Stock Index Futures Muted Ahead of Key U.S. Retail Sales Data, U.S. Bank Earnings on Tap

Oleksandr Pylypenko - Barchart - Tue Jul 18, 2023

September S&P 500 futures (ESU23) are down -0.03%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.10% this morning as market participants braced for the next round of quarterly reports while also awaiting crucial U.S. retail sales data.

In Monday’s trading session, the benchmark S&P 500 rose to a 15-month high, the blue-chip Dow posted a 7-month high, and the tech-heavy Nasdaq 100 notched a 1-1/2 year high. Tesla Inc (TSLA) gained over +3% after the company announced on Saturday that the first Cybertruck was built out of the company’s Gigafactory in Austin, Texas. Also, Apple Inc (AAPL) rose more than +1% after Morgan Stanley raised its price target on the stock to $220 from $190. In addition, Activision Blizzard Inc (ATVI) soared over +3% after a U.S. appeals court denied the Federal Trade Commission’s request to temporarily pause Microsoft’s (MSFT) planned $69 billion acquisition of the company. On the bearish side, Ford Motor Company (F) plunged more than -5% and was among the top percentage losers on the S&P 500 after the automaker cut the price on the electric version of its F-150 truck. Also, AT&T Inc (T) slid over -6% after Citi downgraded the stock to Neutral from Buy.

Data on Monday showed the U.S. NY Empire State Manufacturing index, a gauge of manufacturing activity in New York State on current business conditions, came in at +1.10 in July, stronger than expectations of -4.30.

U.S. Treasury Secretary Janet Yellen expressed confidence on Monday that the U.S. is on a “good path” to reduce inflation without significant harm to the labor market, and she does not anticipate the U.S. economy entering a recession.

Meanwhile, U.S. rate futures have priced in a 97.3% probability of a 25 basis point rate increase and a 2.7% chance of no hike at the next FOMC meeting in July.

On the earnings front, global companies like Bank of America (BAC), Morgan Stanley (MS), Prologis (PLD), Lockheed Martin (LMT), and Charles Schwab (SCHW) are set to report their quarterly figures today. Analysts anticipate aggregate S&P 500 earnings to notch an 8.1% year-over-year decline for the quarter, compared with an expected drop of 5.7% at the start of the month.

Today, all eyes are focused on U.S. Retail Sales data in a couple of hours. Economists, on average, forecast that June Retail Sales will stand at +0.5% m/m, compared to the previous value of +0.3% m/m.

Also, investors will likely focus on U.S. Core Retail Sales data, which came in at +0.1% m/m in May. Economists foresee the new figure to be +0.3% m/m.

U.S. Industrial Production data will be reported today. Economists foresee this figure to stand at 0.0% m/m in June, compared to the previous number of -0.2% m/m.

U.S. Manufacturing Production data will come in today as well. Economists expect June’s figure to be 0.0% m/m, compared to the previous number of +0.1% m/m.

In the bond markets, United States 10-Year rates are at 3.760%, down -0.98%.

The Euro Stoxx 50 futures are up +0.09% this morning as investor focus shifted from economic data and monetary policy to corporate earnings season. Healthcare, media, and materials stocks gained ground on Tuesday, while telecom stocks underperformed. Meanwhile, European Central Bank Governing Council member Ignazio Visco said Tuesday that inflation might subside more quickly due to the impact of declining commodity prices permeating through the economy. Also, ECB Governing Council member Klaas Knot expressed on Tuesday that monetary tightening beyond the upcoming meeting is far from certain. In corporate news, shares of Novartis Ag (NOVN.Z.IX) climbed more than +3% after the drugmaker boosted its full-year profit outlook and announced plans for a share buyback of up to $15 billion. Also, Tele2 Ab (TEL2B.S.DX) plunged about -10% after the company set higher guidance on capital expenditure.

The European economic data slate is mainly empty on Tuesday.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.37%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.32%.

China’s Shanghai Composite closed lower today as worries about a slowdown in the country persisted, dampening market sentiment. Also, disappointing economic data prompted economists at several prominent banks to revise their outlooks downward. JPMorgan Chase & Co., Morgan Stanley, and Citigroup Inc. slashed their projections for economic growth this year to 5% after China reported a “weak” second-quarter GDP reading. Hong Kong-listed property stocks tumbled on Tuesday, with Longfor Properties Co Ltd and Country Garden Services Holdings Co Ltd slumping more than -9%. Technology stocks listed in Hong Kong also plunged, with Tencent Holdings Ltd dropping over -4% and Alibaba Group Holding Ltd falling more than -3%. At the same time, weak economic data increased the likelihood of additional stimulus measures from Beijing. Reports from local media indicated that the People’s Bank of China might consider reducing its key interest rates and bank reserve requirements in the third quarter as part of efforts to boost economic growth.

Japan’s Nikkei 225 Stock Index closed moderately higher today, driven primarily by gains in bank and chip-related stocks. The Nikkei had initially surged up to 1% in the session but later relinquished most of those gains when Hong Kong’s Hang Seng opened sharply lower, dragging down other regional stock indexes. Meanwhile, chip-making equipment giant Tokyo Electron rose about +1%, and chipmaker Renesas Electronics gained over +2%. Investors are preparing for a series of significant events next week, which include monetary policy decisions from the Bank of Japan and the U.S. Federal Reserve and the intensification of the Japanese earnings season. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 1.29% to 20.49.

The Japanese Tertiary Industry Activity Index stood at +1.2% m/m, stronger than expectations of +0.4% m/m.

Pre-Market U.S. Stock Movers

Masimo Corporation (MASI) tumbled over -26% in pre-market trading after the medtech provider reported weaker-than-expected preliminary Q2 revenue and said it would be cutting costs in the second half of 2023.

Karyopharm Therapeutics Inc (KPTI) soared more than +28% in pre-market trading after the U.S. FDA awarded Fast Track designation for selinexor for the treatment of patients with myelofibrosis.

Pinterest Inc (PINS) climbed over +3% in pre-market trading after Evercore ISI upgraded the stock to Outperform from In Line.

The Trade Desk (TTD) fell more than -1% in pre-market trading after New Street downgraded the stock to Sell from Neutral.

Genpact Limited (G) dropped over -1% in pre-market trading after Citi downgraded the stock to Neutral from Buy.

Acumen Pharmaceuticals Inc (ABOS) plunged over -10% in pre-market trading after the company proposed an underwritten public offering of its common stock to raise $100 million.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Tuesday - July 18th

Bank of America (BAC), Morgan Stanley (MS), Prologis (PLD), Lockheed Martin (LMT), Charles Schwab (SCHW), PNC Financial (PNC), Interactive Brokers (IBKR), Bank of NY Mellon (BK), Omnicom (OMC), JB Hunt (JBHT), Synchrony Financial (SYF), Pinnacle (PNFP), Western Alliance (WAL), Hancock Whitney (HWC), United Community Banks (UCBI), Fulton (FULT), AAR (AIR), Bank First National (BFC), Mercantile (MBWM), Cambridge Bancorp (CATC), Equity Bancshares Inc (EQBK).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.