Stocks Climb on Q2 Corporate Earnings Optimism

Morning Markets

September S&P 500 futures (ESU22) this morning are up by +0.72% on hopes for positive Q2 earnings results.  Haliburton, Hasbro, and Truist Financial are all moving higher in pre-market trading after reporting better-than-expected Q2 earnings.  Today’s U.S. housing data was mixed for stocks as June housing starts fell more than expected to a 9-month low, but June building permits fell less than expected.   

Investors have recently exited stocks and moved into cash, according to the Bank of America’s monthly fund manager survey.  The survey indicated that as of July 15, investor allocation to stocks plunged to its lowest since October 2008, while exposure to cash surged to the highest since 2001.

U.S. June housing starts unexpectedly fell -2.0% m/m to a 9-month low of 1.559 million, weaker than expectations of an increase to 1.580 million. June building permits, a proxy for future construction, fell -0.6% m/m to 1.685 million, stronger than expectations of 1.650 million.

The Euro Stoxx 50 is up +0.09% today.  European stocks are slightly higher today but remain below Monday’s 2-1/2 week high.  Gains in European equities are subdued on concern Europe’s energy crisis will undercut economic growth.  Citigroup warns that European equities could drop another 10% if Russia cuts off gas supplies to Europe.  Stocks are also being undercut by today’s rise in 10-year German bund yield to a 1-week high of 1.276% after Reuters reported that ECB policymakers may consider raising interest rates on Thursday by 50 bp instead of 25 bp because of the worsening inflation backdrop.

Eurozone May construction output rose +0.4% m/m, the first increase in 3 months.

China’s Shanghai Composite Index today closed up slightly by +0.04%.  Chinese stocks eked out a slight gain today, led by a rally in energy stocks. Gains were muted, however, as technology stocks were under pressure after Bloomberg reported that Apple plans to slow hiring.  Also, rising Covid infections in China may lead to lockdowns and movement restrictions that threaten to derail economic growth after China reported 699 new Covid infections on Monday, the most in 8 weeks.  In addition, property stocks declined today despite a Bloomberg report that said China might allow homeowners to temporarily halt mortgage payments on stalled building projects without incurring penalties.   

Japan’s Nikkei Stock Index climbed to a 1-week high and closed up by +0.65%.  Japanese markets reopened today and moved moderately higher after being closed for a holiday on Monday.  Short-covering pushed Japanese stocks higher today ahead of Thursday’s policy announcement from the BOJ.

Pre-Market U.S. Stock Movers

Haliburton (HAL) jumped nearly +4% in pre-market trading after reporting Q2 revenue of $5.07 billion, well above the consensus of $4.71 billion.

Truist Financial (TFC) rose nearly +2% in pre-market trading after reporting Q2 adjusted EPS of $1.20, better than the consensus of $1.15. 

Hasbro (HAS) gained almost +1% in pre-market trading after reporting Q2 adjusted Ebitda of $308.3 million, above the consensus of $263.7 million.

Exxon Mobil (XOM) climbed nearly +2% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.  

Marten Transport (MRTN) jumped more than +4% in pre-market trading after reporting Q2 operating revenue of $329.6 million, better than the consensus of $291 million.

Cinemark (CNK) rallied more than +4% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.

Cryptocurrency-exposed stocks are moving higher in pre-market trading, with the price of Bitcoin up more than +3% at a new 1-month high.  Marathon Digital (MARA) is up more than +7%.  Also, Riot Blockchain (RIOT) is up more than +4%, and Hut 8 Mining (HUT) is up more than +2%.  In addition, Coinbase Global (COIN) is up more than +1%.   

Ally Financial (ALLY) dropped more than -4% in pre-market trading after reporting Q2 adjusted EPS of $1.76, below the consensus of $1.87.

Lockheed Martin (LMT) tumbled nearly -4% in pre-market trading after reporting Q2 net sales of $15.45 billion, weaker than the consensus of $16.03 billion, and lowered guidance on its full-year net sales estimate to $65.25 billion from a prior view of $66.00 billion, below the consensus of $65.98 billion.

IBM (IBM) fell more than -5% in pre-market trading after cutting its forecast for free cash flow to the lower end of its $10.0-$10.5 billion range, citing the strong dollar and the loss of business in Russia.

Block Inc (SQ) slid more than -1% in pre-market trading after Macquarie downgraded the stock to neutral from outperform.

Today’s U.S. Earnings Reports (7/19/2022)

Citizens Financial Group Inc (CFG), Halliburton Co (HAL), Hasbro Inc (HAS), JB Hunt Transport Services Inc (JBHT), Johnson & Johnson (JNJ), Lockheed Martin Corp (LMT), Netflix Inc (NFLX), Omnicom Group Inc (OMC), Signature Bank/New York NY (SBNY), Truist Financial Corp (TFC).

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