Big Movers In August 2022
EPAM Systems (EPAM): Earnings, revenue and guidance beat forecasts as the software-engineering firm recovered from a slowdown earlier in the year.
SolarEdge Technologies (SEDG): Supply-chain issues and the strong U.S. dollar hurt profits at the renewable-energy company.
Constellation Energy (CEG): The utility company was viewed as a key beneficiary of renewable-energy provisions in the Inflation Reduction Act.
Ball (BALL): The provider of beverage tins missed estimates as higher inflation hurt demand for soda.
Cardinal Health (CAH): The drug distributor reported strong quarterly revenue, followed by reports that activist investor Elliott Management had built a large stake.
Match (MTCH): Revenue and guidance trailed consensus as demand for online dating slowed following the pandemic.
Key Economic Events Last Month
Job Growth Crushes Estimates
The U.S. economy added 528,000 jobs in July. It was more than twice the forecast amount and the biggest gain since February. The increase also pushed nonfarm payrolls above their pre-pandemic total for the first time. (5/8)
Housing at a crossroads?
July’s consumer price index (CPI) was unchanged from June, missing forecasts for a 0.2% increase. It was the first month since March that CPI missed estimates. (10/8) Other inflation measures including PPI (11/8) and PCE (26/8) also rose less than feared.
2nd Quarter GDP Revised Higher
The Commerce Department revised its estimate of gross domestic product (GDP) change in the second quarter from -0.9% to -0.5%. The higher reading, fueled by consumer spending, beat the -0.8% average estimate. (25/8)
Jerome Powell Sees ‘Pain’ as Fed Crushes Inflation
Federal Reserve Chairman Jerome Powell repeated a pledge to lower inflation to 2 percent. The effort “is likely to require a sustained period of below-trend growth.” He also expects a weaker job market and “some pain to households and businesses.” (26/8)
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESU22(Sep) | 16 Sep 2022 | ESZ22(Dec) | -4.3% |
| S&P 500 E-Mini Micro (@MES) | MESU22 (Sep) | 16 Sep 2022 | MESZ22 (Dec) | -4.3% |
| Nasdaq-100 E-Mini (@NQ) | NQU22 (Sep) | 16 Sep 2022 | NQZ22 (Dec) | |
| Nasdaq-100 E-Mini Micro (@MNQ) | MNQU22 (Sep) | 16 Sep 2022 | MNQZ22 (Dec) | -5.3% |
| Dow Jones E-Mini (@YM) | YMU22 (Sep) | 16 Sep 2022 | YMZ22 (Dec) | -3.9% |
| Dow Jones E-Mini (@MYM) | MYMU22 (Sep) | 16 Sep 2022 | MYMZ22 (Dec) | -3.9% |
Events to Watch This Month
| Date | Event | WhattoWatch |
|---|---|---|
| Fri, 2-Sept | Employment Report for August | Non-farm payroll changes and revisions, unemployment, wage inflation. |
| Wed, 7-Sept | Apple launch event | The technology giant will hold a product launch at 1 p.m. ET. New iPhones are expected. |
| Tues, 13-Sept Wed, 14-Sept |
Inflation reports for July | Consumer prices are due 13 September, followed by producer prices on 14 September. |
| Thu, 15-Sept | Retail sales | Retail sales in the premarket show consumer activity in August. |
| Wed, 21-Sept | Federal Reserve meeting and interest-rate decision | The central bank will announce potential changes to monetary policy at 2 p.m. ET. Chairman Powell speaks 30 minutes later. |
Sector Watch
Energy stocks continued to rebound as tight supplies and the Ukraine crisis lifted oil and natural-gas prices.
Utility stocks gained as investors anticipated benefits from the Inflation Reduction Act and renewable energy.
Health Care stocks declined as investors sold pharmaceuticals and medical-device makers.
Technology tumbled as weak demand weighed on semiconductors and cloud-computing names.
Noteworthy Calls & Predictions
Barry Bannister of Stifel: S&P 500 could return to 4,400 this year as cyclical growth stocks rebound. He favored software, media, technology and retail. Bannister added that inflation could slow and worries about the Federal Reserve raising interest rates are priced in.
StocksTiger 21, an investing club for ultrarich individuals, is seeing a historic shift toward equities. Chairman Michael Sonnenfelft told CNBC that members now have more exposure to stocks than real estate for the first time ever. They are focusing on green-energy plays in particular.
StocksMorningstar reported a $425.5 million inflow into renewable-energy funds in the first two weeks of August. It was more than triple the total for all of July. The shift came amid passage of the Inflation Reduction Act, which includes $369 billion of support for technologies like solar and wind power.
Green energyMultiple watchers of the semiconductor industry made bearish observations. Bloomberg detailed weak demand at companies like Nvidia and slowing investment at Samsung Electrics. Reuters cited analysts at Bernstein and Forrester seeing less growth in cloud computing. The videogame market, another big user of chips, is also set to shrink 8.7% this year, according to NPD.
SemiconductorsA PwC survey found that 50% of companies plan to reduce headcount in the next 6-12 months. Over half expect to freeze hiring and 44 percent may revoke job offers. The poll included 722 U.S. executives in early August.
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