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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 34935.47 -149.06 (-0.42%)
Nasdaq 14672.66 -105.59 (-0.71%)
SP 500 4395.26 -23.89 (-0.54%)
10-yr Note +4/32 1.235
NYSE Adv 1425 Dec 1880 Vol 1.1 bln
Nasdaq Adv 1681 Dec 2627 Vol 3.6 bln

Industry Watch
Strong: Materials, Real Estate, Consumer Staples, Health Care
Weak: Consumer Discretionary, Energy, Financials, Utilities

Moving the Market

-- Amazon (AMZN) fell more than 7.0% after missing revenue estimates and issuing downside Q3 revenue guidance

-- Delta-variant headlines in the mix

-- Personal spending for June was better than expected; PCE Prices for June were better than feared

Amazon and Delta variant subdue market
30-Jul-21 16:20 ET
Dow -149.06 at 34935.47, Nasdaq -105.59 at 14672.66, S&P -23.89 at 4395.26

[BRIEFING.COM] The S&P 500 declined 0.5% on Friday, as disappointing earnings news out of Amazon.com (AMZN 3327.59, -272.33, -7.6%) and negative-sounding headlines surrounding the Delta variant fed into pestering growth concerns. The Nasdaq Composite lost 0.7%, the Dow Jones Industrial Average lost 0.4%, and the Russell 2000 lost 0.6%.

Briefly, shares of Amazon dropped 7.6% after the company missed revenue estimates and issued below-consensus revenue guidance for the third quarter. Amazon said Prime-member growth moderated as people spent less time being at home, and it talked about difficult year-over-year comparisons in the coming quarters.

The S&P 500 consumer discretionary sector (-2.8%) really felt the weight of AMZN, losing 3% on Friday. The energy (-1.8%), utilities (-0.9%), and financials (-0.7%) sectors also underperformed, while the materials (+0.4%), real estate (+0.3%), health care (+0.1%), and consumer staples (+0.1%) sectors closed higher.

Separately, Amazon's observation that people spent more of their time outside suggested that they also spent more money elsewhere. This inference was supported by the latest data showing personal spending increase by 1.0% m/m in June (Briefing.com consensus +0.7%), which was better than expected.

That same report featured better-than-feared PCE Prices for June, which were little changed on a year-over-year basis but still running well above 2.0%.

There were concerns, though, that the rapid spread of the Delta variant could weigh on consumer spending activity. Reports continued to discuss how businesses have delayed return-to-office plans while several media outlets reported on an internal document from the CDC that suggested the Delta variant spreads as easily as chickenpox.

The Treasury market appeared to reflect ongoing expectations for peak growth and inflation rates, as the 10-yr yield decreased three basis points to 1.24%. The 2-yr yield decreased two basis points to 0.18%. The U.S. Dollar Index increased 0.3% to 92.14. WTI crude futures increased 0.3%, or $0.25, to $73.87/bbl.

In other earnings news, Procter & Gamble (PG 142.31, +2.83, +2.0%), Chevron (CVX 101.77, -0.80, -0.8%), Caterpillar (CAT 206.75, -5.81, -2.7%), T-Mobile US (TMUS 144.02, -0.61, -0.4%), and Exxon Mobil (XOM 57.58, -1.35, -2.3%) were some notable companies that exceeded earnings results, but only PG closed higher from this group.

Reviewing Friday's economic data:

Personal spending increased 1.0% month-over-month in June (Briefing.com consensus 0.7%). Personal income was up 0.1% month-over-month (Briefing.com consensus -0.6%), with a 0.7% increase in compensation helping to offset a 2.0% decline in personal current transfer receipts. The PCE Price Index was up 0.5% (Briefing.com consensus 0.7%) and the core-PCE Price Index, which excludes food and energy, increased 0.4% (Briefing.com consensus 0.6%). On a year-over-year basis, the PCE Price Index held steady at 4.0% while the core-PCE Price Index ticked up slightly to 3.5% from 3.4% in May.
The key takeaway from the report is that the inflation rate, while better than feared, is still running well above 2.0% and is eroding the purchasing power of personal income gains. Real disposable personal income was down 3.0% on a year-over-year basis.
The final July reading for the University of Michigan Index of Consumer Sentiment edged up to 81.2 (Briefing.com consensus 81.0) from the preliminary reading of 80.8. The final reading for June was 85.5.
The key takeaway from the report is the conclusion that consumers' expectations for the economy have been reined in with complaints about high prices for homes, vehicles, and household durables.
The Q2 Employment Cost Index increased 0.7% (Briefing.com consensus 0.9%), seasonally adjusted, for the three-month period ending June 2021 after increasing 0.9% for the three-month period ending March 2021. Wages and salaries, which account for about 70% of compensation costs, rose 0.9%, while benefit costs, which make up the remainder of compensation costs, increased 0.4%.
The key takeaway from the report is that wages and salaries for civilian workers and private industry workers were up from the same period a year ago, yet those gains were subsumed by inflation, evidenced by the 6.4% increase in the PCE Price Index seen in the advance Q2 GDP report.
The Chicago PMI for July increased to 73.4 (Briefing.com consensus 63.8) from 66.1 in June.

Looking ahead, investors will receive the ISM Manufacturing Index for July, Construction Spending for June, and the final IHS Markit Manufacturing PMI for July on Monday.

S&P 500 +17.0% YTD
Dow Jones Industrial Average +14.1% YTD
Nasdaq Composite +13.9% YTD
Russell 2000 +12.7% YTD

Crude futures settle slightly higher
30-Jul-21 15:30 ET
Dow -165.74 at 34918.79, Nasdaq -113.06 at 14665.19, S&P -26.35 at 4392.80

[BRIEFING.COM] The S&P 500 is down 0.6% and on track to end the week with a 0.4% decline.

One last look at the sectors shows consumer discretionary (-2.9%) and energy (-1.9%) down 3% and 2%, respectively. The real estate (+0.4%) and materials (+0.3%) sectors outperform with modest gains.

WTI crude futures settled higher by 0.3%, or $0.25, to $73.87/bbl.