Morning in New York: quotes are driven by cautious optimism

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 today will be the publication of the Producer Price Index (PPI) for July (consensus: +0.2% mom, June: 0% mom). Of particular importance for market participants will be the price dynamics in key components such as transportation, financial and health services, which directly affect the Fed's preferred inflation measure (PCE). A stronger than expected increase in PPI, especially in the services sector, will be an argument in favor of maintaining the Fed's tight policy, which could put pressure on the market. If the growth of the index slows down, it will support the dovish sentiment. The market considers the probability of a 25bp rate cut in September to be very high, with some market participants suggesting a 50bp cut. However, given the current stability of the economy, such a scenario looks unlikely: such a sharp easing of the policy may be interpreted as a sign of hidden problems, which could provoke panic among stock market players.

Also today will be released the weekly statistics on the number of new applications for unemployment benefits (consensus: 230 thousand, previous value: 226 thousand). Last week, the number of new claims reached the highest level since 2021, so this time the market will be particularly attentive to this indicator. Further growth in the number of applications will confirm the thesis about the weakening of the labor market, which is a key argument for the supporters of the Fed's monetary policy easing. At the same time, a sharp jump in the number of applications can provoke a negative reassessment of economic prospects.

John Deere (DE), Tapestry (TPR), JD.com (JD), Amcor (AMCR), Advanced Auto Parts (AAP), First Majestic Silver (AG) and Birkenstock (BIRK) will report quarterly results before the start of trading. After the close of the main session, Applied Materials (AMAT), Nu Holdings (NU), Nano Nuclear Energy (NNE), Globant (GLOB), The Metals Company (TMC), Qifu Technology (QFIN) and SanDisk (SNDK) will release financial results.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks before the release of key statistics as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6430-6500 points (from -0.6% to +0.5% to the previous session's closing level).

- Shares of Cisco Systems (CSCO) showed a mixed reaction after the close of the main session on Wednesday, despite the release of a strong fiscal fourth quarter report. The company's revenue rose 8% YoY to $14.7 billion and adjusted EPS came in at $0.99, beating consensus. A key positive factor that CEO Chuck Robbins noted was the strong demand for AI infrastructure. Orders in this segment exceeded $2 billion for the year, double the company's target.

- Coherent (COHR) stock plummeted, although its second-quarter results were better than average expectations. The company reported revenue of $1.53 billion and adjusted EPS reached $1. The selloff was triggered by a drop in operating margin from last year's 4.8% to 0.4%, as well as negative free cash flow. An additional negative factor was the news about the sale of the aerospace and defense business.

- Shares of gold miner Equinox Gold (EQX) rose in the post-market despite high ongoing costs. Investors focused on management's positive outlook. CEO Darren Hall said that Equinox is entering a "key growth phase", which will be supported by the integration of new assets following the takeover of Calibre Mining and the commissioning of new mines.

- News of a NASA contract worth about $2.6 billion supported shares of engineering company KBR (KBR). The contract will strengthen the company's order book, making its business more predictable.

Trading on August 13 on the U.S. stock exchanges ended in the plus with the expansion of the rally. S&P 500 rose by 0.32%, Nasdaq 100 added a symbolic 0.04%, Dow Jones rose by 1.04%. Russell 2000 due to the capital flow from the technological sector into the shares of small capitalization companies rose by 1.98%. There was also increased buyer interest in cyclical sectors. The key positive driver was the confidence of investors in soon softening of FRS policy. Material producers (XLB: +1.88%) were the leaders of growth. Suppliers of consumer staples (XLP: 0.00%) ended the day unchanged.

In the absence of significant informational reasons, the market continued to play off positive factors, including the mentioned expectations of the Fed's imminent return to easing monetary conditions. Head of FRB Chicago Austan Goolsby refrained from forecasting further steps of the regulator. His colleague from Atlanta Raphael Bostic again pointed to the expediency of the only rate revision in the current year.

- News of plans to develop home robotics products and enhance Siri as part of an AI strategy were the driver of Apple's (AAPL: +1.6%) stock gains.

- Walmart (WMT: -2.5%) was pressured by Amazon's (AMZN: +1.4%) plans for a major expansion of its delivery service, signaling a sharp increase in competition in this key market segment.

- The start of sales of Mounjaro injections in India triggered a positive reaction from Eli Lilly (LLY: +3.3%) shares.

- The announcement of Sapiens International's (SPNS: +44.2%) buyout by private equity fund Advent for $2.5 billion in cash at a 47% premium caused its shares to soar.

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