Five things you need to know before the market opens on Wednesday, July 19:
1. -- Stock Futures Higher With Earnings, Housing Data In Focus
U.S. equity futures moved higher Wednesday, with the Dow looking to extend its longest winning streak in two years, as investors prepped for the first of the 'Magnificent Seven' earnings after the close of trading while eyeing housing market data prior to the opening bell.
A stronger-than-expected start to the second quarter earnings season, with banks, healthcare, defense and consumer stocks all toping Street forecasts, has pushed stocks firmly higher over the past week, with the Dow rising for seven consecutive sessions and the S&P 500 closing within 5% of the all-time high it reached in early January of 2021.
Tesla, IBM and Netflix will publish June quarter earnings after the close of trading today, while Goldman Sachs reporting prior to the opening bell. The updates, as well as the solid start to the first week of the earnings season, will likely force a re-think of Wall Street's current second quarter projections, which call for collective second quarter earnings for the S&P 500 to fall 8.1% from last year to $428.9 billion.
Key June housing data will also arrive before the opening bell, with analysts looking for a slowdown in housing starts as mortgage rates hold firmly above the 7% mark heading into the summer months. Existing home sales data will follow on Thursday.
In other markets, data showing seaborne crude exports from Russia fell to a six month low in June has added upward pressure to global oil prices as traders worry that Moscow will make good on its promise to limit exports as a result of U.S.-lead sanctions.
WTI crude futures for August delivery were marked 19 cents higher at $75.94 per barrel while Brent contracts for September, the global pricing benchmark, rose 41 cents to $80.05 per barrel.
In the bond market, benchmark 2-year Treasury note yields were last seen trading at 4.756%, modestly higher in the overnight session, following solid underlying strength in the June retail sales data, which was published early Tuesday. Benchmark 10-year notes were holding at 3.764%.
The U.S. dollar index, which tracks the greenback against a basket of six global currency pairs, was marked 0.17% higher at 100.154 following some dovish comments from European Central Bank officials that weakened the euro and softer-than-expected inflation data from Britain that added downward pressure to the pound.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a modest 4 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 62 point move to the upside. Nasdaq futures were up 30 points.
The Europe-wide Stoxx 600 was marked 0.44% higher in early Frankfurt trading while Britain's FTSE 100 gained 1.4% in London as the pound fell to 1.2943 against the U.S. dollar
Overnight in Asia, the region-wide MSCI ex-Japan index gained 0.37% into the close of trading, while the Nikkei 225 was marked 1.24% higher in Tokyo.
2. -- Tesla Earnings On Deck As Investors Eye Price War Impact On Margins
Tesla (TSLA) -) shares edged higher in pre-market trading ahead of the EV maker's closely-tracked second quarter earnings after the closing bell.
Analysts expect Tesla's overall revenue to rise 45% from a year earlier to $24.5 billion, an all-time high, following its record tally of 466,140 new EV deliveries over the three months ended in June.
The group's adjusted bottom line, however, is forecast to rise just 8% from a year earlier, to 82 cents a share. The increase reflects Chief Executive Elon Musk's decision earlier this year to focus on market-share gains over profit by initiating significant price cuts in key markets and boosting referral incentives.
Elevated production costs, uneven supply chains and expenses linked to the ramp up of new factories in Texas and Germany are also expected to clip overall margins this quarter.
Wall Street forecasts peg the closely tracked adjusted figure to come in at 17.5%, a five-percentage-point slump from the year-earlier period.
Tesla shares were marked 0.05% higher in pre-market trading to indicate an opening bell price of $293.40 each.
3. -- Netflix Shares Higher Ahead of Q2 Earnings With Subscriber Gains In Focus
Netflix (NFLX) -) shares moved higher in pre-market trading ahead of the streaming service's second quarter earnings after the close of trading.
Netflix is expected to fall 10.6% from last year to $2.86 per share, with revenues rising 4% to 8.3 billion, as the rollout of its multi-tiered subscription plans, including an ad-only service, clips its bottom line while boosting its overall subscriber base.
The Wall Street Journal reported last month that Netflix had its best four-day sign-up period in four years over the final days of May despite its crackdown on subscribers' ability to share passwords while forcing those living outside the homes of the account holders to purchase their own subscriptions.
Management is also likely to provide color on the impact of Hollywood actors joining the months-long Writers Guild of America strike earlier this week,
Netflix shares were marked 1.37% higher in pre-market trading to indicate an opening bell price of $481.30 each.
4. -- Goldman Sachs Rounds Out Bank Earnings Amid Tepid Q2 Dealmaking
Goldman Sachs Group (GS) -) shares edged higher in pre-market trading ahead of the investment bank's second quarter earnings before the opening bell.
Analysts expect Goldman, which is heavily-reliant on investment banking and trading fees to support its bottom line, to post earnings of $3.18 per share, down 58% from last year, on revenues of $10.84 billion.
Global dealmaking was pegged at $1.3 trillion over the first half of this year, down 38% from 2022 levels, a tally that, outside of the pandemic, was the lowest in a decade. Second quarter deals, however, were up 22.6% when compared to the first three months of the year, according to Dealogic data.
That said, higher interest rates and a resilient economy are providing a solid boost to second quarter bank profits, with JPMorgan, Citigroup, Wells Fargo, Bank of America and Morgan Stanley all topping Street earnings forecasts over the past four days of reporting.
Goldman Sachs shares were marked 0.21% higher in pre-market trading to indicate an opening bell price of $337.97 each.
5. -- IBM Earnings To Highlight AI Push For Cloud Software Group
International Business Machines (IBM) -) will round-out a trio of after-the-bell earnings Wednesday with investors focused on the iconic tech group's recent push into AI technologies to compliment its cloud software business.
IBM, which recently unveiled plans to buy IT budgeting and forecasting software group Apptio for $4.6 billion, is likely to see flat revenue growth when compared to last year, with a top line of $15.58 billion, with earnings down 13% to $2.01 per share.
IBM's own full-year forecast sees free cash flow in the region of $10.5 billion, with overall revenues rising between 3% and 5% on a constant currency basis, thanks to solid gains from its software and consulting divisions.
Last month, IBM also provided its strongest hint yet of a push into AI and automation-lead investments when CEO Arvind Krishna said he would slow hiring in human resources and certain 'back office' areas of the group, adding that around a third of the group's non-customer facing roles could be replaced by AI and automation over the next five years.
IBM shares were marked 0.07% lower in pre-market trading to indicate an opening bell price of $135.27 each.
