S&P 500 E-minis September contracts rose 0.1% by 8:40 AM in New York after having dropped as much as 0.3% overnight. The broader index added 2.2% in July, its best performance since February as macro concerns waned, and the global situation was favorable for the US equities. In June, however, the S&P retreated 2.1% amidst a higher demand for safer assets stirred by the spillovers of the Greek and Chinese meltdowns. All in all, the index has not regained much ground as the real economy and it is not in its best shape, with Q2 GDP growth just below previous estimates at 2.3%, almost no increase in real wages, weak inflation and the ongoing contraction in energy sector.
The most recent bearishness was a factor by report by the US government saying that employment cost index (ECI) fell short of projections, in line with Q2 GDP growth. Almost immediately thereafter, the US dollar slipped, with the greenback index down 0.69% at 96.886, and 0.2% down against the yen, at 123.93. The euro rose 1% against the greenback, to $1.1048.
US wages rose just 0.2% in Q2, their slowest pace since 1982 when the measure was started. In the previous quarter, salaries added 0.7%, according to the Labor Department data.
As far as the US earnings season goes, some 70% of the S&P-listed enterprises have reported, 74% out of those surpassing previous estimates of solid sales outlook. However, consensus forecast is corporate profits dropped 4% in Q2, a positive revision from the 6.4% contraction expected in early July.
Oil prices extended their losses as OPEC once again reiterated no production cuts should be expected. Formerly a dominant force in the global energy trading, the cartel have seen better times and are now struggling to retain its share of the market. Copper and other metals edged lower as demand-side concerns exacerbated on the renewed rout in mainland China’s stocks. With the Chinese situation possibly out of the Communist government’s control, the world’s second-biggest commodities consumer might see a more dramatic contraction in the real economy, suggesting an even weaker demand for raw materials.
Nasdaq futures dropped 0.18% just before the open.
Michigan University is reporting a July consumer sentiment report, forecast to stand at 94.0 points, so this will be a driving factor behind Wall Street today. A preliminary estimate of the measure was at 93.3, so if the recent forecast is confirmed, stocks are likely to gain some ground.