Monday July 12th

12-07-2021

The Dow is set to retreat from a record with futures down 100 points to start the week

U.S. stock index futures declined after the measure closed out the prior week at a record. Second-quarter earnings season kicks off on Wall Street this week with big banks set to start reporting results Tuesday. Futures on the Dow shed 128 points, or 0.37%, and S&P 500 futures fell 0.1%. Nasdaq 100 futures bucked the trend and gained 0.4%. The 10-year Treasury yield dipped 1.3 basis points to 1.343%, continuing its losses from last week. (One basis point is 0.01%.) Bank shares, despite expectations for strong earnings reports this week, fell as yields declined. Bank of America and JPMorgan were both lower. Other shares linked to the economic comeback from the pandemic were slightly weaker with Boeing and Carnival Corp. lower. Key technology stocks were higher in premarket trading with Tesla, Facebook and Apple in the green slightly. Virgin Galactic shares jumped more than 2% after its founder Richard Branson made history by reaching space on Sunday in the company’s VSS Unity spacecraft. The three major indexes closed at record highs on Friday after a sell-off Thursday as investors worried about a potential slowdown in U.S. economic growth. Friday’s rally brought the averages into the green for the week; the Dow added 0.24% week-to-date, while the S&P 500 and Nasdaq each rose about 0.4% in the same period. Stocks tied to the economic recovery that fell during Thursday’s session logged gains on Friday. Financial names rebounded, with Bank of America and Goldman Sachs both jumping more than 3%. Travel-related stocks also rose; Royal Caribbean popped 3.6%, Wynn Resorts gained close to 2%, and American Airlines and United Airlines both added more than 2%. The major averages’ record highs come ahead of the start of quarterly earnings reports. S&P 500 companies’ profits are expected to be up 65% from the same quarter a year ago, according to Refinitiv, bouncing back from the worst of the pandemic. The expected surge in profits would be the strongest earnings growth since the fourth quarter of 2009, as stocks recovered from the financial crisis. “Continued earnings momentum should refuel investors’ confidence in the recovery amid slowdown concerns and drive a rotation back into Value,” Bank of America’s Savita Subramanian said in a note Sunday. JPMorgan Chase, Goldman Sachs and PepsiCo kick off earnings season with results due out before the bell on Tuesday. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock report on Wednesday, and Morgan Stanley, Truist and UnitedHealth post results on Thursday. Investors also anticipate important data to be released this week, including key readings on inflation on Tuesday and Wednesday, and June retail sales on Friday. Stocks in Asia-Pacific rose on Monday, with shares in Japan and China leading gains regionally. Japan’s Nikkei 225 surged 2.25% to close at 28,659.02 while the Topix index jumped 2.14% to end the trading day at 1,953.33. South Korea’s Kospi closed 0.89% higher at 3,246.47. Mainland Chinese stocks also closed higher, with the Shanghai composite up 0.67% to 3,547.84 while the Shenzhen component climbed 2.137% to 15,161.52. Hong Kong’s Hang Seng index gained about 0.8%, as of its final hour of trading. Crude futures slipped on Monday as concerns over slowing global growth outweighed the prospect of tightening supply after talks among key producers to raise output in coming months stalled. Brent crude for September fell $1.14, or 1.5%, to $74.41 per barrel while U.S. West Texas Intermediate crude for August was at $73.37 a barrel, down $1.20, or 1.6%. Both benchmarks fell around 1% last week but still hover near highs last reached in October 2018. Gold prices fell on Monday as a stronger dollar made bullion more expensive for holders of other currencies, while investors awaited U.S. inflation data and Federal Reserve Chairman Jerome Powell’s testimony this week. Spot gold was down 0.4% at $1,800.46 per ounce by 1051 GMT. U.S. gold futures slipped 0.5% to $1,801.30 per ounce. The dollar index rose 0.2% against its rivals.