $115 million in the second quarter.The company is redirecting exports from Canada to other countries to reduce the effect of the duties and estimates related costs to be about $250 million quarterly. 

July 16 trading on the U.S. stock exchanges ended on the positive territory. S&P 500 added 0.32%, Nasdaq 100 rose by 0.1%, Dow Jones rose by 0.53%, and Russell 2000 - by 0.99%. The "Magnificent Seven" stocks showed multidirectional dynamics. Tesla (TSLA) looked better than others, whose quotations rose by 3.5%. Ten of the 11 sectors included in the S&P 500 closed in the green zone. The health care industry (XLV: +1.24%) was the leader of growth thanks to strong reporting from Johnson & Johnson (J&J). The energy sector (XLE: -0.86%) was the outsider;

Producer Price Index (PPI) for June slightly eased fears of a new round of inflation acceleration. The overall index showed zero change from May's level, with the consensus of +0.2%, and its year-on-year growth slowed to the lowest since September 2024 at 2.3%. Core PPI was also unchanged from May, rising 2.6% after 3.2% y/y a month earlier. A 0.3% m/m rise in goods prices was offset by a 0.1% decline in services. Economists note the first signs of appreciation of import tariff-sensitive products (electronics, furniture, clothing). A more pronounced effect may appear in the following months. It should be noted that the PPI index reflects only domestic producer prices and does not include imports, so the data does not give a complete picture of the impact of foreign trade restrictions on the situation. The impact of the recently announced duties on such goods as pharmaceuticals and semiconductors may intensify after August 1, if the duties announced by the White House are still imposed;

"The Fed's Beige Book recorded a slight pickup in business activity from late May through early July. The index increased in five districts, stagnated in another five, and declined slightly in two. Companies continue to see moderate cost increases due to import tariffs on raw materials and expect prices to remain high. The overall picture reflects a mild slowdown in the economy without a sharp cooling;

Against the backdrop of the reports about the plans of the head of the White House to fire Fed Chairman Jerome Powell that appeared the day before, the shares sagged in the moment. However, the decline was quickly bought back after Donald Trump publicly denied this information. At the same time, the president spoke at an AI-focused forum in Pittsburgh, saying that tariffs on pharmaceuticals and semiconductors could be imposed by the end of the month and announcing his intention to gradually bring duties on pharmaceutical products to very high levels.  

- Ford Motor (F: -2.9%) capitalization came under pressure due to plans to increase spending on service campaigns for a number of models by $570 million as it will negatively impact the group's quarterly margins. 

- Morgan Stanley (MS: -1.3%) reported revenue and earnings above forecasts, but its own net interest income guideline was perceived by the investment community as too conservative, causing the bank's shares to decline. 

- Donald Trump's decision to sign an executive order allowing 401(k) pension plans to invest in private assets has been a driver of Blackstone (BX: +3.8%) as investors expect new capital to flow into the alternative investments sector. 

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