Durable Goods Orders Increased Less Than Expected

Pre-market futures are improving this morning, after closing out last week’s trading on weaker footing. The blue-chip Dow is presently up +580 points, +1.1% and the S&P 500 +60 points, +0.81%. The tech-heavy Nasdaq leads the way +357, +1.26%, while the small-cap Russell 2000 is +2 points at this hour, +0.06%. Tensions in and around Iran cooled over the weekend, bringing down spot oil prices as well.

We also see the latest publicly traded memory chip company this morning: CXMT Corp., formerly ChangXin Memory Technology, is setting records as the newest entrant on the Shanghai STAR exchange. The Chinese AI play rose +466% in its first day of trading, making it the largest semiconductor company in the history of the Shanghai market. Compare this with South Korea’s SK Hynix (SKHY), which is up +3.8% today, and Micron Technologies (MU), +1% in today’s pre-market.

Durable Goods Orders Mixed for June

Headline Durable Goods Orders for June came in a small fraction of expectations: +0.3% from a consensus estimate of +2%. Technically, this is the third positive print in the last four months, and comes off the lowest month of the year: -4.5% in May. These are preliminary numbers that will smooth out in a couple weeks, but its clear durable goods orders are seeking equilibrium.

Ex-Transportation, its +0.6% reached only a third of the prior month’s upwardly revised +1.8%. Non-Defense, ex-aircraft (a proxy for normal enterprise spending) came in at +0.9%, 20 basis points (bps) higher than projections, and rose half a point on the May revision to +1.9%. Shipments roared ahead +1.9% — the highest tally we’ve seen since 2021.

What to Expect from the Stock Market This Week

Q2 earnings season shifts to a higher gear this week, with “Mag 7” stocks Meta Platforms (META) and Microsoft (MSFT) releasing quarterly results Wednesday after the close. Apple (AAPL) and Amazon (AMZN) report on Thursday afternoon — and Apple should be interesting, as it has begged off the AI race and thus will not see a considerable hit to free cash flow. Will this make a difference to investors?

Besides these important earnings reports, we’ll see Q2 results for Boeing (BA) Tuesday morning, with Exxon Mobil (XOM) and Chevron (CVX) Friday ahead of the bell. These are but a smidgeon of the more than 900 companies scheduled to report quarterly earnings this week alone.

FOMC Meets This Week, Interest Rate Decision Wednesday

Commencing tomorrow and concluding Wednesday afternoon, the Federal Open Market Committee (FOMC) meets on monetary policy this week. Odds are strong that the 3.50-3.75% Fed funds rate will remain in place, where it has been all year. Biases had been for a downward move on the Fed’s next policy shift, but in recent months with the Iran war ongoing, high oil prices (Brent crude rose above $100 per barrel last week) are turning the tide in FOMC sentiment toward a rate hike sometime this year.

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This article originally published on Zacks Investment Research (zacks.com).

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