MARKET WRAPS

Watch For:

Employment Report for June; Weekly Export Sales; Monthly Wholesale Trade for May; Consumer Credit for May; Canada Labor Force Survey for June.

Opening Call:

Stocks futures edged lower on Friday as investors awaited the release of the June jobs report.

Job growth is expected to slow but remain steady, as the consensus forecast is for 250,000 new nonfarm payroll positions. The reported unemployment rate has now remained at 3.6% for three months in a row, and Friday's report could extend it to four. The forecast for June remains 3.6%, according to a WSJ survey.

As concerns about a recession have mounted in recent weeks, investors have focused on the latest economic data as they monitor readings on inflation and the Federal Reserve's plans for raising interest rates.

Though overshadowed by the Jobs numbers, data for wholesale inventories for May are also due to be released.

In overseas markets, European were in the red and Asian benchmarks were mixed. Japanese stocks pared back early gains to close near flat following news that former Prime Minister Shinzo Abe died after being shot.

Market Insight:

UBS Asset Management expects its positioning to be guided in large part by incoming inflation data and its implications for policy makers, it said in its mid-year 2022 outlook. From a market perspective, hot inflation is a problem with no good solutions in the near term, according to the asset manager.

Headline inflationary pressures will likely constrain central banks from turning in a dovish direction, it said, adding that economic data would likely need to get materially worse, raising risks to earnings, before monetary policy makers would consider pivoting in light of the deterioration in the growth outlook.

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Analysts have likely been behind the curve in cutting earnings estimates as the economic outlook has worsened--and once they catch up, select sectors could be hit particularly hard.

High on the list are economically sensitive areas including apparel companies, automobiles, and other manufacturers.

While cuts have already begun, recent earnings trends look far too high, likely necessitating even further cuts, as the driver of sky-high profit figures is now reversing with a rollback in monetary and fiscal stimulus.

"We had such a demand spike during Covid and some of that has to normalize," Fort Pitt Capital Group said. "It seems like analysts are behind the curve on adjusting earnings estimates."

Forex:

The latest nonfarm payrolls report is likely to exceed analysts' expectations, boosting the dollar, UniCredit Research said.

The report will probably show net job creation of 300,000 in June, above the market consensus of 265,000, according to the bank.

"If we are right, the data will be considered strong enough to pump the greenback [dollar] up further, convincing investors that the Fed has more room to hike rates than other central banks, which are potentially more exposed to a recession given the ongoing gas and energy crisis," it said.

Energy:

Oil futures were mixed in Europe, with investors showing little appetite to push prices higher as they wait for the latest nonfarm payrolls data.

Metals:

Base metal prices were down as recession risks continued to weigh on sentiment and curb industrial demand after gaining some ground in the previous session on the prospect of China introducing new stimulus measures.

"Oil and commodity desks are likely using steep headline-driven commodity rallies to reduce long exposure" to recession risks--now considered close to baseline, or given--in both the U.S. and Europe, SPI asset management said.


TODAY'S TOP HEADLINES


Spirit Airlines to Again Delay Shareholder Vote on Frontier Deal

Spirit Airlines Inc. will again postpone a shareholder vote on a merger withFrontier Group Holdings Inc. as the carrier holds deal talks with Frontier and rival suitor Jetblue Airways Corp., the company said Thursday.

The delay to July 15 is the third time Spirit has put off the shareholder referendum on its planned sale to Frontier, which was first announced in February. The vote had initially been scheduled for June 10, but was pushed back to June 30. That vote was called off last week the evening before the vote-and pushed to July 8.


GameStop Terminates Finance Chief as It Works to Turn Around Business

GameStop Corp. has terminated its finance chief and is making job cuts as the videogame retailer continues in its effort to turn around the business.

The Grapevine, Texas-based company on Thursday said that Chief Financial Officer Mike Recupero is leaving after roughly a year in the role. Diana Saadeh-Jajeh, who has served as chief accounting officer at GameStop, will become CFO, effective Thursday, the company said. Ms. Saadeh-Jajeh served as interim CFO in 2021, after then-finance chief Jim Bell was forced out by activist investor and current board chairman Ryan Cohen.


Levi Strauss Sales Rise as Retail Sector Grapples With Growing Inventories

Levi Strauss & Co. posted higher sales in the latest quarter, sidestepping for now issues related to excess inventory among retailers and a slowdown in consumer spending.

The San Francisco-based company said Thursday that revenue rose 15% to $1.47 billion in its fiscal second quarter. Analysts polled by FactSet expected $1.43 billion in total revenue.


Secret Service Director Leaving to Join Snapchat

WASHINGTON-The head of the U.S. Secret Service is retiring to take a top security post at the California-based social-media company Snap Inc., the parent of Snapchat, officials said Thursday.

James Murray, director since 2019, had been looking to retire since the spring after 27 years with the law-enforcement agency best known for protecting presidents, Secret Service spokesman Anthony Guglielmi said. He delayed leaving until July 30 because he wanted to lead the organization through the G7, NATO and Summit of Americas meetings, as well as to present the Secret Service's new budget, the spokesman said.


Twitter Lays Off Third of Recruiting Team

Twitter Inc. on Thursday said it laid off 30% of its talent acquisition team, as the company deals with increasing business pressures and a potential takeover from Elon Musk.

The layoffs come after the company in May announced that it would be pausing hiring and looking to cut costs. As a result of the revised business needs, the company is restructuring and reducing its talent acquisition team. The layoffs are expected to affect fewer than 100 people and are limited to the talent acquisition team, the company said.


Meta Will No Longer Make VR-Headset Users Log In With Facebook Accounts

Meta Platforms Inc. on Thursday changed its rules for logging into its virtual-reality headsets, saying it aims to provide more options for people to join its vision of the metaverse.

Starting next month, people no longer will need a Facebook account to use the company's VR devices, Meta said, a rule that users and potential customers have criticized. Having to create a Facebook account to use the VR gaming hardware could have kept out people unwilling to join the social network. It could have also presented a conflict with parents who didn't mind their children on VR but didn't want them on social media.


Soft Opening for Hong Kong's New Runway Shows City's Risk of Hard Landing

HONG KONG-A much anticipated new runway opened for commercial flights in Hong Kong on Friday, part of a yearslong infrastructure revamp that the government said would be vital to the city's future as a global trade and finance hub.

But that was before the Covid-19 pandemic decimated world supply chains and led Hong Kong to isolate itself behind a wall of travel restrictions.


Shinzo Abe, Former Japanese Prime Minister, Dies After Being Shot

TOKYO-Former Japanese Prime Minister Shinzo Abe died after being shot during a speech on Friday, public broadcaster NHK reported, citing officials in the country's ruling party.

Mr. Abe, 67, was Japan's longest serving prime minister and was shot while campaigning for the ruling Liberal Democratic Party for a national election on Sunday.


Startups Suffer Bleak Second Quarter

The number of U.S. startups going public has slowed to a trickle and fresh funding for such companies has dropped sharply, adding to signs that venture-capital investors are confronting more challenging markets after a boom period.

The momentum for companies to go public has sputtered. In the first half of this year, private companies going public had a combined exit value of $49 billion, according to research company PitchBook Data Inc. That's down from a record $777 billion for all of last year, according to the data released Thursday.


Australia Looks Set for Highest Core Inflation Rate Since 1990

SYDNEY-Australia could record the fastest acceleration in trimmed mean core inflation-the measure most watched by the Reserve of Australia-in more than 30 years in the second quarter, ANZ senior economist Catherine Birch says.

Amid widespread expectations that the RBA will deliver another outsized interest-rate rise of 50 basis points in August, Ms. Birch said in a note that she expects a trimmed mean inflation rate of 1.6% in the second quarter. That would take the six-month annualized rate to 6.1%, the strongest pace since 1990.


Secret Service Director Leaving to Join Snapchat

WASHINGTON-The head of the U.S. Secret Service is retiring to take a top security post at the California-based social-media company Snap Inc., the parent of Snapchat, officials said Thursday.

(MORE TO FOLLOW) Dow Jones Newswires

07-08-22 0535ET