Stock futures fall after better-than-expected jobs report
Stock futures fell on Friday after the July jobs report came in much stronger than expected, showing more jobs added, lower unemployment and higher wage growth than economists estimated.
Dow futures fell 231 points, or 0.71%. Futures linked to the S&P 500 fell 1.08% and Nasdaq futures fell 1.33%.
July jobs report crushes expectations
The US economy added many more jobs than expected last month. On Friday, the U.S. government said 528,000 jobs were added in July, easily beating a Dow Jones estimate of 258,000.
To be sure, average hourly earnings were up 5.2% year over year ̵[ads1]1; well above expectations. This can be seen by the market as a sign that inflationary pressure is still strong.
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Elon Musk believes we are past peak inflation
Elon Musk said he believes we are past peak inflation, and predicts a mild 18-month recession ahead.
Musk’s comments came at Tesla’s 2022 shareholder meeting, which was held on August 4.
“We get a lot of insight into where the prices of things go over time, because when you’re making millions of cars, you have to buy things many months before they’re needed,” he said.
Amazon buys iRobot in $1.7 billion deal
Amazon will buy iRobot for $61.00 per share, the consumer robot company announced Friday. The all-cash transaction is valued at approximately $1.7 billion, including iRobot’s net debt.
Shares in iRobot were halted on the news. The sale price of $61 per share is a 22% premium to Thursday’s close of $49.99. Amazon’s stock was up approx. 0.2% in the pre-market.
– By Michelle Fox
DoorDash rises after record orders
A Doordash delivery person rides a bicycle in the rain during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, the United States, on November 13, 2020.
Carlo Allegri | Reuters
Shares of DoorDash rose more than 10% in premarket trading Friday after the company reported quarterly results that beat expectations after the market closed Thursday. The food delivery service said orders were up 23% year-on-year and revenue was up 30%.
The company expects softer consumer spending in the second half of the year, it says.
Oil kit for steep weekly loss
Oil prices were moderately lower in Friday morning trading on Wall Street and headed for steep weekly losses. Concerns about a slowdown in demand have pushed prices down in recent sessions.
West Texas Intermediate crude futures, the US oil benchmark, are down 10.5% for the week, while the international benchmark Brent oil has fallen 14.5%.
Bitcoin, Ether on track for worst week since July 1st
Cryptocurrencies have fallen this week after a rough start to the month. Bitcoin and Ether are both down by approx. 3% in the week to date, and is on pace to post its first negative week in five.
The performance will also be the worst weekly drop since July 1, when Bitcoin lost 8.71% and Ether fell 13%.
Warner Bros. plunges
Leslie Grace attends the Warner Bros. Premiere of ‘The Suicide Squad’ at The Landmark Westwood on August 2, 2021 in Los Angeles, California.
Axelle/bauer-griffin | Movie Magic | Getty Images
Stifel raises S&P 500 target in second half
Stifel’s Barry Bannister raised his second-half S&P 500 target to 4,400 from 4,200, noting that he continues to favor cyclical growth stocks in sectors such as software and media.
Here are two reasons Bannister gave for his bump:
- “S&P 500 selloff in 1H22 continues to reverse.”
- “The S&P 500 also discounts negative y/y S&P 500 EPS in 2022, but we see 2022 EPS holding up.”
Bannister’s new target implies an upside of 6% from Thursday’s close.
European shares flatten ahead of key US jobs report
European markets were flat on Friday morning as investors followed corporate earnings and awaited the key US jobs report.
The pan-European Stoxx 600 was little changed in early trade. Cars rose 0.8% while insurance stocks fell 0.8%.
Earnings continue to drive individual share price movements in Europe. Allianz, Deutsche Post, London Stock Exchange Group and WPP were among the companies that reported before the bell on Friday.
– Elliot Smith
Asian markets shake off fears of military tensions over Taiwan
Asia-Pacific markets rose on Friday as investors shrugged off fears over China’s military exercises near Taiwan, which follow US House Speaker Nancy Pelosi’s visit to the self-ruled island this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.74%. Mainland China’s Shanghai Composite gained 0.28% and the Shenzhen component added 0.64%.
Taiwan’s Taiex rose more than 2%, with chip maker TSMC rising 2.8%.
A lower number of overall jobs does not mean a weaker economy, says the investor
If Friday’s jobs report shows the U.S. economy added fewer workers in July than last month, that’s not necessarily a sign of economic weakness, according to Brad McMillan, CIO of the Commonwealth Financial Network.
“If we do see a reduction in hiring, even at expected numbers, it seems much more likely to be due to a shortage of workers, rather than a sudden shock to labor demand,” McMillan said in a note. “With demand strong, what matters here is the availability of labor.”
– Yun Li
Some on Wall Street don’t think the comeback rally can be sustained
The Fed’s commitment to bring down inflation in addition to easing recession fears has sparked a relief rally in the market. The S&P 500 is now 14.2% above its 52-week intraday low of 3,636.87 from June 17. The benchmark is also coming off its best month since November 2020, rising more than 9% in July.
However, some on Wall Street are skeptical that the rally can last much longer. Max Kettner, chief multi-asset strategist at HSBC Bank, said the comeback is “wishful thinking” and that he would need to see further repricing of expectations for rate rises and another sharp fall in real interest rates to believe it.
Widely followed Mike Wilson of Morgan Stanley also called this rally short-lived as corporate earnings begin to deteriorate.
Consumer discretion leads gains, energy biggest laggard this week so far
Six of the 11 S&P 500 sectors were in the green week to date, led by consumer discretionary, which has risen 2.9%.
The most negative sector this week has been energy, which has fallen more than 8% and is heading for its worst week since June 17. The decline in energy names came amid a drop in oil prices. WTI is down over 10% this week, on pace for its worst week since April.
– Yun Li