Oil set for steep weekly loss
Oil prices were moderately lower during Friday morning trading on Wall Street and on track for steep weekly losses. Concerns around a slowdown in demand have sent prices tumbling in recent sessions.
West Texas Intermediate crude futures, the U.S. oil benchmark, is down 10.5% for the week, while international benchmark Brent crude has shed 14.5%.
— Pippa Stevens
Warner Bros. plunges
Leslie Grace attends Warner Bros. Premiere of “The Suicide Squad” at The Landmark Westwood on August 02, 2021 in Los Angeles, California.
Axelle/bauer-griffin | Filmmagic | Getty Images
Stifel raises second-half S&P 500 target
Stifel’s Barry Bannister hiked his S&P 500 target for the second half to 4,400 from 4,200, noting he continues to prefer cyclical growth stocks in sectors such as software and media.
Here are two reasons Bannister gave for his target bump:
- The “S&P 500 sell-off in 1H22 is still being reversed.”
- “The S&P 500 also discounts negative y/y S&P 500 EPS in 2022, but we see 2022 EPS holding its own.”
Bannister’s new target implies 6% upside from Thursday’s close.
European stocks flat ahead of key U.S. jobs report
European markets were flat on Friday morning as investors tracked corporate earnings and awaited the key U.S. jobs report.
The pan-European Stoxx 600 was little changed in early trade. Autos gained 0.8% while insurance stocks fell 0.8%.
Earnings continue to drive individual share price movement in Europe. Allianz, Deutsche Post, the London Stock Exchange Group and WPP were among the companies reporting before the bell on Friday.
– Elliot Smith
Asia markets shake off fears over military tensions around Taiwan
Markets in Asia-Pacific rose on Friday as investors shook off fears over China’s military exercises near Taiwan, which follow U.S. House Speaker Nancy Pelosi’s visit to the self-ruled island this week.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.74%. Mainland China’s Shanghai Composite gained 0.28% and the Shenzhen Component increased 0.64%.
The Taiex in Taiwan jumped more than 2%, with chipmaker TSMC rising 2.8%.
Lower headline jobs number doesn’t mean a weaker economy, investor says
If Friday’s jobs report shows the U.S. economy added fewer workers in July than the previous month, it is not necessarily a sign of economic weakness, according to Brad McMillan, CIO at Commonwealth Financial Network.
“If we do see a reduction in hiring, even at the expected number, it looks 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 labor availability.”
— Yun Li
Some on Wall Street don’t think the comeback rally can sustain
The Fed’s commitment to bring down inflation as well as easing recession fears have 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 index is also coming off its best month since November 2020, gaining more than 9% in July.
However, some on Wall Street are skeptical that the rally can sustain for much longer. Max Kettner, chief multi-asset strategist at HSBC Bank said the comeback is “wishful thinking,” and he would need to see further repricing of rate hike expectations and another sharp drop in real yields to believe it.
Widely followed Mike Wilson from Morgan Stanley also called this rally short-lived as corporate earnings are beginning to deteriorating.
Consumer discretionary leading the gains, energy biggest laggard this week so far
Six out of the 11 S&P 500 sectors were in the green week to date, led by consumer discretionary, which has gained 2.9%.
The most negative sector this week has been energy, which has fallen more than 8% and is on track 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