New York Stock Market in August Opens Mixed Amid Earnings and Economic Data Watch

The three major indices of the U.S. New York stock market showed mixed trends around the opening on August 1 (local time), the first trading day of the month, as investors monitored corporate earnings and key indicators. While expectations for a soft landing that can reduce inflation without a recession continue, profit-taking movements following the July rally were also observed. This week, earnings reports from companies such as Apple and Amazon, along with key employment data, are scheduled to be released.

At around 10:05 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, composed of blue-chip stocks, was trading at around 35,656, up 96.78 points (0.27%) from the previous close. Meanwhile, the large-cap-focused S&P 500 index was down 4.49 points (0.1%) at 4,584, and the tech-heavy Nasdaq index was down 61.30 points (0.43%) at 14,284.

The three major indices all closed higher the previous day. The Dow, which had recorded a 13-trading-day rally, rose 3% in July. The S&P 500 and Nasdaq indices increased by 2.9% and 3.8% respectively over the month, continuing a five-month consecutive upward trend. This is the longest monthly rally since 2021.

Currently, all 10 sectors except industrials in the S&P 500 are in decline. The drop in energy-related stocks, which surged the previous day, is notable. Uber, a ride-sharing company that released earnings before the market opened, fell about 5% despite turning a profit, due to sales below expectations. Pharmaceutical company Merck showed a slight decline despite sales exceeding expectations, as losses continued. JetBlue dropped more than 8% after lowering its annual guidance. On the other hand, Caterpillar rose more than 7% on better-than-expected earnings. Apparel company Gap is up more than 2% after Barclays upgraded its investment rating.

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Investors are closely watching corporate earnings and key indicators released today. This week, more than 160 companies listed on the S&P 500 are expected to report earnings. According to FactSet, more than half of the listed companies have reported so far, with 82% beating expectations. Earnings exceeding expectations further support the recently spreading soft landing hopes. However, FactSet estimates that the net income of S&P 500 companies will decrease by 7.1% year-on-year this year, marking three consecutive quarters of net income decline.

Mark Haefele, Chief Investment Officer (CIO) of UBS Global Wealth Management, said, "The Q2 earnings season is about halfway through, and results have been mixed so far," adding, "Investors should prepare for volatility based on valuations across sectors and make selections within sectors." Currently, there is some caution about the rally and profit-taking movements in the market. Historically, August and September have been months when the New York stock market tends to underperform.

The manufacturing data released today was weak. The ISM July Manufacturing PMI came in at 46.4, below market expectations of 46.9. Remaining below the baseline of 50, it marked the ninth consecutive month of contraction. ISM Chairman Timothy Fiore stated in a release, "Demand remains weak but slightly improved compared to June, and production has slowed," adding, "There are signs that more job cuts will occur soon." The July Manufacturing PMI compiled by S&P Global was 49, an improvement from June's 46.3 but still below 50.

This week, the Labor Department's employment report, which could influence the Federal Reserve's monetary policy decisions, will be released. Wall Street expects an increase of 200,000 jobs. Austan Goolsbee, President of the Federal Reserve Bank of Chicago and a known dove within the Fed, emphasized yesterday that "nothing has been decided" regarding rate hikes at the September Federal Open Market Committee (FOMC) meeting and that key indicators such as the employment report and Consumer Price Index (CPI) will be closely watched.

According to the Job Openings and Labor Turnover Survey (JOLTS) released today, job openings in June were 9.58 million, down from 9.61 million in May. This is the lowest level since April 2021 and below FactSet's estimate of 9.7 million. However, it is still considered historically high. Layoffs slightly eased from 1.55 million in May to 1.53 million in June. The number of voluntary quits, which reflects confidence in the labor market, was 3.77 million, down 295,000 from the previous month. Nick Bunker, Head of Economic Research at the Indeed Hiring Lab, said, "Various economic indicators show that the U.S. economy continued to perform well in Q2. The JOLTS report is no exception." The number of job openings per available worker was estimated at 1.6.

Market expectations for a soft landing continue alongside views that the Fed's rate hikes are nearing an end. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market this morning priced in an over 81% chance that the Fed will hold rates steady at the upcoming September FOMC meeting. Although the Fed's June dot plot suggested one more rate hike this year, the market currently favors a hold scenario through year-end. The probability of an additional hike this year stands at around 26%.

In the New York bond market, the yield on the 10-year U.S. Treasury note is around 4.0%, while the 2-year Treasury yield, sensitive to monetary policy, is around 4.89%. The dollar index, which measures the value of the U.S. dollar against six major currencies, rose 0.4% from the previous close to 102.3.

European stock markets are down. Germany's DAX index is down 0.96%. France's CAC index is down 0.91%, and the UK's FTSE index is down 0.32%.

This content was produced with the assistance of AI translation services.