Coming off of a mixed Wednesday that saw the Dow post a 13th straight winning day, the S&P 500 finish flat and the NASDAQ finish down marginally, equity markets are rallying this morning. NASDAQ futures are up 1.3%, while S&P futures are up 0.6% and Dow futures are up 0.2%, suggesting that leadership may be shifting back to tech and communications for the first time in a while. In Europe today, the Dax is up 1.2% while the FTSE is up 0.2%. WTI Crude Oil is up 1.2% approaching $80.00/bbl, while Natural Gas is down 1.9%.
Meta Platforms is leading the charge this morning, soaring 10.3% in premarket trading after beating the street on EPS ($2.98 vs street $2.91), posting stronger than expected user numbers and issuing positive guidance. Other notable companies with results out this morning include McDonalds ($3.17 vs street $2.78), Linde* ($3.57 vs street $3.47), Agnico-Eagle ($0.86 vs street $0.73), Cenovus Energy ($0.44 vs street $0.40), and FirstService ($1.93 vs street $1.76). Later today, results are due from Intel, MasterCard, Abbvie, Canadian Pacific, and others.
Investors also appear be responding positively to the notion that the current US rising interest rate cycle may be nearing an end for now. Although the Fed and the European Central Bank both raised their benchmark rates yesterday afternoon and this morning respectively, the Fed in particular was non-committal on the amount and timing of future increases in its statement and at Chair Powell’s press conference shifting to a data-dependent, meeting-by-meeting approach. In Europe, where the central bank is still trying to catch up to its peers, the statement was more hawkish indicating that the outlook for inflation remains “too high for too long”. The Bank of Japan meets tonight.
In economic news, US Q2 GDP has come in much stronger than expected (2.4% vs street 1.8% and previous 2.0%), while the inflation component has come in weaker than expected (2.6% vs street 3.0% and previous 4.1%), which can also be seen as positive. In other news, US durable goods orders (4.7% vs street 1.0%) and weekly initial jobless claims (221K vs street 235K) have also surpassed expectations. US pending home sales are due later this morning.
*Shares of Linde are held in some portfolios managed by SIA Wealth Management.