10-year yield slips below 4% on manufacturing weakness, rate cut hopes
The 10-year Treasury note yield dipped below the psychologically important 4% level Thursday as the manufacturing sector slipped deeper into contraction and expectations rose for the Federal Reserve to start lowering interest rates.
In morning trade, the yield on the benchmark debt instrument fell to 3.975%, off nearly 13 basis points, or 0.13 percentage point. The note hasn’t traded below 4% since early February.
10-year Treasury yield
That came as the Institute for Supply Management reported that its index measuring factory activity in the U.S. for July slumped to 46.8%, down 1.7 percentage point from June and below the Dow Jones estimate for 48.9%.
As that report came in, traders upped their bets that the Fed will be cutting rates this year. They raised the odds for cuts at each of the three remaining Federal Open Market Committee meetings this year, and pushed up the likelihood of a full percentage point of reductions to about 20%, according to the CME Group’s FedWatch measure of 30-day fed funds futures contract pricing.
—Jeff Cox
Moderna shares plunge after biotech giant cuts guidance
Moderna CEO Stephane Bancel testifies before the Senate Health, Education, Labor, and Pensions Committee in the Hart Senate Office Building on Capitol Hill on March 22, 2023 in Washington, DC. T
Chip Somodevilla | Getty Images
Shares of Moderna fell more than 16% after the company surpassed revenue expectations for the second quarter but slashed its full-year sales guidance.
The biotech cited lower expected sales in Europe, a competitive environment for respiratory vaccines in the U.S. and possible deferred international revenue into 2025. Moderna now expects its full-year product revenue to come in between $3 billion and $3.5 billion, lower than previous guidance of $4 billion.
For more on Moderna’s earnings, read here.
— Pia Singh, Annika Kim Constantino
Stocks open in the green on Thursday
Ferrari beats Wall Street’s Q2 expectations, raises 2024 guidance
Ferrari cars are pictured at Ferrari’s new ‘e-building’ facility where the luxury sportscar maker is testing lines before an expected start of car production in early 2025, in Maranello, Italy, June 21, 2024.
Daniele Mascolo | Reuters
Shares of Ferrari increased as much as 5% during premarket trading after the automaker beat Wall Street’s second-quarter expectations and raised its financial outlook for the year.
The luxury sports car manufacturer reported adjusted earnings per share of 2.29 euros for the second quarter and net revenue of 1.71 billion euros. That compared to Wall Street’s expectations of 2.08 euros in adjusted earnings per share and revenue of 1.61 billion euros, according to an average of estimates compiled by LSEG.
Ferrari’s shipments during the quarter were 3,484 units from April through June, up 2.7% versus the second quarter of 2023.
The company’s new upward guidance for the year includes net revenues of more than 6.55 billion euros, up from 6.4 billion euros, and adjusted earnings before interest and taxes of 1.82 billion euros, or an adjusted EPS of more than 7.90 euros, up from 1.77 billion euros, or an adjusted EPS of 7.50 euros.
Jobless claims surge but labor costs fall
A job seeker attends the JobNewsUSA.com South Florida Job Fair held at the Amerant Bank Arena on June 26, 2024 in Sunrise, Florida.
Joe Raedle | Getty Images
Initial unemployment claims jumped last week while a measure of labor costs was unexpectedly low, according to economic data released Thursday.
First-time filings for unemployment insurance totaled 249,000 for the week ending July 27, an increase of 14,000, the Labor Department reported. That was the highest level since August 2023 and above the 235,000 Dow Jones estimate.
Continuing claims, which run a week behind, increased to 1.877 million, the highest level since Nov. 27, 2021.
In other news, unit labor costs, a measure of wages and productivity, rose just 0.9% in the second quarter, below the 1.7% forecast, the department’s Bureau of Labor Statistics reported. Over the past four quarters, unit labor costs were up just 0.5%, the smallest increase since the third quarter of 2019.
— Jeff Cox
Stocks making the biggest moves premarket
Check out some of the companies making headlines in premarket trading.
- Hershey — Shares were down 7% in the premarket after the chocolate maker posted second-quarter results that missed analyst expectations. The company earned $1.27 per share on revenue of $2.07 billion. Analysts polled by LSEG expected a profit of $1.43 per share on revenue of $2.31 billion. “Today’s operating environment remains dynamic with consumers pulling back on discretionary spending,” CEO Michele Buck said in a statement.
- Amazon — Stock in the e-commerce giant were roughly 2% higher ahead of second-quarter results after the closing bell on Thursday. Analysts polled by FactSet forecast earnings per share of $1.03 on $148.6 billion in revenue.
- Etsy — The e-commerce stock dipped more than 1% after posting mixed quarterly results. Etsy topped revenue expectations, but adjusted earnings came in at 41 cents per share, missing the consensus estimate of 45 cents per share, per LSEG.
Read the full list here.
— Brian Evans
Announced layoffs in July highest for the month since 2020
Last month saw the highest announced layoffs for any July going back to 2020, outplacement firm Challenger, Gray & Christmas reported Thursday.
Planned job cuts totaled 25,885 on the month, a 47% decrease from June but 9% higher than the same month a year ago.
Year to date, companies have announced 460,530 layoffs, down 4.4% from the same period in 2023 but the third-highest since 2009, according to Challenger.
—Jeff Cox
Hershey shares fall after disappointing earnings report
In this photo illustration, Hershey milk chocolate candy bars are displayed on May 03, 2024 in San Anselmo, California.
Justin Sullivan | Getty Images
Shares of Hershey were down 7% in the premarket after the chocolate maker posted second-quarter results that missed analyst expectations.
The company earned $1.27 per share on revenue of $2.07 billion. Analysts polled by LSEG expected a profit of $1.43 per share on revenue of $2.31 billion.
“Today’s operating environment remains dynamic with consumers pulling back on discretionary spending,” CEO Michele Buck said in a statement.
HSY drops
Bull market still has legs, BofA says
Despite the S&P 500 suffering its first 2% pullback in nearly a year last week. Bank of America is still optimistic about equities going forward. That was a “consolidation phase within the confines of the bull market perhaps, but not the end to it. On the contrary, things are just starting to fall in place for the broader corporate sector.”
— Fred Imbert
Fed tees up a September rate cut, Ned Davis Research says
With Wednesday’s announcement and news conference, the Federal Reserve has teed up a rate cut next month, according to Ned Davis Research’s Joe Kalish.
“The Fed is preparing the markets for a September rate cut, which was evident in the changes made to the statement that was close to our expectations,” wrote Kalish, the firm’s chief global macro strategist.
“What it didn’t say is that they have gained greater confidence that inflation is moving toward target. That will change when they actually cut rates,” he added. Fed Chair Jerome Powell, however, “acknowledged that they have gained additional confidence and if the data stays like it has been coming in recently, a September cut is ‘on the table.'”
— Fred Imbert
Semiconductor ETF notches best day in over a year
Gundlach says to expect 150 basis points of rate cuts over the next year
DoubleLine founder Jeffrey Gundlach said market participants should expect 150 basis points in interest rate cuts from the Federal Reserve over the next year.
For reference, decreases that total the amount he is suggesting would result in the key interest rate sitting at between 3.75% and 4%. Following Wednesday’s announcement that the borrowing cost would remain unchanged, it is currently at 5.25% to 5.5%.
“I think we’re going to see about 150 basis points of cuts,” Gundlach said on CNBC. “That’s my base case for over the next year at the most.”
— Alex Harring, Scott Schnipper
Gold futures reached a record closing high Wednesday, extending 2024 gain beyond 19%
Gold futures added 0.9% on Wednesday (DEC), closing at a new record of $2,473 an ounce, after Fed Chair Jerome Powell said the central bank may start lowering interest rates in September if inflation data continues to cool.
Gold ended July higher by 5.7%, the precious metal’s fourth advance in five months and extending this year’s advance to 19.4% On an inflation-adjusted basis, gold’s all-time high remains $3,461an ounce, dating from January 1980, the final year of then-President Jimmy Carter’s term in office.
SPDR Gold Shares ETF in 2024.
— Gina Francolla, Scott Schnipper
Meta Platforms, Arm Holdings among Wednesday’s biggest movers after the bell
These are the stocks making the biggest moves in extended trading:
- Meta Platforms — Shares of the social media giant rallied 7%. Meta Platforms topped revenue and earnings expectations for the recent quarter, posting earnings of $5.16 per share on $39.07 billion in revenue.
- Arm Holdings — The U.K.-based semiconductor stock shed about 13% on light guidance. Arm forecast adjusted earnings ranging from 23 cents to 27 cents per share for the fiscal second quarter, while analysts called for 27 cents, per LSEG.
- Teladoc — The telehealth stock slid more than 15% after posting worse-than-expected revenue in the second quarter.
Read the full list of stocks on the move after the bell here.
— Samantha Subin
Stock futures open higher
Stock futures opened higher Wednesday evening as Wall Street assessed the latest batch of earnings reports.
The S&P 500 futures jumped 0.3%, boosted by strong results from Meta Platforms. Nasdaq-100 futures rose 0.5%, while futures tied to the Dow Jones Industrial Average added 40 points, or 0.1%.
— Samantha Subin
