Before The Bell
The U.S. stock market pulled back at the close of last week, as traders looked to make sense of the corporate profit outlook, the Federal Reserve’s monetary policy, and the evolving coronavirus pandemic. Meanwhile, as we embark on a new week on Wall Street, the mood seems upbeat. Of note, a $1 trillion infrastructure plan seems to be gaining momentum in Washington and that could serve as a positive a catalyst. Overnight, the international markets traded higher. In Asia, the Nikkei staged a solid advance. In Europe, the FTSE 100 has been making progress, as well. On our shores, the S&P futures are ahead about 16 points, indicating a positive start to today’s session.
In economic news, a few reports are due to be released today. Specifically, we will get a look at the ISM Manufacturing Index for the month of July, along with the latest construction spending numbers. However, the big news will be announced at the end of the week. Specifically, on Friday morning, the government is scheduled to deliver the July employment report. Most analysts are expecting to see a healthy addition of jobs, and for the unemployment rate to settle around 5.6%, down from the prior month’s figure. The employment report will be widely watched by traders, as this issuance has the potential to move the market. Of note, the nation’s employment situation is closely monitored by the Federal Reserve, as it looks to determine the health of the economy and adjust its monetary policy. In addition, the central bank looks carefully at various measures of inflation. Although prices have been rising lately, the Fed seems committed to taking a measured approach, for now.
In the corporate arena, the second-quarter earnings season is in full swing. We recently heard from Square, Inc. (SQ). The financial technology company pre-announced encouraging results, and unveiled plans to acquire Afterpay, an Australia-based business, in an all-stock transaction valued at roughly $29 billion. M&A announcements tend to be favorably viewed on Wall Street, and may help market sentiment. Today, we will hear from Simon Property Group (SPG), a leading retail REIT. In addition, NXP Semiconductors (NXPI) and Take-Two Interactive Software (TTWO) will weigh in with their numbers.
Technically, the stock market averages are sitting near record territory, as we move into the month of August. For the past year, the bulls have regularly moved in to buy stocks whenever the market has pulled back. This behavior suggests that there is ample capital waiting on the sidelines and that opportunities in other areas may be limited.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
