Five things you need to know before the market opens on Friday July 7:
1. — Stock Futures Slip Lower With Jobs Data On Deck
U.S. equity futures nudged lower Friday, while Treasury bond yields steadied and the dollar gave back gains against its global peers, as investors looked to a today’s June jobs report to confirm data suggesting a surprisingly resilient domestic econmoy.
Bond markets dictated much of the trading session Thursday, which saw the S&P 500 down as much as 1.3% before paring its overall decline to around 0.8%, as benchmark 10-year yields surged nearly 10 basis points to 4.05% following a blowout reading on private payrolls from ADP, a smaller-than-expected decline in job openings from the Bureau of Labor Statistics and a solid reading of activity in the economy’s most important sector.
The ISM Services PMI, in fact, was likely the largest influence on yesterday’s action, as it showed not only robust growth over the month of June, but an employment component consistent with payroll growth of around 500,000 – a tally similar to the 497,000 reported by ADP.
The figures prompted a notable bump higher in the Atlanta Fed’s GDPNow forecasting tool, which suggests the economy is growing at a 2.1% clip, while effectively locking-in another 25 basis point rate hike from the Fed later this month in Washington.
Bets on a follow-on hike in November, meanwhile, are pegged at around 43%, although traders are mostly expecting the July hike to be the last of the Fed’s year-long tightening cycle.
Benchmark 10-year note yields eased to 4.046% in overnight trading, while 2-year paper backed-up to 4.982% following yesterday’s 2007-high of 5.092% printed in the wake of the ADP and ISM reports.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.08% lower at 103.080.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a 3 point opening bell decline while those linked to the Dow Jones Industrial Average were priced for a 13 point pullback. Nasdaq futures were down 20 points.
In overnight trading, the MSCI ex-Japan index fell 0.94% into the close of trading while Japan’s Nikkei 225 ended the session down 1.17% at 32,388.32 points.
The Europe-wide Stoxx 600 was marked fell 0.27% in early Frankfurt trading, pegging the benchmark at a three-month low, while Britain’s FTSE 100 fell 0.17% in London.
2. — Wage Growth In Focus For June Payroll Report
The Labor Department will publish its crucial June jobs report prior to the start of trading Friday, with investors set to pore over the details linked to wages, hours worked and overall participation following a series of stronger-than-expected employment readings earlier this week.
Analysts expect the report will show the economy added a net new 228,000 new jobs last month, down from the 339,000 pace recorded in May, with the headline unemployment rate easing to 3.6%.
However, wages will once again prove the key focus of the report following yesterday’s blowout estimate from payroll processing group ADP, which estimated a June tally of 497.00 new jobs while citing a marked decline in wage gains for both job leavers and those remaining in their positions.
Economists see average hourly earnings rising 0.3% in June, a comparable pace to May, with the year-on-year figure slipping by 10 basis points to 4.2%.
“We expect June’s employment report will provide further support for a July rate hike as the risk of wages getting stuck at current levels is rising with each passing month of labor market resilience and the stark absence of net job losses,” said Joe Davis, global chief economist at Vanguard.
3. — Twitter Sends Meta ‘Cease-and-Desist’ Letter Following Threads Debut
Twitter owner Elon Musk has sent a ‘cease and desist’ letter to Meta Platforms (META) – Get Free Report CEO Mark Zuckerberg, according to multiple media reports, just hours after the social media group launched its rival micro-blogging platform.
Alex Spiro, Musk’s longtime attorney, reportedly sent the letter to Zuckerberg alleging “”systematic, willful, and unlawful misappropriation of Twitter’s trade secrets and other intellectual property” and claimed the company had hired a large number of former Twitter staffers who “”had and continue to have access” to trade secrets and highly-confidential information.
Musk himself, in a reply to a Twitter post that reported news of the cease-and-desist letter, said “competition is fine, cheating is not.”
Meta, which reportedly had some 30 million users sign-up for the Threads platform on the first day of its launch, said in a public post that “no one on the Threads engineering team is a former Twitter employee.”
Meta Platforms shares were marked 0.54% lower in pre-market trading to indicate an opening bell price of $290.40 each.
4. — Levi Strauss Slumps After Mixed Q2 Earnings, Softer Profit Outlook
Levi Strauss (LEVI) – Get Free Report shares slumped lower in pre-market trading after the iconic clothing maker posted softer-than-expected second quarter sales, and trimmed its full-year profit forecast, as higher input costs continue to bit its top and bottom lines.
Levi Strauss said it sees adjusted earnings in the region of $1.10 to $1.20 per share, down 20 cents from its prior forecasts, with revenues rising between 1.5% and 2%.
The revised guidance followed a mix set of second quarter earnings, which showed adjusted profits of 4 cents per share on revenues of $1.3 billion.
“We’re competing now for other dollars that are being spent out of the consumer’s wallet, and that moderate income consumer is having to make some tough choices,” said Levi Strauss CEO Chip Bergh, who told investors the group plans targeted price cuts through its wholesale channels over the coming months.
Levi Strauss shares were marked 8.3% lower in pre-market trading to indicate an opening bell price of $13.05 each.
5. — Costco Slips Lower Following Muted June Sales Update
In its regular monthly update, Costco said sales for the five weeks ending on July 2 rose 0.4% from last year to $22.78 billion, a figure that lifts the first half total to around $196.93 billion, a 4.6% improvement from the same period in 2022.
Comparable sales, Costco said, were down 1.4%.
Costco said in late May that weaker spending on big-ticket items held back sale-store sales for the three months ending on May 7, as overall net revenues rose 1.9% from last year to $52.6 billion, missing Street forecasts.
‘We’re not only comparing against this “recession” or concerns about big-ticket items but comparing against uber strength over the last two years prior to that,” CFO Richard Galanti told investors on May 25. “So I think we’ll come out of this fine. We’re pretty good at figuring out new items and new things to do.”
Costoco shares were marked 0.81% lower in pre-market trading, indicating an opening bell price of $533.00 each