Overnight Markets and News

Sep S&P 500 E-minis (ESU18 -0.03%) this morning are trading slightly higher as the market anticipates a strong Q2 U.S. GDP report this morning with a consensus estimate of +4.2%. Stocks are also seeing support from a +4% pre-market gain in Amazon.com, which rallied on much stronger than expected Q2 earnings. However, Twitter is sharply lower by -15% in pre-market trading after disappointing news in a shareholder letter with an expected decline in users and weaker-than-expected earnings.

The EuroStoxx 50 index is up +0.5% on favorable earnings and upward momentum after this week's sharp rally to a 5-week high. Asian stocks today closed mostly higher: Japan Nikkei Index +0.56%, Hong Kong Hang Seng +0.08%, China Shanghai Composite -0.30%, Taiwan TAIEX Index +0.59%, Australian S&P 200 +0.89%, Singapore Str. Times -0.11%, South Korea KOSPI 200 +0.28%, India BSE Sensex 30 +0.95%, Turkey ISE National 100 +0.28%.

Sep 10-year T-notes (ZNU18 unch) this morning are up 1 tick with some support from the BOJ's continued defense of its JGB yield target. The dollar index (DXY00 +0.14%) this morning is slightly higher by +0.07%, with EUR/USD (^EURUSD -0.15%) down -0.08% and USD/JPY (^USDJPY -0.03%) down -0.09%. EUR/USD was undercut by today's slightly weaker-than-expected French Q2 GDP report of +1.7% y/y versus expectations of +1.9% y/y.

The BOJ today again defended the 0.1% upper limit of its 10-year JGB yield target by offering to buy an unlimited amount of 5-10 year bonds at 0.1%, lower than the 0.11% level purchase level earlier this week. The 10-year JGB yield has risen this week on speculation that the BOJ at its meeting this coming Monday/Tuesday may tweak its policy in a tighter direction.

China extended its review period for the Qualcomm-NXP deal as it seeks to deflect blame for the companies saying that the deal is dead.

U.S. Stock Preview

Key U.S. news today includes: (1) Q2 GDP (expected +4.2% q/q annualized, Q1 +2.0%), (2) revised-Jul University of Michigan U.S. consumer sentiment index (expected unch at 97.1, prelim-Jul -1.1 to 97.1).

Notable S&P 500 earnings reports today include: Twitter (consensus $0.16), Exxon Mobil (1.26), Ventas (1.00), Moody's Corp (1.88), Aon (1.64), AbbVie (1.98), Weyerhaeuser (0.43), Cabot Oil (0.20), Goodyear (0.61), Iron Mountain (0.53), Merck (1.03), Colgate-Palmolive (0.77), Phillips 66 (2.19), Chevron (2.08), Franklin Resources (0.74).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week: none.

Market Comments

Sep S&P 500 E-minis this morning are trading slightly higher as the market anticipates a strong Q2 U.S. GDP report this morning with a consensus estimate of +4.2%. Thursday's closes: S&P 500 -0.30%, Dow Jones +0.44%, Nasdaq 100 -1.44%. The S&P 500 on Thursday closed lower on a slide technology stocks led by a 19% plunge in Facebook after the company reported fewer than expected active daily users in June and the CFO warned that sales growth will continue to slow through the rest of the year. In addition, the U.S. Jun durable goods orders report of +1.0 and +0.4% ex transportation was weaker than expectations of +3.0% and +0.5% ex transportation. Stocks were supported by strength in energy stocks after crude oil prices rose +0.45% to a 2-week high.

Sep 10-year T-notes this morning are up 1 tick with some support from the BOJ's continued defense of its JGB yield target. Thursday's closes: TYU8 -10.00, FVU8 -5.50. Sep 10-year T-notes on Thursday closed lower on reduced safe-haven demand for T-notes as trade tensions eased on Wednesday's US/EU tariff cease-fire. T-notes were also undercut by increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 2-week high.

The dollar index this morning is slightly higher by +0.07%, with EUR/USD down -0.08% and USD/JPY down -0.09%. Thursday's closes: Dollar Index +0.387 (+0.41%), EUR/USD -0.0086 (-0.73%), USD/JPY +0.25 (+0.23%). The dollar index on Thursday closed higher on weakness in EUR/USD on dovish comments from ECB President Draghi who said “it's too early to declare victory” on inflation. The dollar was also boosted by the increase in T-note yields, which improves the dollar's interest rate differentials.

Metals this morning are trading lower with Aug gold down -8.0 (-0.65%), Sep silver down -0.135 (-0.87%), and Sep copper down -0.009 (-0.30%). Thursday's closes: Aug gold -6.1 (-0.50%), Sep silver -0.094 (-0.60%), Sep copper +0.00005(+0.02%). Metals on Thursday settled mixed. Metals prices were undercut by a stronger dollar and by an easing of trade tensions after Wednesday's US/EU tariff cease-fire. Copper closed higher on signs of tighter supplies after LME copper inventories fell -450 MT to 251,950 MT, a 6-month low.

Sep WTI crude oil is down -0.17 (-0.24%) and Sep gasoline is up +0.0010 (+0.05%). Thursday's closes: Sep crude +0.31 (+0.45%), Sep gasoline +3.15 (+1.51%). Sep crude oil and gasoline on Thursday rallied to 2-week highs and closed higher. Crude oil prices were boosted by Saudi Arabia's suspension of crude oil shipments through the Bab el-Mandeb Strait after two oil tankers came under attack from Yemeni Houthi militia. Crude oil prices were also boosted by the increase in the crack spread to a 1-month high, which gives added incentive to refiners to boost their crude purchases to refine more gasoline and other petroleum products.

Overnight U.S. Stock Movers

Amazon.com (AMZN -2.98%) climbed nearly 3% in after-hours trading after it reported Q2 operating income of $2.98 billion, above consensus of $1.71 billion, and forecast Q3 operating income of $1.4 billion to $2.4 billion, higher than consensus of $1.2 billion.

Twitter (TWTR -2.89%) is sharply lower by -15% in pre-market trading after disappointing news contained in its shareholder letter with an expected decline in users and weaker than expected earnings.

Chipotle Mexican Grill (CMG -1.08%) rose 5% in after-hours trading after it reported Q2 comparable sales rose +3.3%, higher than consensus of +2.7%.

Expedia (EXPE -1.38%) jumped 11% in after-hours trading after it reported Q2 adjusted EPS of $1.38, stronger than consensus of 89 cents.

Boston Beer (SAM -4.71%) slumped 16% in after-hours trading after it reported Q2 EPS of $1.98, well below consensus of $2.81.

Edwards Lifesciences (EW -0.04%) slid more than 5% in after-hours trading after it forecast Q3 adjusted EPS of 93 cents to $1.03, below consensus of $1.08.

Lam Research (LRCX +2.58%) fell more than 3% in after-hours trading after it forecast Q1 revenue of $2.30 billion, below consensus of $2.76 billion.

Maxim Integrated Products (MXIM +0.27%) gained almost 2% in after-hours trading after it reported Q4 adjusted EPS of 73 cents, higher than consensus of 70 cents, and then forecast Q1 adjusted EPS of 72 cents to 78 cents, stronger than consensus of 69 cents.

Electronic Arts (EA -3.14%) tumbled almost 7% in after-hours trading after it forecast full-year adjusted revenue of about $5.55 billion, weaker than consensus of $5.60 billion.

National Instruments (NATI +0.62%) rallied more than 6% in after-hours trading after it reported Q2 adjusted EPS of 34 cents, better than consensus of 25 cents, and then forecast Q3 adjusted EPS of 32 cents to 46 cents, the midpoint higher than consensus of 32 cents.

First Solar (FSLR -0.68%) fell more than 7% in after-hours trading after it forecast full-year gross margin of +20.5% to +21.5%, below consensus of +22.1%.

Starbucks (SBUX -0.33%) gained 1% in after-hours trading after it reported Q3 comparable sales rose +1.0%, better than consensus of +0.8%.

Juniper Networks (JNPR +0.18%) dropped 7% in after-hours trading after it forecast Q3 revenue of $1.14 billion to $1.20 billion, weaker than consensus of $1.22 billion.

Cypress Semiconductor (CY +2.03%) rose almost 3% in after-hours trading after it forecast Q3 adjusted EPS of 36 cents to 40 cents, higher than consensus of 35 cents.