Stock market news: August 1, 2019 - Yahoo Finance

U.S. stock futures were flat after the Federal Reserve on Wednesday indicated it was not on a set path toward still-lower rates. The signaling had initially sent risk assets reeling as investors scrambled to recalibrate to the prospect of less accommodative monetary policy than previously expected.

Here were the main moves in the market ahead of the opening bell, as of 8:39 a.m. ET:

S&P 500 futures (ES=F): -0.01%, or 0.25 points
Dow (YM=F): +0.05%, or 13 points
Nasdaq (NQ=F): +0.05%, or 3.75 points
10-year Treasury yield (^TNX): unchanged at 2.021%
U.S. dollar index (DX-Y.NYB): +0.33% to 98.84

Though the Federal Reserve delivered a 25 basis point rate cut, as expected, its members stopped short of promising further cuts in the near-term. Two members of the committee dissented with the decision to reduce rates, and favored keeping borrowing costs unchanged.

The monetary policy decision and subsequent remarks from Fed Chair Jerome Powell led many traders to characterize the policy move as a “hawkish cut.” After weeks of relatively low-volatility trading, the S&P 500 and Dow posted their largest drawdown since May, and the U.S. dollar surged. President Donald Trump, a vocal critic of the Fed under Powell who has repeatedly called for lower rates, weighed in with a Twitter post saying, “Powell let us down.”

Powell described the rate cut “as a mid-cycle adjustment, and markets are worried that means there isn’t much more easing coming,” Kit Juckes, global head of FX strategy at Societe Generale, wrote in a note. “Cue further equity market weakness and further dollar strength.”

Other economists, however, took the Fed’s noncommittal signaling to have been a strategic move to temper market expectations and provide a buffer for officials to remain data dependent in making their next decision after their September meeting.

Wednesday’s “Fed events may have given risk markets a little indigestion, but they also bought the Fed a little more flexibility going into the next FOMC meeting,” JPMorgan economist Michael Feroli wrote in a note. “We still look for one more easing in September, and continue to believe that ... the call in September depends on all of the data. While [Wednesday’s] move was motivated by global growth, trade policy and inflation developments, we expect September’s decision will also depend on domestic growth developments.”

Federal Reserve Chair Jerome Powell holds a news conference following the Federal Reserve's two-day Federal Open Market Committee Meeting in Washington, U.S., July 31, 2019. REUTERS/Sarah Silbiger

As of Thursday morning, markets priced in an about 50-50 probability of either a 25 basis point rate cut, or no change to key interest rates after the Fed’s September meeting, according to CME Group data.

That deluge of new domestic data releases ahead of the Fed’s next meeting came in mostly strongly Thursday. New unemployment claims edged up just slightly more-than-expected to 215,000 for the week ending July 27, according to government data. The four-week moving average, however, fell to 211,500, indicating ongoing tightness in the labor market. The Bureau of Labor Statistics releases its July jobs report Friday, on the heels of a stronger-than-expected report from the ADP/Moody’s survey on July’s private payrolls.

Two separate reports on U.S. manufacturing sector activity will also be released later in the morning from Markit Economics and the Institute of Supply Management.

Earnings update

Meanwhile, second-quarter earnings season continues to chug along.

Health insurance giant Cigna (CI) topped Wall Street’s expectations in quarterly results released Thursday morning, and raised its annual revenue and earnings forecast. This came a day after competitor Humana (HUM) also posted strong results and raised guidance. Cigna’s results were led by an about 75% jump in quarterly profit, with health services revenue – the unit that includes the Express Scripts pharmacy benefits business it bought last year – surging over last year.

Auto company General Motors (GM) also exceeded expectations on both the top- and bottom-lines, with North American profits rising 11% over last year. Adjusted automotive free cash flow was positive $2.5 billion in the quarter, more than reversing a loss of $100 million in the year-ago quarter. Sales and profit from China declined, however, and the company said it expects unit sales in the region to remain weak as an economic slowdown continues in the region. GM reiterated its full-year guidance to see adjusted EPS of between $6.50 and $7.00.

As of Thursday morning, companies comprising more than three-quarters of the S&P 500’s market capitalization had reported second-quarter results. Earnings have so far beaten by 5.4%, with 69% of companies exceeding their bottom-line estimates, according to Credit Suisse analyst Jonathan Golub. Assuming a typical beat rate for the rest of the quarter, aggregate EPS is on pace to rise 3.4% over last year, Golub added.

Companies including Aphria (APHA), Pinterest (PINS), Square (SQ) and U.S. Steel (X) are slated to report quarterly results after market close.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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