Here are five things you must know for Tuesday, July 19:
1. -- Stock Futures Higher As Dollar Retreats
U.S. equity futures edged higher Tuesday, while the dollar extended its recent decline and Treasury yields held steady, as investors ploughed into another active corporate earnings session amid some mixed messages from some of the world's biggest companies.
A late afternoon report from Bloomberg yesterday suggested that Apple (AAPL), the world's most valuable company, is planning to slow both its hiring and spending in its coming fiscal year. That message was echoed, at least in part, by Goldman Sachs (GS), which signaled ongoing cost-cuts despite its better-than-expected second quarter earnings and solid gains in its global markets division.
Both were enough to pull U.S. stocks lower yesterday, with the Dow swinging nearly 500 points to close 0.69% in the red as investors looked to the impact of softer corporate investment on the broader earnings season.
Overnight reports that the European Central Bank is discussing a 50 basis point rate hike for its Thursday meeting -- when it's expected to lift its key lending rate for the first time in 11 years -- put downward pressure on the U.S. dollar and gave equity futures a modest pre-market boost ahead of housing starts data at 8:30 am and June quarter earnings from Johnson & Johnson (JNJ), Lockheed Martin (LMT) and Hasbro (HAS).
The dollar index was marked 0.66% lower on the session at 106.649 while benchmark 10-year note yields were holding at 2.989%. The U.S. Treasury yield curve remains deeply inverted, however, with 2-year notes trading at 3.165%.
European stocks moved lower as the single currency rebounded from its two-decade lows against the greenback, with the Stoxx 600 falling 0.41% in early Frankfurt trading. Overnight in Asia, the softer dollar helped the Nikkei to a modest 0.65% in Tokyo while the region-wide MSCI ex-Japan index fell 0.28% heading into the close of trading.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average are indicating a 170 point opening bell gain, while those linked to the broader S&P 500 are priced for a 27 point advance. Futures tied to the tech-focused Nasdaq are priced for an 80 point opening bell gain.
2. -- IBM Slumps As Currency Hit Clouds Q2 Earnings Beat
International Business Machines (IBM) shares slumped lower in pre-market trading after the tech group posted better-than-expected second quarter earnings but cautioned that the impact of the strongest dollar in more than two decades would erode full-year sales.
IBM said revenues for the three months ending in June rose 9% from last year to $15.5 billion, topping the Street consensus forecast of $15.19 billion. Adjusted earnings of $2.31 per share, a 0.85% decrease from last year but also beat the Street forecasts by around 4 cents.
The group took a $900 million hit to second quarter revenues owing to the surging U.S. dollar, which hit a fresh 20-year peak during much of the three-month period, a figure that was around $200 million higher than its prior forecast.
CFO James Kavanaugh told Reuters that the full year hit could top $3.5 billion, but he told investors on a conference call late Monday that "it's about $1.5 billion overall change from what we said here in April."
IBM shares were marked 5.1% lower in pre-market trading to indicate an opening bell price of $131.13 each, a move that would tip the stock into negative territory for the year.
3. -- Disney Gathers Record $9 Billion In Ad Commitments
Walt Disney (DIS) shares edged higher in pre-market trading after the media group said it had secured a record $9 billion in ad spending commitments for its coming fiscal year.
Known as "up fronts", the advertising purchases suggest faith in both the group's expanding digital platforms, including ESPN and Hulu, as well as its plans to introduce a tiered service for its Disney+ streaming platform.
Last week, Disney said it would increase the cost of its EPSN+ streaming service by $3, to $9.99 per month, in order to partly offset the surging costs of acquiring live sports rights,
Disney added 7.9 million subscribers over its fiscal second quarter, which ended on April 2, taking ESPN+ to 22.3 million paid subscribers and Hulu to 45.6 million. Overall subscriber totals for its Disney+ streaming services hit 137.7 million, topping analysts' estimates by around 2 million.
Disney shares were marked 0.5% higher in pre-market trading to indicate an opening bell price of $96.17 each.
4. -- Twitter Dips Lower Ahead of Opening Hearing in Musk Takeover Battle
Twitter (TWTR) shares moved lower in pre-market trading ahead of the first hearing between its lawyers and those representing Elon Musk in their $44 billion takeover dispute.
Kathaleen McCormick, the chancellor of Delaware's Court of Chancery, will preside over 90 minute meeting -- starting at 11:00 am eastern time via Zoom, owing to her recent Covid positive test -- as the two side line-up arguments for both the timing of the main trial and the basis for which Musk is attempting to abandon his agreement to buy the group for $54.20 per share.
Twitter said yesterday that Musk's legal team was attempting to "slow walk" the social media group's lawsuit, which seeks to compel him to close the deal he unveiled in April, adding that "millions of Twitter shares trade daily under a cloud of Musk-created doubt."
Twitter share were marked 0.95% lower in pre-market trading to indicate an opening bell price of $38.05 each.
5. -- Netflix Earnings on Deck As Investor Eye Subscriber Exodus
Netflix (NFLX) shares jumped higher in pre-market trading ahead of the streaming service and media group's second quarter earnings after the closing bell.
Netflix is expected to post a bottom line of $2.95 per share for the three months ending in June, with revenues rising 9.5% from last year to $8.04 billion.
Netflix, which lost 200,000 subscribers over the the first three months of the year and expects to have lost another 2 million by the end of the second quarter thanks to what the company said was a mix of rising prices, increasing competition and password sharing. The group moved to address at least part of that equation earlier this week as it unveiled plans to raise prices in Latin America for customers accessing Netflix in more than one home.
The group is also reportedly working on an ad-supported version of its service that will be "more integrated and less interruptive” than traditional television.
Netflix shares were marked 1.6% higher in pre-market trading to indicate an opening bell price of $193.82 each, a move that would still leave the stock nursing a year-to-date decline of around 67.8%.
