NASDAQ 100, Dow Jones, S&P 500: Lower after Fitch Downgrade; CVS Impresses

Highlights

• U.S. futures down after Fitch’s rating downgrade
• CVS Health reports impressive Q2 earnings and revenue
• Investors optimistic despite market uncertainties

Overview

As the U.S. stock market gears up for another day of trading, futures are showing a downward trend following Fitch Ratings’ decision to downgrade the long-term rating for the country.

The blue-chip Dow Jones Industrial Average futures have slipped 0.25%, while benchmark S&P 500 futures stand at 4580.50, down 0.45%, and tech-rated Nasdaq-100 futures are lower by 0.73%. This comes after Fitch cited concerns about the expected fiscal deterioration over the next three years.

Earnings: AMD Surges, SolarEdge Tumbles

On the earnings front, Advanced Micro Devices reported better-than-expected quarterly results, leading to a 1% rise in their stock during extended trading. However, SolarEdge Technologies experienced a 12% tumble as they missed second-quarter revenue expectations. These contrasting outcomes have left traders assessing the latest batch of second-quarter earnings results.

CVS Health Exceeds Expectations in Q2

CVS Health impressed with Q2 earnings and revenue that exceeded expectations. The company’s cost-cutting efforts and expansion into healthcare services following major acquisitions have paid off. Despite a decline in net income from 2022, CVS maintained strong earnings per share. The health services segment and retail pharmacy division contributed to revenue growth with increased prescription volume. The health insurance segment also recorded substantial gains. CVS’s resilience amid challenging market conditions and strategic moves position it for continued growth and profitability in the healthcare industry.

Earnings Season Surprises Bullish Investors

Despite the uncertainties, the ongoing earnings season has pleasantly surprised investors. FactSet data indicates that about 82% of S&P 500 companies reporting have posted positive surprises. These results have contributed to bullish investor sentiment, fueling the continuation of this year’s recovery since the third quarter began.

Traders Eagerly Awaiting ADP Jobs Data

Investors are beginning to explore the potential of an even more optimistic outlook, looking beyond the ’23 bear case to a plausible 2024 and 2025 bull case. The emerging possibilities have garnered attention and interest among traders, who now consider the 2024 earnings as the potential start of a new multi-year trend.

Additionally, traders eagerly anticipate the July ADP jobs report before the market opens. Economists polled by Dow Jones predict a 175,000 increase in jobs, a figure lower than the previous month’s 497,000 rise.

Short-Term Outlook:  Mixed as Traders Assess Fitch Downgrade, Earnings, Labor Market Data

As the day unfolds, market participants will closely monitor these economic indicators and earnings reports, adjusting their strategies accordingly in response to the dynamic market conditions.