Tuesday’s market minute
- Global stocks mingle as risk sentiment improves ahead of a wave of American corporate earnings and a key debate in Congress over the next form of coronavirus relief.
- The US dollar is recovering from its two-year low, while gold is withdrawing from its all-time high as investors await a new round of fiscal stimulus from Washington.
- Coronavirus cases in the United States drop for the first time in five weeks, while Pfizer and Moderna launch large clinical trials of vaccines that could provide short-term advancement in treatment.
- Big profit days on Wall Street are likely to define the direction of the market, with numbers expected from three Dow components: Pfizer, McDonald’s and 3M, as well as Raytheon, Harley-Davidson and DR Horton.
- US equity futures suggest a weakening on Wall Street in the opening bell, with Redbook retail sales data at 8:55 am ET and consumer confidence figures for July at 10:00 am Eastern time.
US stock futures recorded a decline on Tuesday, while the dollar rebounded from a two-year low as investors braced for a wave of corporate earnings that could define the direction of the market in the short term. And they looked at what could be contention talks between Republicans and Democrats about the next form of coronavirus support for the world’s largest economy.
With three Dow components posting mixed earnings before the opening bell – Pfizer (PFE) – Get reportMcDonald’s (DCM) – Get report and 3M (MMM) – Get report– and the Federal Reserve will begin its virtual policy meeting two days later today in Washington, risk markets were relatively muted overnight, with the dollar rising from the two-year lows it touched yesterday and gold withdrawing from all-time maximums.
A modest decline in the number of new coronavirus cases in the United States, which fell 2% last week, as well as the start of talks between Republican and Democratic lawmakers about the next round of financial support for Americans with affected cash problems by coronavirus. Job losses provided a better backdrop for Tuesday’s session, although infection outbreaks in Europe and Asia continue to unstable nerves as the pandemic spreads to its eighth month of damage, which includes more than 16 million confirmed cases and 600,000 deaths.
Still, lawmakers remain at least $ 2 trillion apart in their proposed support packages, after Republicans revealed what Senator Mitch McConnell called a “tailored and directed” bill, the HEALS Act, that would reduce paycheck payments and at the same time would direct more cash for EPP production. and small business loans.
Democrats said the proposal was too small and promised to continue lobbying for their $ 3 trillion HEROES bill that was passed by the House earlier this year.
With Washington in focus, both in terms of congressional fiscal policy and Federal Reserve monetary support, stocks appear poised for a modest drop in the opening bell on Tuesday, as Dow-linked contracts suggest a 120-slip Points and those linked to the S&P 500 indicate a 13-point drop for the broader benchmark.
Pfizer shares rose 3% more, to an annual high of $ 38.70 after it beat second-quarter profit estimates and raised its full-year earnings guidance, while McDonald’s and 3M fell after failing forecasts. Street amid falling sales of the coronavirus pandemic.
In terms of corporate earnings, more than 80% of the 140 S&P 500 companies that reported so far this season have exceeded Wall Street’s forecasts, although analysts still expect the collective result of the benchmark index to drop 40.3%. compared to last year once the final numbers are reported. early next month.
About 190 S&P 500 companies will report this week, including Visa (V) – Get reportChevron (CVX) – Get report and ExxonMobil (XOM) – Get report as well as Apple’s tech giants (AAPL) – Get reportGoogle (GOOGL) – Get report and Facebook (full board) – Get report.
The US Dollar Index, which tracks the dollar against a basket of six global currencies and hit a two-year low yesterday, was 0.3% higher at 93,973, while 10-year Treasury yields rose. 0.62% in overnight trade overnight. The feeling of risk improved.
European stocks were also modestly firmer as the Stoxx 600 benchmark index rose 0.3% early Tuesday, spurred by a 0.25% gain for the DAX performance index in Germany and a rise of 0 , 41% for the FTSE 100 in London.
Overnight in Asia, Japan’s Nikkei 225 closed 0.26% lower at 22,657.38 points as investors prepared for an avalanche of benchmark corporate earnings as they analyzed a worrying (albeit small) rise in local infections. by coronavirus, while solid gains in South Korea and Shanghai helped propel the ex-Japan MSCI index to a gain of 0.87% in the last hours of trading.
World oil prices changed little in the overnight session, even with the sharp rebound in the US dollar, as traders looked at inventory data from the American Petroleum Institute later today and continued to speculate on the pace of growth. of world energy demand during the second half. of the year.
WTI contracts for September delivery, the US benchmark, 9 cents lower since its closing on Monday in New York and were changing hands at $ 41.51 per barrel in early European operations, while Brent contracts for September, the global benchmark, were 9 cents higher at $ 43.50 a barrel.
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