Dow Futures Falls Just 10 Pts; ISM Manufacturing PMI Data Due

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By Peter Nurse — U.S. stocks are seen opening marginally lower Monday, handing back some of the recent gains ahead of the release of more corporate earnings and the key monthly employment report.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 10 points or 0.1%, S&P 500 Futures traded 10 points or 0.2% lower, and Nasdaq 100 Futures dropped 20 points or 0.2%.

The new month is set to start on a slightly negative note, as investors consolidate after the best month of the year so far. The Dow Jones Industrial Average gained 6.7% in July, the S&P 500 gained just over 9.1%, while the Nasdaq climbed over 12%, all three averages recording their biggest monthly gains since 2020.

Second quarter U.S. corporate results have mostly been stronger than expected. Of the 56% of S&P 500 companies that have reported earnings so far, more than half have beaten analyst estimates, according to analysts at Goldman Sachs, above the long-term average of 47%.

That said, the rate of earnings beats is below the 62% average pace set in the last five quarters, Goldman added, suggesting there could still be further downside.

The corporate deluge continues Monday, with the likes of Activision Blizzard (NASDAQ:ATVI), Devon Energy (NYSE:DVN), and Loews (NYSE:L) due to report.

Aside from the generally upbeat corporate news, speculation that the Fed may not need to tighten as aggressively as some had feared, in the wake of data showing the U.S. economy contracted for the second quarter in a row, has helped the tone.

This means Friday’s monthly employment report will be even more highly anticipated than usual. The report is expected to show that the labor market remains robust, with 250,000 jobs added in July, despite the recent barrage of Fed rate hikes.

Ahead of this, investors will also be paying particular attention to the Institute of Supply Management’s manufacturing PMI later in the session, particularly after manufacturing activity in both China and across the Eurozone contracted last month.

Oil prices largely fell Monday after the unexpected drop in the Chinese manufacturing PMI raised concerns over slowing crude demand in the world’s largest importer.

Attention this week will be on the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, which is set to meet on Wednesday to discuss future supply.

By 7 AM ET, U.S. crude futures traded 1.5% lower at $97.10 a barrel, while the Brent contract traded 1.2% lower at $102.73.

Additionally, gold futures rose 0.4% to $1,788.60/oz, while EUR/USD traded 0.3% higher at 1.0252.

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