5 Things You Must Know Before the Market Opens Tuesday

U.S. stock futures are pointing lower Tuesday ahead of a full slate of earnings reports.
By Joseph Woelfel ,

Updated from 8 a.m. EDT to include data on U.S. housing starts.

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Here are five things you must know for Tuesday, July 19:

1. -- U.S. stock futures were pointing lower Tuesday following record closes for the major indexes during the previous session and ahead of a full slate of earnings reports.

European stocks fell as a closely watched gauge of eurozone confidence came in worse than expected.

Asian shares finished mostly lower but Japanese stocks jumped 1.4% as Nintendo rallied thanks to its wildly popular Pokemon GO game.

U.S. housing starts in June rose, the Commerce Department said on Tuesday, driven by a high level of demand and tight inventory. Starts for newly constructed homes rose 4.8% last month to an adjusted annual pace of 1.19 million. Economists had expected a pace of 1.17 million. May's numbers were revised down to 1.14 million from 1.16 million. Housing permits increased 1.5% to 1.15 million.

U.S. stocks on Monday rose to new records with only slight effort as a rally in tech helped to offset weakness in oil and political uncertainty in Turkey.

The S&P 500 rose 0.24%, the Dow Jones Industrial Average gained 0.09%, and the Nasdaq added 0.52%. The Dow eked out a new closing high of 18,533.05, mere points above its previous Friday record, while the S&P 500 scored a new high of 2,166.89.

Goldman Sachs (GS) - Get Report  reported second-quarter profit Tuesday of $3.72 a share, topping estimates of $3.05 a share. The stock was rising 0.4% in premarket trading.

Johnson & Johnson (JNJ) - Get Report posted second-quarter revenue and earnings that topped forecasts as its pharmaceuticals division continued to expand rapidly. The health care giant also lifted its full-year forecast. The stock rose 2.5% in premarket trading.

Results are also expected Tuesday from Microsoft (MSFT) - Get Report  and United Airlines (UAL) - Get Report .

2. -- Netflix (NFLX) - Get Reportsaid it added fewer subscribers than expected in the second quarter.

The stock was falling 11% in premarket trading following Netflix's release of earnings on Monday. 

The streaming video service, known for its original shows such as House of Cards and Orange Is the New Black, said it added 1.7 million new subscribers in its second quarter, below its forecast of 2.5 million new customers and the 3.3 million it added in the same quarter a year earlier.

"We are growing but not as fast as we would have liked or have been," the company said in a letter to its shareholders. "Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever, and we continue to improve every aspect of our business." 

On a conference call Monday, Chief Financial Officer David Wells said Netflix expected some of the weakness in new subscriber numbers to continue until potentially the end of November. 

The company said it would have made its overall target for new customers but experienced "expectedly" higher churn -- or customers who dropped the service -- as a result of its decision earlier this year to hike its monthly subscription price in the U.S. to $9.99 for its most popular package from its long-time price of $7.99.

Netflix earned 9 cents a share in the second quarter on revenue of $2.1 billion. Wall Street was looking for earnings of 2 cents a share and revenue of $2.11 billion.

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3. -- Yahoo!'s (YHOO) loss in the second quarter widened from a year earlier to $440 million, or 46 cents a share, and after subtracting commissions paid to its partners revenue slumped 19%.

On an adjusted basis, earnings in the quarter were 9 cents a share, below Wall Street forecasts of 10 cents.

The Internet company made no mention in its earnings release Monday of the possible sale of its core business. But a decision could come soon since Monday was the deadline for final offers. CEO Marissa Mayer did say that Yahoo!'s board "has made great progress on strategic alternatives."

Yahoo! said it also was taking a $482 million write-down on the value of Tumblr, the social media service that Yahoo! acquired for $1.1 billion in 2013.

4. -- Fiat Chrysler (FCAU) - Get Report is being investigated by federal prosecutors over allegations the carmaker violated securities laws by getting dealers to falsely report sales of new cars in order to inflate the company's numbers.

The company confirmed Monday that it is cooperating with investigations by the Justice Department and the Securities and Exchange Commission.

The probe apparently stems from a lawsuit filed in January by the Illinois-based Napleton dealership group alleging that competing dealers were given thousands of dollars to report false sales. The group alleged that a Fiat Chrysler executive offered Napleton $20,000 to falsely report sales of 40 new vehicles. The lawsuit also alleged that the false sales give the appearance that Fiat Chrysler's performance is better than it actually is.

The stock fell 2.2% in premarket trading.

5. -- IBM's (IBM) - Get Report sales and earnings in the second quarter topped analysts' forecasts on improvements in cloud-based services.

IBM earned $2.5 billion, or $2.61 a share, in the quarter, down from $3.45 billion, or $3.50 a share, a year earlier.

Adjusted earnings in the quarter were $2.95 a share, above forecasts of $2.89.

Total revenue in the quarter fell 2.8% but revenue from cloud services rose 30%.

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