The Tuesday Market Minute
- Global stocks sputter for a second session, with investors keying on U.S. retail sales data and second quarter earnings reports for broader market direction.
- U.S.-China trade negotiations suggest little progress, while President Donald Trump moves to protect the country's steel industry with an executive order on domestic content.
- European stocks drift lower, with basic resource and auto stocks pulling markets lower amid concern for the fate of global trade progress.
- Global oil prices little-changed as Gulf of Mexico production taken offline by storm Barry is offset by an EIA report forecasting record U.s. shale output of 8.55 million barrels per day next month.
- U.S. equity futures suggest a flat open on Wall Street Monday ahead of June retail sales data at 8:30 am Eastern time and earnings from Wells Fargo and Goldman Sachs.
U.S. equity futures were little-changed in early Tuesday trading as investors maintained their cautious stance on global stocks heading into the second quarter earnings season and keyed on June retail sales data for further clues on the direction of Federal Reserve interest rates.
With all three U.S. benchmarks at or near record highs, with valuations that are firmly ahead of historic averages, some investors are worried that slowing corporate earnings, as well as stronger-than-expected domestic economic data that snuffs out chances of a near-term rate cut from the Fed will trigger an extended sell-off in overpriced stocks.
Added to the concern were comments from President Donald Trump and his two most-trust economic allies -- Steven Mnuchin and Larry Kudlow -- suggesting the trade dynamic between the U.S. and China may not be as optimistic as it appeared at the conclusion of the G20 summit in Japan last month.
Trump took to Twitter yesterday to suggest that U.S. tariffs on China-made goods were pressuring that country's growth, while Mnuchin and Kudlow painted a lukewarm picture of the state of current trade negotiations, with the Treasury Secretary tell reporters in Washington that a face-to-face meeting was only likely "to the extent that we make significant progress."
U.S. futures suggest only modest moves on Wall Street Tuesday ahead of both the June retail sales data, which is expected to show a 0.1% advance on the month, and second quarter earnings from three of the country's biggest banks: JPMorgan Chase (JPM - Get Report) , Well Fargo (WFC - Get Report) and Goldman Sachs (GS - Get Report) .
Netflix (NFLX - Get Report) will also post quarterly earnings and subscriber numbers after the bell Wednesday, firing the starter pistol for FAANG profits and near-term forecasts, as analysts predict the collective bottom line of S&P 500 companies will fall 3% from the same period last year, according to FactSet projections, a figure that would mark the first back-to-back quarterly decline in at least three years.
Contracts tied to the Dow Jones Industrial Average, which closed just 5.5 points from its all-time high yesterday at 27,359.16 points, suggest an 11 point slip while those linked to the S&P 500, which has gained more than 20.2% so far this year, are primed for a modest 1 point advance.
JB Hunt Transport Services (JBHT - Get Report) shares were another notable early market mover, rising nearly 8% after the second-largest U.S. trucking group posted stronger-than-expected second quarter revenues and pointed to a pick-up in overall volumes in the second half of the year.
JPMorgan shares slipped 1.3% lower in pre-market trading after the biggest U.S. investment bank smashed Street estimates for its second quarter earnings with an bottom line of $2.82 per share, but noted declining volumes in its equity and fixed income trading divisions.
Overnight in Asia, Japan's Nikkei 225 return from a public holiday that kept markets closed on Monday to find a stronger yen and broader concerns for regional growth and global trade protectionism after President Trump signed an Executive Order raising the content limit for domestic steel to 95%.
The Nikkei 225 slipped 0.7% by the close of trading while the region-wide MSCI ex-Japan index edged 0.2% higher into the close of the trading session.
European stocks were modestly weaker at the start of trading in Frankfurt and London, even as both the euro and the pound drifted lower against the U.S. dollar, with the Stoxx 600 drifting 0.05% to the upside and Britain's FTSE 100 opening little-changed from its Monday close.
Bayer AG (BAYRY) shares topped the German market following a Federal Court ruling in California that slashed the amount of damages the chemicals group will need to pay after a jury found its Roundup weedkiller cause a man to contract non-Hodgkin's lymphoma.
Global oil prices were also little-changed in the overnight session, with the closure of production facilities in the Gulf of Mexico following Storm Barry offset by a report from the U.S. Energy Information Administration that forecast record August output of 8.55 million barrel per day from the country's seven active shale deposits.
Brent crude contracts for September delivery, the global benchmark, were seen 16 cents higher from their Monday close and changing hands at $66.64 per barrel in early European trading while WTI contracts for August, which are more tightly linked to U.S. gas prices, were marked 13 cents higher at $59.71 per barrel.