US Stock Market Outlook: Indices Drop, Nonfarm Payrolls Ahead, Amazon Falls Over 8%
U.S. Stock Market Update
Pre-Market Trends
On Friday, U.S. stock futures fell across the board, with Nasdaq futures dropping over 1%. The U.S. Labor Department is set to release the July non-farm payroll data at 20:30 Beijing time, marking a critical moment for the financial markets during this "48-hour" period from Wednesday to Friday.
Economic Context
Despite a gradual slowdown in hiring since April, the Federal Reserve maintained interest rates this week. Chairman Powell noted that while there are downward risks in the labor market, it remains "balanced," indicating a wait-and-see approach from policymakers. Recent labor-related data suggests resilience in the U.S. economy amid complex trade negotiations, leading to a reduction in expectations for interest rate cuts this year. However, with two more non-farm employment and inflation reports pending, the possibility of a rate cut in September remains.
Major Stock Movements
Most tech stocks saw declines in pre-market trading. Amazon fell over 8%, AMD dropped more than 3%, and Broadcom decreased by over 2%. Notably, Apple rose nearly 2%.
Amazon's Earnings Report
Amazon's second-quarter earnings report revealed net sales of $167.7 billion, surpassing analyst expectations of $162.1 billion. However, disappointing growth in its cloud business, AWS, and a weaker third-quarter profit guidance raised concerns among investors.
- Q2 total revenue: $167.7 billion (up 13% YoY)
- Net profit: $18.2 billion (up 35% YoY)
- Capital expenditures reached a record $31.4 billion, up about 90% YoY.
AWS's profit margin shrank to 32.9%, down from 39.5% in Q1 and 35.5% YoY.
Apple's Strong Performance
Apple reported impressive earnings, with Q3 revenue reaching $94.036 billion, a 10% YoY increase. The iPhone revenue surged, partly due to a rebound in the Chinese market, marking the first YoY growth in two years.
- Net profit: $23.434 billion (up 9% YoY)
- Earnings per share: $1.57 (up 12% YoY)
- Revenue from Greater China: $15.369 billion (up 4.4% YoY)
Apple also announced a cash dividend of $0.26 per share.
Coinbase's Mixed Results
Coinbase's second-quarter report showed a profit of $1.4 billion, primarily due to investment gains from its stake in Circle. However, total revenue fell short of expectations, rising only to $1.5 billion from $1.4 billion YoY.
Figma's IPO Success
Figma's stock surged over 19% in pre-market trading after a strong IPO debut, where it opened at $85, nearly three times its IPO price of $33.
Reddit's Impressive Growth
Reddit's stock jumped nearly 15% after reporting Q2 revenue of $500 million, a 78% increase YoY, and a net profit of $89 million.
Market Outlook
As August approaches, historical trends suggest it may be a challenging month for stocks, particularly growth stocks, amid renewed inflation concerns and fading hopes for a Fed rate cut.
Upcoming Economic Data
Key economic indicators to watch include:
- U.S. unemployment rate for July
- Adjusted non-farm payroll figures
- S&P Global Manufacturing PMI final value
- ISM Manufacturing PMI
- Michigan Consumer Sentiment Index final value
Investors remain cautious as they navigate these developments.
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