Although the economic data was surprisingly bearish, the tech earnings speculation outweighed everything else, providing another good day for the relief rally.  The T2122 indicator continues in a short-term overbought condition for the indexes, but the bulls appear more than willing to buy up risk ahead of the GDP report and FOMC rate increase betting big on tech giant earnings results next week.  The miss and the nearly 30% decline indicated after the SNAP earnings disappointment was shaken off this morning as the premarket pump recovered early losses.

Asian markets traded mixed overnight as Japan continues to report rising inflation.  European markets trade with modest gains across the board in a choppy session after the ECB rate increase.  U.S. futures recovered much of the overnight losses pointing to a flat open as I write this report ahead of earnings results and PMI data.  Plan your risk carefully, heading into next week’s significant market-moving reports.

Economic Calendar

Earnings Calendar

We have just over 20 confirmed reports this morning as we wind down this trading week.  Notable reports include AXP, ALV, CLF, GNTS, HCA, NEE, NEP, RF, SLB, & VZ.

News & Technicals’

On Thursday, Amazon said it would buy primary-care provider One Medical for $3.9 billion.  Amazon’s three most significant acquisitions are a grocery chain, a movie studio, and a health company.  These deals show the company’s willingness to spend big to grow fast in new businesse areas identified as strategic growth opportunities.  The office vacancy rate in San Francisco rose to 24.2% in the second quarter from 23.8% in the prior period, according to CBRE research.  Big tech employers like Salesforce and Google are staying flexible when it comes to bringing people back.  Small businesses that count on tech workers struggle to stay afloat if they haven’t already closed their doors.  Convenience store chain 7-Eleven has slashed roughly 880 corporate jobs in the United States.  The eliminations come roughly a year after it completed its $21 billion acquisition of rival C-store business Speedway.  According to a spokesperson, the cuts were of certain jobs in the company’s Irving, Texas, and Enon, Ohio, support centers, as well as field support roles.  The average price for a used car is $33,341, which is $172 below the peak in March, according to CoPilot research.  Nearly new vehicles (1 to 3 years old) have an average listing price of $13,145 more than if typical depreciation had occurred over the past two years.  A separate report shows that high used-car prices have pushed the average trade-in value above $10,000 for the first time.  Snap missed on the top and bottom lines in its second-quarter earnings report.  The company authorized a stock repurchasing program of up to $500 million.  Snap said it plans to “substantially slow our hiring rate, as well as the rate of operating expense growth.”  Treasury yields declined sharply in early Friday trading in response to ECB action.  The 2-year declined to 3.03%, the 5-year dipped to 2.93%, the 10-year fell to 2.82%, and the 30-year dropped to 3.02%.

Despite the rise in jobless claims and the Philly Fed MFG Index’s substantial decline, the bulls had another good day on Friday, choosing to favor tech earnings speculation over economic data.  The after-the-bell earnings miss from SNAP has the stock indicated to decline nearly 30% at the open, but as I write this report, the premarket pump has also shaken off that disapointment.  Indexes remain in a short-term oversold condition, and volume remains noticeably low as the relief rally extends.  Today we get the latest reading on the PMI Flash, and then we wait on next week’s GDP and FOMC rate decision, along with a hectic schedule of tech giant earnings.  Though a pullback could occur at any time, the remarkable willingness to rush into risk ahead could keep the bulls in charge heading into the weekend.

Trade Wisely,

Doug