The Tuesday Market Minute
- Global stocks grind to a fresh record high following stronger-than-expected China trade figures, but caution holds ahead of bank earnings and CPI data.
- China's June exports rise 32.2% from last year, pared by a 36.7% gain in imports.
- JPMorgan and Goldman Sachs kicked-off a second quarter earnings season that is expected to show a 65% gain in collective S&P 500 profits.
- CPI data for June was notably faster-than-forecast, rising 0.9% on the month and 5.4% on the year.
- Oil prices hold gains ahead of API inventory data as domestic stockpiles continue to dwindle amid a surge in travel and industrial demand.
- U.S. equity futures suggest softer open on Wall Street following stronger-than-forecast second quarter earnings from JPMorgan, PepsiCo and Goldman Sachs as well as faster June CPI data.
Wall Street futures traded mixed Tuesday as stocks remained within touching distance of another trio of record highs ahead of the unofficial start of second quarter earnings and a key reading of June inflation.
JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report got the ball rolling with stronger-than-expected second quarter updates, lead by a surge in investment banking fees, that are expected to lead a robust earnings season posed for a 65% year-on-year increase in collective profits as companies benefit from the consumer economy's post-pandemic rebound.
The specter of higher corporate profits, alongside the tailwind of $1.9 trillion in stimulus from the American Rescue Act and record-low interest rates and myriad support programs from the Federal Reserve, has lifted U.S. stocks to nearly 40 record highs so far this year, with the S&P 500 closing at 4,384.63 points - some 96% higher than the pandemic low it touched on March 23 of last year.
Faster inflation has shadowed that spectacular rebound, however, and investors will eye today's reading of June CPI -- which showed a year-on-year gain of 5.4% -- for any suggestion that it could compel the Fed to remove one of the legs supporting this historic run for stock prices.
Analysts were looking for a month-on-month gain of around 0.5%, but the headline advance was pegged at 0.9%.
Stock futures, meanwhile, are indicating a modestly weaker open with contracts tied to the Dow Jones Industrial Average suggesting a 120 point decline while those linked to the S&P 500 are priced for an 18 point dip.
Boeing (BA) - Get Boeing Company Report shares were active, falling 1.7% after cautioning that it will slow the pace of its 787 Dreamline production following a fault identified by the Federal Aviation Administration.
A bump higher in Treasury bond yields, to 1.38%, helped pare pre-market gains fore tech stocks, with futures contracts tied to the Nasdaq Composite indicating a 75 point opening bell dip.
Oil prices were also holding gains heading into today's release of domestic inventory data from the American Petroleum Institute which are expected to indicate the eighth consecutive weekly decline from levels that are already the lowest since February of last year.
WTI futures contracts for August delivery were marked 51 cents higher in European trading at $74.60 per barrel while Brent contracts for September added 50 cents to $75.66 per barrel.
In overseas markets, European stocks were little-changed ahead of the U.S. bank earnings and CPI data release, with the Stoxx 600 trading 0.05% lower in the opening hours of trading in Frankfurt, while an easing of dividend restrictions on U.K. banks by the Bank of England helped the FTSE 100 to a 0.2% gain in London.
Overnight in Asia, Japan's Nikkei 225 gained 0.52% to close at 28,718.24 points while stronger-than-expected export data from China helped the region-wide MSCI ex-Japan index to a 0.92% gain, its best since late June, heading into the close of trading.