Morning in New York: the focus is on Labor Department data

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

The dynamics of quotations during the upcoming trades will be determined by the official statistics on the labor market for June. According to the consensus forecast, the number of new jobs in the non-agricultural sector will fall to 113 thousand, while the average for the last six months is 157 thousand. At the same time, unemployment is expected to rise to 4.3%. Compliance of actual data with these benchmarks will confirm the scenario of labor market cooling on the background of the introduction of import tariffs in May. Last week's weak macro data were completely ignored by the investment community, and stocks are at the highs, so possible signs of deterioration in the labor market can give reason to fix positions, as well as to revise expectations on the dynamics of interest rates. The futures market is now laying three of its declines before the end of the year starting with the September meeting.  

Also of interest to traders will be the June ISM Services Business Activity Index (consensus: 50.9 points, previous reading: 49.9) and S&P Global (consensus: 50.9 points, previous reading: 53.1). In both cases, forecasts point to readings above 50 points, separating growth in business activity from recession;

Foreign trade uncertainty remains, although yesterday President Donald Trump announced an agreement with Vietnam. According to Bloomberg, as part of the agreements with China, the U.S. waived export license requirements for China to sell chip design software. There was no positive news regarding the progress of negotiations with Japan and the EU. There was no sign of an extension of the July 9 deadline, but more than 80 trade agreements must be signed by that date;

The Big Beautiful Bill's advancement of tax relief and welfare cuts faces a number of challenges in the lower house of Congress, leaving passage of the legislation by July 4 in doubt. 

Futures on US indices are trading in moderate plus. Before the opening of the main session there is a neutral balance of risks with increased volatility, the probability of correction is increasing. We focus on S&P 500 movements in the range of 6150-6260 points (from -1.2% to +0.5% to the closing level of July 2);

- Datadog (DDOG) shares jumped 11% in the premarket on news of its inclusion in S&P 500 at the opening of trading on July 9, replacing Juniper Networks (JNPR) securities.  

- OpenAI has confirmed that it is a party to a $30 billion contract to lease computing capacity in Oracle data centers (ORCL). 

- Shares of Robinhood Markets (HOOD) fell nearly 1.7% after OpenAI denied reports of a token partnership with it, emphasizing that the share transfer was not approved.  

- AT&T (T) completed the sale of 70% stake in DIRECTV to TPG Capital, which was welcomed positively by the market. 

- National Beverage (FIZZ) reported fiscal fourth quarter EPS growth from last year's $0.47 to $0.48.  

Trading on July 2 on the U.S. stock exchanges ended mostly in the green zone. S&P 500 and Nasdaq 100 set new historic highs, adding 0.47% and 0.73% respectively. The Dow Jones closed virtually unchanged (-0.02%), while the Russell 2000 index of small-capitalization companies rose 1.31%. The IT sector (XLK: +1.06%), commodities (XLB: +1.5%) and energy (XLE: +1.72%) sectors led the gains. The shares of the "Magnificent Seven" were trading multidirectionally. Positive dynamics of Tesla (TSLA) quotations was due to the data of deliveries for the second quarter, which exceeded pessimistic market forecasts. Gold rose in price on the background of published statistics of the World Gold Council (WCG) about intensification of purchases of precious metal by the world Central Banks in May;

The key macroeconomic event of the day was the release of unexpectedly weak employment data from ADP. In June, the number of jobs in the private sector decreased by 33 thousand, while the consensus suggested an increase of 115 thousand. Negative dynamics of the indicator was recorded for the first time since March 2023. This statistic may signal a more significant deterioration in the employment situation ahead of today's publication of the Labor Ministry report. However, due to the low correlation between ADP data and official statistics, we believe it is premature to draw conclusions;

- Constellation Brands (STZ: +4.5%) reported fiscal Q1 revenue and earnings below forecasts, which management attributed to weaker consumer demand. Nevertheless, the company reaffirmed its full-year EPS guidance;

- Rivian (RIVN: -4.5%) reported production of 5,979 thousand vehicles in the second quarter, which was below consensus. 10,661k units were delivered to the market, which is within expectations. Management still expects a figure in the 40-46k range for the year-end. Rivian is due to receive another $1 bln from Volkswagen as sales problems continue;

- Shares of Microsoft (MSFT: -0.2%) reacted with a slight decline on news of a partial rollback in the development of its own AI chips, as well as plans to cut 9,000 employees. 

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