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Morning Briefing – August 3, 2023

Market Overview

Market sentiment is wavering as stocks are set to further yesterday’s losses, influenced by the ongoing consolidation movements. The weak performance post-earnings from significant players such as Qualcomm (QCOM), PayPal (PYPL), and Etsy (ETSY) is hindering the broader market. However, earnings-related upticks in Moderna (MRNA), Unity Software (U), and DoorDash (DASH) are offering some compensation.

A resurgence of selling in the Treasury market is posing another challenge for stocks. The 10-year note yield has risen by six basis points to 4.13%, while the 2-year note yield remains stagnant at 4.89%.

The Bank of England has hiked its bank rate by 25 basis points to 5.25%. Market sentiment predominantly anticipates another 25-basis point increase announcement in September.

Economic Calendar

Today’s economic schedule is as follows:

  • 8:30 a.m. ET: Q2 Productivity-Prelim and Q2 Unit Labor Costs-Prelim; Weekly initial and continuing jobless claims.
  • 9:45 a.m. ET: July S&P Global US Services PMI – Final.
  • 10:00 a.m. ET: July ISM Non-Manufacturing Index; June Factory Orders.
  • 10:30 a.m. ET: Weekly EIA Natural Gas Inventories.

Corporate News

Highlights in the corporate world include:

  1. Qualcomm (QCOM): Despite beating estimates by $0.06, Qualcomm’s conservative outlook on the market, expecting CY23 handset units to decline by high single digits, and plans for cost reduction in 1H24, has caused the stock to fall by 8.2%.
  2. PayPal (PYPL): The firm has marginally beaten earnings estimates and has provided an upbeat Q3 EPS and revenue guidance, but shares have dropped by 7.4%.
  3. DoorDash (DASH): Despite missing EPS estimates by $0.03, positive revenue performance and a higher FY23 adjusted EBITDA outlook have resulted in a 3.9% rise in shares.
  4. Unity Software (U): The company has posted in-line Q2 results and raised its FY23 adjusted EBITDA guidance, leading to a 5.7% rise in share prices.

Bonds and Futures

Treasuries intensified their sell-off, sending the 10-year yield to a nine-month high and equities fell as concerns over mounting borrowing costs grew. European stocks saw a 0.6% dip, and US equity futures indicate that the S&P 500 will continue to descend from yesterday’s losses.

Key Market Insights

Bill Ackman, CEO of Pershing Square Capital Management, fueled bearish sentiments by announcing his shorting of 30-year Treasuries as a hedge against the influence of higher long-term rates on stocks.

Additionally, Fitch Ratings’ decision to lower the US from its AAA credit rating has further spotlighted the country’s burgeoning fiscal deficits. However, Warren Buffett expressed no change in Berkshire Hathaway Inc.’s current activities, demonstrating faith in US Treasurys with regular investments.

Investors are closely observing today’s economic data, including jobless claims and a reading on the US services industry, for any signs of the American economy overheating. High-impact earnings reports from Apple Inc. (AAPL) and Inc. are expected later today.


The pound fell 0.2% against the dollar following the Bank of England’s expected interest rate hike. In European equities, the Stoxx 600 Index is bracing for the sharpest three-day decline since March.


In the commodities market, iron ore slid back under $100 a ton as investors question China’s commitment to resuscitating growth with steel-intensive stimulus. Meanwhile, the Bank of Japan intervened in the market for the second time this week to slow gains in benchmark sovereign bond yields, stressing its determination to limit sharp rate fluctuations even as it makes room for increases.

Closing Thoughts

Overall, the market landscape is filled with contrasting forces. While some companies are outperforming expectations and boosting the market, others are struggling to meet predictions and dragging down sentiment. This, combined with broader concerns about bond yields, inflation, and international economic health, make for a complex and nuanced trading environment.




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