Stocks Set to Open Mixed as Investors Brace for Earnings Season, Chinese GDP Data Disappoints

September S&P 500 futures (ESU23) are down -0.04%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.09% this morning as market participants digested the latest economic data from China while looking ahead to a busy week of corporate earnings.

In Friday’s trading session, Wall Street’s major indexes ended mixed. State Street Corp (STT) tumbled over -12% after the company reported weaker-than-expected Q2 revenue as net interest income dropped during the quarter. Also, Citigroup Inc (C) slid about -4% after the big bank posted a slight miss on Q2 profit amid weakness in its investment banking business. In addition, energy stocks retreated as the price of WTI crude dropped more than -2%, with APA Corporation (APA) plunging more than -5% and Devon Energy Corporation (DVN) falling over -4%. On the bullish side, UnitedHealth Group Incorporated (UNH) climbed more than +7% and was the top percentage gainer on the benchmark S&P 500 after the managed care company reported upbeat Q2 results.

Data on Friday showed that the University of Michigan’s gauge of consumer sentiment rose to a 1-3/4 year high of 72.6 in July, stronger than expectations of 65.5. At the same time, the University of Michigan’s July year-ahead inflation expectations rose to +3.4% from +3.3% in June, higher than the expected +3.3% figure.

Meanwhile, U.S. rate futures have priced in a 95.5% probability of a 25 basis point rate increase and a 4.5% chance of no hike at the Fed’s monetary policy committee meeting later this month.

Earnings season kicks into gear this week, with results expected from several more big banks, including Bank of America (BAC), Morgan Stanley (MS), and Goldman Sachs (GS). Also, major global companies, including Tesla (TSLA), Netflix (NFLX), Johnson & Johnson (JNJ), and Lockheed Martin (LMT), are expected to post quarterly updates this week.

Investors will also be monitoring a spate of economic data this week, including U.S. Retail Sales, Core Retail Sales, Industrial Production, Manufacturing Production, Business Inventories, Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, and Existing Home Sales. 

Today, all eyes are focused on the U.S. NY Empire State Manufacturing index in a couple of hours. Economists, on average, forecast that the July NY Empire State Manufacturing index will come in at -4.30, compared to the previous value of +6.60.

In the bond markets, United States 10-Year rates are at 3.797%, down -0.58%.

The Euro Stoxx 50 futures are down -0.79% this morning as weak economic data from China dampened sentiment, and investors also braced for the second-quarter earnings season to assess the implications of the global growth slowdown. Consumer staples and mining stocks experienced the biggest decline today, while healthcare stocks outperformed. Meanwhile, analysts are anticipating the largest year-on-year decline in European profits since 2020. In corporate news, Cie Financiere Richemont Sa (CFR.Z.IX) plunged over -8% after the Cartier owner reported weaker-than-expected organic sales growth in the three months through June.

Italy’s CPI data was released today.

The Italian June CPI has been reported at 0.0% m/m and +6.4% y/y, in line with expectations.

China’s Shanghai Composite Index (SHCOMP) closed down -0.87%, while the Japanese market was closed for a holiday.

China’s Shanghai Composite today closed lower after another round of weak data fueled concerns about a recovery in Asia’s largest economy. The National Bureau of Statistics on Monday released data indicating a sluggish growth rate for the country’s economy in the second quarter, although the annual figure appeared stronger due to a weak comparison base in 2022, while overall momentum declined rapidly due to weakening domestic and international demand. In addition, China’s retail sales data disappointed for the month, while industrial production unexpectedly accelerated in June. Data released on Monday increased the pressure on policymakers to implement additional stimulus measures to shore up economic activity. Meanwhile, the People’s Bank of China rolled over maturing medium-term policy loans and kept the interest rate steady on Monday. Energy, bank, and consumer staples stocks underperformed on Monday.

“To counteract persistent growth headwinds, we expect more easing measures in coming months, with a focus on fiscal, housing, and consumption, although the magnitude of stimulus should be smaller than in previous easing cycles,” Goldman Sachs said in a note.

The Chinese GDP has been reported at +0.8% q/q and +6.3% y/y in the second quarter, compared to expectations of +0.5% q/q and +7.3% y/y.

The Chinese June Industrial Production stood at +4.4% y/y, stronger than expectations of +2.7% y/y.

The Chinese June Retail Sales came in at +3.1% y/y, weaker than expectations of +3.2% y/y.

The Chinese June Unemployment Rate was at 5.2%, in line with expectations.

Pre-Market U.S. Stock Movers

Chewy Inc (CHWY) gained more than +4% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral.

Activision Blizzard Inc (ATVI) climbed over +4% in pre-market trading after a U.S. appeals court denied the Federal Trade Commission’s request to temporarily halt Microsoft’s (MSFT) planned $69 billion acquisition of the company.

Yelp Inc (YELP) rose about +3% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral. 

Tesla Inc (TSLA) rose over +1% in pre-market trading after the company announced on Twitter on Saturday that the first Cybertruck was built out of the company’s Gigafactory in Austin, Texas.

Berry Petroleum Corp (BRY) slid more than -3% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.

Twilio Inc (TWLO) fell over -2% in pre-market trading after Piper Sandler downgraded the stock to Neutral from Overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - July 17th

Equity Lifestyle (ELS), BancFirst (BANF), FB Financial (FBK), Indus Realty Trust (INDT), CrossFirst Bankshares (CFB), Guaranty Bancshares (GNTY), Home Bancorp (HBCP).

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