Stock Futures Higher After a Sixth Straight Positive Month

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Principal Points

• US futures on Monday hover in the green, each major index higher by over 0.50% in pre-market hours
• European bourses kick off August with gains of over 1%, Stoxx 600 at a fresh intraday record

US stock futures moved up in pre-market trading on Monday ahead of the first opening bell for the month of August later today. Dow Jones futures at one point jumped over 200 points, while S&P500 futures and Nasdaq futures were higher by around 0.60% each. The positive tone of the market prior to the regular session would build on six consecutive months of solid gains for the three major averages.

Although volatility increased based on uncertain outlook for stocks due to higher inflation pressures, mixed economic data, and Delta strain jitters, the broad S&P500 index closed July with a gain of 2.3%. The Dow Jones Industrial Average and the Nasdaq Composite finished the month higher by 1.3% and 1.2%, respectively.

Inflation Expectations Fall Short

While inflation was a key concern for investors who feared betting aggressively on stocks, Friday’s inflation data improved inflation expectations for the US economy. Fed’s preferred gauge of inflation, the core personal consumption expenditures price index, rose 3.5% in June, on an annual basis. While still significantly above the Fed’s target of 2%, the indicator showed lesser-than-expected price pressures, below estimates of 3.6%.

In addition to the inflation data on Friday, economic growth in the US came in below the consensus. Second-quarter gross domestic product arrived at 6.5% on an annualized basis, considerably less than the projected 8.4% growth rate.

In individual stock performance, the past week ended the flurry of corporate earnings by technology giants. Amazon stock sank 7.56% after it reported slower-than-expected growth for the quarter ended June. The latest quarterly results by the e-commerce and cloud-computing giant missed expectations for the first time in three years. Moreover, the company forecasted the lofty revenue figures could not be sustained going into the third quarter of 2021.

The first trading week of August continues with a string of hot earnings reports. Lyft, Uber, General Motors, and Square are all lined up to report their financial results this week. So far, 59% of the S&P 500 companies that have published second-quarter performance, 88% have topped analyst expectations for earnings.

What Does This Week Hold?

This week also brings to the markets the nonfarm payrolls and employment data for the month of July. The widely-anticipated jobs report on Friday will indicate whether the US economy continues to expand, boosted by the consistent fiscal and monetary stimulus.

European bourses on Monday opened on a high note as investors were once again optimistic to dive into the risky assets. The pan-European Stoxx 600 is floating at an intraday all-time high during the regular trading session, up over 0.80% to levels above 465 points.

Individual economies’ indexes are also soaring today. All major markets in the bloc are flashing green across the board. UK’s FTSE100, Germany’s DAX, and France’s CAC40 are all higher by roughly 1.00%. Spain’s IBEX35 jumped 1.50% in the early trading hours.

In cryptocurrency, major digital assets are trading lower today after a strong weekend of gains. Ether spiked nearly 8% on Sunday, reaching a session high of $2,700 per coin. Bitcoin, over the weekend, jumped to a two-and-a-half month high of $42,550. The leading coin couldn’t sustain the gains and ended the day slightly in the red.

On Monday, Bitcoin is hovering right above the $40,000-threshold, while Ether gyrates near $2,600 per coin.