Markets Await Factor Orders Data

Pre-market futures are back in the green this morning, after a dramatic shakeout on Friday that saw a disappointing jobs report lead to the firing of the Chief of the U.S. Bureau of Labor Statistics (BLS). We now officially see a labor market slowdown with drastic downward revisions to the prior two months, and this means that interest rates are likely to come down.

To wit, bond yields have shrunk. The 10-year has dissolved back to 4.20%, where it hasn’t been since late April. The 2-year is also at 3+ month lows, +3.67%. The odds that the Fed funds rate gets reduced from its current 4.25-4.50% at its next Federal Open Market Committee meeting (mid-September) are now near-certain. In fact, the odds for a third rate cut this year have grown, as well.

The Dow is currently up +195 points ahead of the new trading week, with the S&P 500 at +33 and the Nasdaq +188 points. The small-cap Russell 2000 is up +13. For the month of July — which had performed excellently for the most part — closed in the red for the Dow and Russell 2000, in the green for the Nasdaq and S&P 500.

August tends to be a weaker trading month, historically. However, as Q2 earnings reports continue to file in — more than 500 companies will report on Wednesday alone — and outperform expectations, if they can also raise guidance based on what they see unfolding in the economy, there is a chance for a surprise to the upside this month. Economic reports throughout the month will likely contribute to this forming narrative, as well.

Wayfair Posts Big Earnings Surprise, Tyson Beats

Ahead of today’s open, furniture retailer Wayfair (W) posted a huge +141.67% positive surprise, with earnings of 87 cents per share far ahead of the 36 cents in the Zacks consensus. The Zacks Rank #2 (Buy)-rated company also posted a +4.25% revenue beat this morning, with $3.27 billion reported on the top line. Shares are up +13% on the news, adding to its +47.2% growth year to date. 

Tyson Foods (TSN) also outpaced estimates in its fiscal Q3 report this morning, albeit not by as wide of margins. Earnings of 91 cents per share surpassed the 72 cents, for a positive earnings surprise of +26.39%, on revenues of $13.88 billion bettering the Zacks consensus by +1.88%. Shares are trading up +5% in today’s pre-market, making up for most of the stock’s -8.5% loss year to date.

What to Expect from the Stock Market Today

After the opening bell this morning, we’ll take a look at Factory Orders for the month of June. These are expected to shift to a negative month over month: -4.9% from +8.2% the prior month, which was the highest single-month tally in more than 10 years. A negative print would be the second in the past three months, so we see these numbers clumping a bit.

Cybersecurity favorite Palantir (PLTR) reports Q2 earnings after today’s close. The stock, currently registering as a Zacks Rank #5 (Strong Sell), is expected to gain +55.56% on earnings year over year and +38.37% on revenues. Even with Friday’s $4 selloff per share, Palantir shares are still trading over +100% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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