Pre-Market Market Movers
1. On Thursday, August 6, US stock index futures were mixed in pre-market trading. As of writing, Dow futures rose 0.17%, S&P 500 futures gained 0.10%, and Nasdaq futures declined 0.51%.
2. European markets showed modest gains, with the German DAX up 0.16%, the UK FTSE 100 up 0.08%, the French CAC 40 up 0.58%, and the Euro Stoxx 50 up 0.54%.
3. Oil prices edged higher, with WTI crude rising 0.89% to $75.89 per barrel and Brent crude climbing 1.15% to $80.36 per barrel.
Market News
JPMorgan warns that the July tech stock rout may have lasting structural effects. The July sell-off in global tech stocks was severe, and JPMorgan's latest assessment suggests it could fundamentally alter the market structure for tech trading. The bank warns that hedge funds may face a structural decline in their ability to participate, while retail investors could gain greater influence, potentially increasing volatility. The losses may force hedge funds to adopt stricter risk management and concentration limits, reducing their capacity to hold high-volatility tech stocks. Prime brokers might also reduce balance sheet space allocated to such strategies. If this assessment proves correct, tech trading could become more reliant on retail investors over the long term, making it more susceptible to volatility from leveraged ETFs, retail options buying, and margin accounts.
Federal Reserve Bank of San Francisco President Mary Daly expressed support for the Fed's decision to hold interest rates steady in July but warned of rising inflation risks. She highlighted two possible scenarios for inflation: one where it cools and another where price pressures intensify. Daly noted that the latter scenario is becoming increasingly likely, driven by tariff increases, rising energy costs, and ongoing AI investment. She cautioned that this could lead to broader and more persistent inflation, requiring more aggressive action from the Fed. Policymakers should closely monitor incoming data in the coming weeks.
US job cuts in July fell to a two-year low, while hiring plans strengthened. According to Challenger, Gray & Christmas, US employers announced 33,429 job cuts in July, down significantly from roughly 46,000 in June, marking the lowest monthly total in nearly two years. Hiring plans for July reached their highest level for that month since 2022. While the tech sector remains a major area for layoffs, accounting for nearly a third of all cuts this year due to AI's impact, strong demand in manufacturing and in-person services is supporting the job market. Attention now turns to the July non-farm payrolls report due on Friday, which is expected to show 83,000 new jobs added and the unemployment rate holding steady at 4.2%.
JPMorgan Chase CEO Jamie Dimon warned that leverage in financial markets is "quite high" and that hidden borrowing could amplify volatility. He noted that margin debt has reached record levels, and there is significant borrowing not captured by margin accounts, existing under other names. This leverage, both explicit and implicit, spans prime brokerage, hedge funds, ETFs, and Treasury arbitrage strategies. Dimon stated that the overall level of leverage is very high, increasing the likelihood of a single investor or fund triggering widespread market disruption.
Oil prices are falling despite a tighter physical market. Brent crude has dropped from near $100 per barrel in late July to below $80. The decline is partly due to diplomatic signals suggesting a potential agreement to restore partial passage through the Strait of Hormuz. However, the physical market is extremely tight, with Brent crude for October delivery trading at a premium of $1.50 over November contracts, a strong backwardation structure. Even if crude supply partially recovers, the refined products market remains in crisis, with global inventories depleted during the summer peak demand period, particularly for diesel.
Individual Stock News
SanDisk Corp. (SNDK.US) reported fourth-quarter results that beat expectations across the board, but its first-quarter guidance failed to meet the market's most optimistic forecasts, sending shares lower. Revenue surged 372% year-over-year to $89.7 billion, above the $83.9 billion consensus. Adjusted EPS came in at $39.25, surpassing the $34.45 estimate. Growth in generative AI and AI agents is driving demand for enterprise SSDs and NAND flash. Data center revenue doubled sequentially to $29.8 billion, indicating a shift from traditional mobile and PC flash to AI infrastructure. However, the company's first-quarter revenue guidance of $103-108 billion, while above the average analyst estimate of $104.7 billion, fell short of more bullish expectations around $111.6 billion. The adjusted EPS guidance of $44-46 also slightly missed the consensus of $45.58. The stock fell over 9% in pre-market trading.
Western Digital (WDC.US) also beat earnings and revenue expectations, but its stock dropped sharply after the report. Fourth-quarter revenue rose 44% year-over-year to $37.5 billion, above the $36.8 billion estimate. Adjusted EPS of $3.56 beat the $3.31 consensus. The company's first-quarter guidance of $40-42 billion in revenue was above the $40.6 billion average estimate. Despite strong demand for nearline high-capacity HDDs, the stock fell nearly 16% in pre-market trading. The decline was attributed to an "expectation cliff," as the stock had already surged around 201% year-to-date, pricing in the HDD shortage. The guidance, while above consensus, did not signal the more aggressive forward outlook seen from peers like Seagate, leading to disappointment.
Memory chip stocks fell broadly in pre-market trading, dragged down by SanDisk and Western Digital. SK Hynix fell over 6%, while Micron Technology and Seagate Technology both dropped over 4%.
AppLovin Corporation (APP.US) reported second-quarter revenue of $19.2 billion, up 53% year-over-year, but slightly below the $19.4 billion analyst estimate. Net profit rose 55% to $12.7 billion, with adjusted EPS of $3.76, slightly above the consensus of $3.75. The company's third-quarter revenue guidance of $20.55-20.85 billion, with a midpoint of $20.7 billion, was slightly below the $20.8 billion estimate. CEO Adam Foroughi noted that the company's gaming-focused ad business relies heavily on AI model improvements, but a significant performance leap did not materialize in the second quarter. The stock fell over 18% in pre-market trading.
Occidental (OXY.US) reported second-quarter profit that hit a four-year high, driven by a 19% surge in oil prices and rising production. Revenue reached $83.2 billion, up 57% and exceeding expectations by $10.7 billion. Adjusted EPS was $2.40, $0.55 above estimates. The realized price for crude oil soared over 50% year-over-year to $96.78 per barrel. Global average production rose 2.4% to 1.43 million barrels of oil equivalent per day, driven by strong US output. However, international production in Algeria, Oman, Qatar, and the UAE fell 12% due to regional conflicts. The company now expects 2026 capital expenditure of $55-59 billion, down from a previous forecast of $63-67 billion. The stock rose nearly 2% in pre-market trading.
Advertising giant WPP PLC (WPP.US) reported first-half results that, while showing declines in revenue and profit, exceeded analyst expectations. Operating profit fell 3.4% to £398 million ($536 million), above the £347.2 million average estimate. Revenue, excluding pass-through costs, declined 5.6% to £4.75 billion, also above the £4.65 billion estimate. WPP plans to achieve £500 million in annual cost savings over the next few years, reinvesting the savings into growth areas. The company recently expanded its AI-focused business unit, WPP Enterprise Solutions, which will offer AI consulting, smart e-commerce, customer data management, loyalty operations, and content automation. The stock surged over 25% in pre-market trading.
Moderna, Inc. (MRNA.US) achieved a major milestone after receiving FDA approval for its first mRNA-based flu vaccine, mFLUSIVA, for adults aged 50 and older. This is the first approved mRNA flu vaccine in the US and Moderna's fifth product globally. The approval comes after a previous FDA setback and is a key part of Moderna's growth strategy as demand for its COVID-19 vaccine wanes. The stock rose nearly 4% in pre-market trading.
Key Economic Data and Events
20:30 ET: US Initial Jobless Claims (week ending August 1)
05:30 ET (next day): St. Louis Fed President Alberto Musalem (2028 FOMC voter) speaks on the US economy and monetary policy
Earnings Calendar
Friday Pre-Market: Airbnb (ABNB.US), Roku (ROKU.US)
Friday Pre-Market: Yuchai International (CYD.US)
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