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The Thursday Market Minute

  • Global stocks mixed, with weakness in Asia offset by solid gains in Europe and another march higher for U.S. equity futures.
  • Manufacturing activity continues to roar, with Europe posting a record June PMI, but input costs are surging, too, adding to near-term inflationary concerns. 
  • Micron shares dip despite a stronger-than-expected third quarter and solid outlook as the mystery of semiconductor inventory levels deepens.
  • U.S. stocks notch one of the best first half performances since 1998, with the S&P 500 riding a five-day streak of record highs and a fifth consecutive quarterly gain.
  • CDC data shows 154.8 million Americans have now been fully vaccinated against the coronavirus, with around 326.5 million doses administered as of Wednesday.
  • U.S. equity futures suggest a firmer open on Wall Street ahead of weekly jobless claims data at 8:30 am Eastern time and quarterly earnings from Walgreens Boots Alliance.

U.S. equity futures powered higher Thursday, extending a record run for the S&P 500 that formed part of the strongest first half performance in more than two decades, as investors geared-up for key job market data and the start of the second quarter earnings season.

Powered by low interest rates, supportive central banks and a waning pandemic, Wall Street enjoyed one of its best quarters in years over the three months ending in June, with the S&P 500 riding a five-day streak of record highs and the Nasdaq adding 9.5% for the period. 

Merger activity was a big factor in the gains, as well, with a global record of $1.5 trillion in new deals announced over the quarter, including $700 million in the U.S., as investors looked to close out transactions ahead of proposed tax cuts from President Joe Biden while taking advantage of near record-low borrowing costs.

Economic growth, tame bond markets and robust corporate earnings should provide a similarly supportive  backdrop for stocks over the second half of the year, as well, and if the Federal Reserve maintains its pledge not to move on interest rates until at least 2023, while providing a long runway for any changes to its $120 billion in monthly bond purchases, then a 4,500 point S&P 500 looks well within reach before the end of the year.

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Refinitv forecasts suggest second quarter S&P 500 earnings will rise 65.1% from last year to a share-weighted $378.9 billion, lead by a roaring comeback for industrial and consumer discretionary profits. 

Labor market data could tweak Fed expectations, however, and weekly jobless claims today, as well as Friday’s non-farm payrolls, will be closely watched for any hint of upward pressure beyond the current forecasts.

Roll it all together and you have another solid start for Wall Street trading Thursday, with futures contracts tied to the Dow Jones Industrial Average indicating a 75 point opening bell gain and those linked to the S&P 500 priced for a 5.5 point bump. 

Nasdaq Composite futures are looking at a modest 3.5 point dip even as benchmark 10-year Treasury note yields hold at 1.482% after yesterday’s stronger-than-expected reading of private sector job gains from payroll processing group ADP.

Micron Technology  (MU) – Get Report were a notable pre-market mover, falling 2% to 83.25 each after the chipmaker forecast robust current quarter sales of $8.2 billion amid rising data center demand following a stronger-than-expected third quarter earnings report.

Elsewhere, U.S. crude prices neared the $75 per barrel mark Thursday — following a 10% gain over the June quarter — after a bigger-than-expected decline in domestic stockpiles of 6.2 million barrel reported by the Energy Department yesterday. 

Brent crude was also on the move, rising 83 cents to $74.44 per barrel, ahead of today’s OPEC+ meeting in Vienna, with analysts expecting a modest paring of the group’s production cuts, which are likely to extend into April of next year. 

In Europe, stocks neared another all-time high in the early session, following a record reading for manufacturing output. But that was matched by a massive surge in input prices that likely forebodes a near-term spike in regional inflation that could erode growth prospects.

Overnight in Asia, stocks were on the back foot again Thursday, with volumes muted by a holiday in Hong Kong, as the region’s surge in Delta variant infections, alongside supply-chain pressures and input price increases, offset a jump in business and manufacturing sentiment.