Daily Game Plan

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  8:30ET Nonfarm Productivity, Unit Labor Costs, Initial Jobless Claims; 9:45ET S&P Global
US Manufacturing PMI; 10:00ET Construction Spending, ISM Manufacturing, ISM Prices Paid – New Orders – Employment

HIGHLIGHTS and News:  

• Nvidia Added $329 Billion In Value, Most In Market History
• Taco Bell to roll out AI drive-thru ordering at its restaurants globally; starting this year in the US
  
• The Chicago Bears play tonight
• US homeowners mortgages classified as “seriously underwater” drop to the lowest in at least five years
• WSJ reporter released by Russia in multi-country prisoner swap
• USDJPY holds key .618 Fibonacci support on the nose

World equities are weaker on the back of softer demand and a macro backdrop that remains beset by challenges. The Caixin/S&P Global manufacturing PMI in China fell
sharply back into contraction territory, its lowest reading since October and missing forecasts for a continued expansion. Euro zone manufacturing activity remained mired in contraction in July, with output declining at its fastest pace this year. The U.S.
equivalent surveys from ISM and S&P Global are also due today. The BOE cut rates for the first time since early 2020 and signaled further cautious reductions ahead. BOE’s Bailey cautioned on cutting too quickly or by too much.       

EQUITIES:  

US equity futures are mixed, with small cap Russell 2000 contracts lower, while Nasdaq leads gains. The risk-off mood in Europe failed to put a damper on the outlook for US equities after
a powerful rally on Wednesday. Meta impressed overnight with its quarterly update, sending its stock up 7% ahead of today’s opening bell and steadying the ship for the Magnificent Seven mega caps. AI-bellwether Nvidia soared 13% yesterday and added $330 billion
in market cap in just one day – the biggest such gain in history. Jobless claims data today and July’s unemployment print tomorrow will provide further clues on the state of the labor market, after Fed Chairman Powell signaled that officials are on course
to cut interest rates next month. Investors will also be watching earnings from Apple and Amazon.com after the close for further evidence on whether big investment in artificial intelligence translates into better returns. Futures ahead of the bell: E-Mini
S&P +0.4%, Nasdaq +0.5%, Russell 2000 -0.2%, DJI -0.02%

Futures ahead of the data: E-Mini S&P +0.4%, Nasdaq +0.5%, Russell 2000 -0.2%, DJI -0.02%

In pre-market trading, NVDA is up another 2.7% while META jumps over 8%.  Arm Holdings (ARM) slumped 10% following a conservative revenue forecast, while Qualcomm lost 1% on flagging
a revenue hit after the US revoked one of its export licenses for sanctioned Chinese telecom firm Huawei.  Carvana (CVNA) shares rose as much as 14% as the online used-car dealer reported revenue for the second quarter that beat. Western Digital Corp (WDC)
dropped 6% after forecasting first-quarter revenue below estimates. Alphatec Holdings (ATEC) shares slide 19% after the medical devices maker reported a larger loss per share in the second quarter than expected. Aurora Innovation (AUR) is trading lower by
10% after the developer of autonomous-driving technology offered up to $350 million in class A shares. Hershey (HSY) slides 7% after the chocolate bar maker reported adjusted earnings per share and sales for the second quarter that missed estimates. Moderna
(MRNA) shares sink 12% after the vaccine maker cut its revenue forecast for the full year.

S&P 500 relative to the equal-weight S&P 500 ETF held just above key support

Semiconductor ETF relative to IWM bounced after touching its key 200dma in the pair.

European gauges are lower on a series of disappointing results from automakers and Societe Generale SA, erasing much of the previous session’s tech-fueled gains. The Stoxx 600 index weakened
after BMW AG’s earnings slowed and German rival Volkswagen AG’s margins declined, with both automakers suffering from weak demand in China. A poor performance in Societe Generale SA’s retail unit sent the stock plummeting 7%, dragging down European peers.
Shell Plc rose after reporting second-quarter earnings that beat estimates and confirmed another $3.5 billion of share buybacks. Rolls-Royce Holdings jumped 11% after raising its profit guidance for the year and said it will reinstate dividend payments. Stoxx
600 -0.35%, DAX -1.1%, CAC -1.1%, FTSE 100 -0.05%.  Banks -2%, Media -1%, Insurance -0.9%. REITs +2%, Retail +1.6%, Financial Services +0.6%.

Shares in Asia were mostly lower with the MSCI Asia Pacific Index falling 0.6%. Japanese stocks including Toyota Motor (-8.5%) were among the biggest drags, offsetting gains in tech shares
that tracked advances in US. Weaker manufacturing activity out of China knocked Chinese stocks back into the red, while Japan’s Topix skidded more than 3% in a delayed reaction to the previous day’s BoJ move and yen spike. Japan’s real estate shares tumbled
the most since March 2020 on concern mortgage rates will increase and sap demand. Topix -3.25%, Nikkei 225 -2.5%, Vietnam -2%, Singapore -1%, CSI 300 -0.65%, Hang Seng Index -0.2%. Taiwan +2%, Philippines +1.1%, Indonesia +1%, ASX 200 +0.3%, Kospi +0.25%,
Sensex +0.15%.

FIXED INCOME: 
 

Treasuries are slightly lower across the curve, while gilts outperform after Bank of England cut interest rates by 25 basis points to 5% in a 5-4 vote split. US yields
were already higher leading int the BOE rate decision, giving back some of Wednesday’s late gains into month-end. For the US session, focus will switch back to data with initial jobless claims and manufacturing gauges expected.  10-year yield trades around
4.05%, cheaper by 2bp on the day. 2s10s, 5s30s curves are slightly flatter.

METALS: 

Gold slipped from near record levels as the dollar rebounded, as investors weighed the prospects of the Federal Reserve cutting interest rates in September, and elevated
tensions in the Middle East. Powell’s comments yesterday suggested the Fed’s battle against inflation might be nearing its end, which initially supported gold. Market attention now shifts to Friday’s US payrolls report, which could influence the likelihood
of a September rate cut.  Spot gold -0.3%, silver -0.15%.

ENERGY:   

Oil prices added to Wednesday’s jump on rising Middle East tensions as the OPEC+ producer group held its latest meeting in London. The Joint Ministerial Monitoring
Committee (JMMC) is unlikely to recommend an oil output policy changes. Sources also said that tweaking the OPEC+ plan to gradually phase out production cuts is not in the cards.  The committee is focused on compensation according to a delegate. Oil traders
loaded up on call options amid a spike in Middle East tensions. More than 300,000 Brent call option contracts traded yesterday. US gasoline demand jumped to the highest since 2019 in May, a sign the summer driving season started off stronger than initial figures
had shown. WTI +0.7%, Brent +0.7%, US Nat Gas -0.1%, RBOB +0.3%.

CURRENCIES:   

In currency markets, the yen slid after earlier extending Wednesday’s BOJ-related surge, while the dollar index was firmer despite the Fed optimism for a September
rate cut. The dollar and Swiss franc rallied as growing concerns about escalating tensions in the Middle East prompted selling in higher-risk assets and raised demand for haven currencies. Sterling slipped to a three-week low as the BOE cut rates. USDJPY bounced
after touching (exactly) the key .618 Fibonacci retracement on the year.  US$ Index +0.25%, GBPUSD -0.5%, EURUSD -0.35%, USDJPY +0.5%, AUDUSD -0.1%, USDNOK -0.1%, USDCHF -0.05%.

Spot Bitcoin +0.4%, Spot Ethereum -0.5%.

TECHNICAL LEVELS:  

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

• Upgrades
• C.H. Robinson (CHRW) Raised to Overweight at JPMorgan; PT $110
• Carvana (CVNA) Raised to Overweight at Wells Fargo
• Datadog (DDOG) Raised to Buy at BTIG; PT $143
• Entegris (ENTG) Raised to Buy at Seaport Global Securities; PT $150
• Raised to Outperform at Mizuho Securities; PT $143
• First Solar (FSLR) Raised to Buy at DZ Bank; PT $280
• GE Vernova (GEV) Raised to Overweight at Morgan Stanley; PT $220
• Meta Platforms (META) Raised to Buy at Punto Casa de Bolsa; PT $571.58
• Pegasystems (PEGA) Raised to Buy at Loop Capital; PT $84
• Reddit (RDDT) Raised to Buy at Loop Capital; PT $75
• Silgan (SLGN) Raised to Neutral at JPMorgan; PT $53
• UMC (2303 TT) ADRs Raised to Buy at Goldman; PT $9.70
• Waters (WAT) Raised to Outperform at Leerink; PT $375
• Wingstop (WING) Raised to Outperform at Raymond James
• Downgrades
• Allied Properties Real Estate (AP-U CN) Cut to Sector Perform at RBC
• ALX Oncology (ALXO) Cut to Market Perform at LifeSci Capital; PT $4
• American Tower (AMT) Cut to Hold at Accountability Research; PT $225
• BILL Holdings Inc (BILL) Cut to Peerperform at Wolfe
• Bunge Global (BG) Cut to Neutral at Citi; PT $114
• Capital Power (CPX CN) Cut to Reduce at Veritas Investment Research Co
• Etsy (ETSY) Cut to Market Perform at Oppenheimer
• Host Hotels (HST) Cut to Neutral at Compass Point; PT $18
• Instructure (INST) Cut to Market Perform at Raymond James
• IPG Photonics (IPGP) Cut to Neutral at Seaport Global Securities
• Lion Electric (LEV) Cut to Underperform at CIBC; PT 65 cents
• MacroGenics (MGNX) Cut to Neutral at BTIG
• Public Storage (PSA) Cut to Hold at Truist Secs; PT $306
• SiteOne Landscape (SITE) Cut to Hold at Stifel; PT $150
• Tenable (TENB) Cut to Neutral at DA Davidson; PT $40
• United Therapeutics (UTHR) Cut to Neutral at Ladenburg Thalmann
• Voya Financial (VOYA) Cut to Equal-Weight at Morgan Stanley; PT $76
• Western Digital (WDC) Cut to Hold at Summit Insights
• WSP Global (WSP CN) Cut to Reduce at Veritas Investment Research Co
• Zeta (ZETA) Cut to Equal-Weight at Morgan Stanley; PT $30
• Initiations
• Greystone Housing Impact Investors LP (GHI) US Rated New Buy at Janney Montgomery; PT $17
• Medpace Holdings (MEDP) Rated New Hold at Truist Secs; PT $415
• Onestream (OS) Rated New Outperform at Baird; PT $32

Data sources: Bloomberg, Reuters, CQG