S&P Futures Tick Higher as Investors Weigh Economic Outlook, Tesla Earnings on Tap

September S&P 500 futures (ESU23) are trending up +0.08% this morning after three major U.S. benchmark indices ended the regular session higher as investors weighed the latest batch of earnings reports from major companies and digested U.S. retail sales data.

In Tuesday’s trading session, the benchmark S&P 500 and the blue-chip Dow rose to 15-month highs, while the tech-heavy Nasdaq 100 notched a 1-1/2 year high. Morgan Stanley (MS) climbed more than +6%, while Bank of America Corp (BAC) gained over +4% after both big U.S. banks reported better-than-expected Q2 results. Also, Charles Schwab Corp (SCHW) surged more than +12% and was the top percentage gainer on the S&P 500 after the firm’s Q2 results topped Wall Street consensus. In addition, Microsoft Corporation (MSFT) soared about +4% after the U.S. tech giant provided details on pricing for some artificial intelligence services.

“The earnings were greater than satisfactory. Big banks act as a temperature gauge of the macroeconomy, and so far, the big banks have pleased many investors,” said Peter Andersen, a founder of Andersen Capital Management.

Economic data on Tuesday showed the U.S. June retail sales rose +0.2% m/m, lower than the expected +0.5% m/m rise. Also, U.S. core retail sales came in at +0.2% m/m in June, weaker than expectations of +0.3% m/m. In addition, U.S. industrial production unexpectedly fell -0.5% m/m in June, weaker than expectations of 0.0% m/m.

Meanwhile, U.S. rate futures have priced in a 99.8% probability of a 25 basis point rate increase at the conclusion of the Fed’s July meeting.

Second-quarter earnings season picks up steam, with investors awaiting fresh reports from major global companies, including Tesla (TSLA), Netflix (NFLX), IBM (IBM), Elevance Health (ELV), and Goldman Sachs (GS). 

Today, all eyes are focused on the U.S. Building Permits preliminary data in a couple of hours. Economists, on average, forecast that June Building Permits will stand at 1.490M, compared to the previous value of 1.496M.

Also, investors are likely to focus on U.S. Housing Starts data, which was at 1.631M in May. Economists foresee the June figure to be 1.480M.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -2.440M, compared to last week’s value of +5.946M.

In the bond markets, United States 10-Year rates are at 3.754%, down -0.90%.

The Euro Stoxx 50 futures are up +0.25% this morning as investors digested fresh Eurozone and U.K. inflation data while awaiting more earnings from major U.S. companies. Gains in real estate and consumer stocks are leading the overall market higher. The Office for National Statistics said Wednesday that Britain’s June inflation rate cooled more than expected to the lowest level in more than a year, leading investors to reduce their expectations for additional rate hikes by the Bank of England. At the same time, Eurostat said Wednesday that Eurozone underlying inflation, the key measure of price gains for the European Central Bank, grew at a faster rate than initially estimated in June, while headline inflation matched the preliminary figures. In corporate news, shares of Kering (KER.FP) climbed over +5% after the French luxury goods group announced the departure of the head of the Gucci brand. 

U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. June CPI stood at +0.1% m/m and +7.9% y/y, weaker than expectations of +0.4% m/m and +8.2% y/y.

U.K. June Core CPI arrived at +0.2% m/m and +6.9% y/y, weaker than expectations of +0.4% m/m and +7.1% y/y.

Eurozone June CPI has been reported at +0.3% m/m and +5.5% y/y, in line with expectations.

Eurozone June Core CPI came in at +0.4% m/m and +5.5% y/y, stronger than expectations of +0.3% m/m and +5.4% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.03%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.24%.

China’s Shanghai Composite today closed just above the flatline as weak economic data continued to weigh on sentiment, prompting investors to anticipate further stimulus measures from the Chinese government. Also, the offshore yuan depreciated to its lowest level in over a week. Economists say Beijing’s efforts to boost consumption are still deemed insufficient to significantly strengthen the recovery, leading them to shift their attention to potential measures that may emerge from the upcoming Politburo meeting later this month. According to the July Asia Fund Manager survey by BofA Securities, an overwhelming 81% of participants expressed their expectation for the implementation of monetary easing measures. Meanwhile, Hong Kong-listed technology stocks retreated on Wednesday, with Baidu Inc falling over -1% and Tencent Holdings Ltd dropping about -1%.

“The market pessimism around Chinese equities is probably at a level of extreme. At this point, little policies probably aren’t enough. You need something bigger, something to sort of shock people out of the slumber,” said John Lin, a chief investment officer of China equities at AllianceBernstein.

Japan’s Nikkei 225 Stock Index closed higher and hit a 2-week high today, buoyed by a rally on Wall Street and dovish comments from Bank of Japan Governor Kazuo Ueda. The country’s central bank chief indicated his commitment to maintaining an accommodative monetary policy for the foreseeable future, emphasizing that there is still progress needed to achieve the central bank’s 2% inflation target sustainably and stably. Meanwhile, the yen weakened for a second day following Ueda’s dovish remarks, boosting export-oriented stocks. In corporate news, Nissan Motor Co Ltd surged over +7% and was the top percentage gainer on the Nikkei following a report from the Nikkei newspaper stating that the automaker’s CFO expressed the intention to return the dividend payout ratio to 30%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.59% to 20.37.

“Ueda’s dovish comments reduced concern about a sharp rise in the Japanese yen, and it’s very logical for the Japanese equity market to also rebound,” said Masayuki Kichikawa, a chief macro strategist at Sumitomo Mitsui DS Asset Management.

Pre-Market U.S. Stock Movers

AT&T Inc (T) climbed more than +5% in pre-market trading after the company provided an update on its nationwide copper-wire telecom network.

Snowflake Inc (SNOW) rose over +1% in pre-market trading after Exane BNP Paribas upgraded the stock to Neutral from Underperform.

Joby Aviation (JOBY) dropped more than -7% in pre-market trading after JPMorgan downgraded the stock to Underweight from Neutral.

Western Alliance Bancorporation (WAL) fell more than -2% in pre-market trading after the regional lender reported mixed Q2 results as higher funding costs weighed on net interest income. 

Aqua Metals Inc (AQMS) tumbled over -24% in pre-market trading after saying it intends to offer and sell shares of its common stock in an underwritten public offering.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - July 19th

Tesla (TSLA), Netflix (NFLX), IBM (IBM), Elevance Health (ELV), Goldman Sachs (GS), U.S. Bancorp (USB), Crown Castle (CCI), Las Vegas Sands (LVS), Kinder Morgan (KMI), Baker Hughes (BKR), Halliburton (HAL), Discover (DFS), Equifax (EFX), Nasdaq Inc (NDAQ), M&T Bank (MTB), Steel Dynamics (STLD), United Airlines Holdings (UAL), Northern Trust (NTRS), Citizens Financial Group Inc (CFG), Rexford Inl Rty (REXR), Ally Financial Inc (ALLY), First Industrial RT (FR), First Horizon National (FHN), Alcoa (AA), Wintrust (WTFC), Zions (ZION), Columbia Banking (COLB), FNB (FNB), Calix (CALX), Cohen Steers (CNS), Liberty Oilfield (LBRT), SL Green (SLG), Banner (BANR), Monarch (MCRI), National Bank Holdings (NBHC), Preferred Bank (PFBC), Great Southern Bancorp (GSBC), NVE Corporation (NVEC), Richardson Electronics (RELL).

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