Marketmind: August cools Wall St stocks
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[August 01, 2023] A
look at the day ahead in U.S. and global markets from Mike Dolan
After notching a fifth straight month of gains for July, Wall St stocks
looked set to step back on Tuesday as a deluge of corporate earnings hit
this week and poor manufacturing soundings from around the world set a
more edgy backdrop.
China's factory underperformance stood out once again and underlined its
struggling recovery - perhaps the main driver of stalling industrial
activity everywhere.
With markets increasingly impatient at the patchy and underwhelming
economic stimulus plans seen from Beijing so far, China stocks fell
back, bucking Tuesday's wider Asia stocks rally.
A Federal Reserve survey late Monday showed how more than a year of
sharp interest rate increases had weighed on credit to the wider economy
in the second quarter - but hopes of 'peak rates' worldwide were
encouraged when Australia's central bank unexpectedly paused policy
tightening again.
Led in part by a resulting recoil in the Australian dollar, the U.S.
dollar surged to its best level in three weeks as the relatively upbeat
U.S. economic constellation contrasted with stiffer conditions abroad.
Chicago Fed chief Austan Goolsbee said on Monday the Fed is now on "the
golden path" of bringing down inflation without causing a recession -
but added no final decision had been made on September's policy meeting.
Excess credit tightening after the March bank sector stress appears to
have been the "dog that has not been barking," Goolbee said, and the
more restrictive loan conditions he had seen were in line with what Fed
policy had intended to engineer.
But with property lending showing up as a particular cause of concern in
Fed lending surveys, real estate remains a worry for many investors
around the world.
With the Bank of England set to lift UK interest rates again later this
week, the latest data showed British house prices fell 3.8% in the year
through July - their fastest fall since the aftermath of the banking
crash of 2009.
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A trader works on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., July 24, 2023.
REUTERS/Brendan McDermid/File Photo
Sterling and UK stocks fell back.
Otherwise, the focus in U.S. hours will be on another sweep of
corporate earnings, with chipmaker AMD in focus during a bumper
season for semiconductor firms and Caterpillar likely to reflect the
more subdued industrial economy by contrast.
Big Pharma also looms large, with updates from Pfizer and Merck.
Ride-hailing giant Uber's stock rose more than 2% before the bell
and ahead of its earnings report.
In the UK, HSBC climbed 2.1% after the lender raised its key
performance target, while BP gained 2.2% after the energy giant
boosted its dividend by 10%.
With the July U.S. employment report due Friday, traders will also
watch closely for the latest U.S. job openings numbers later on
Tuesday.
U.S. stock futures and Treasury yields were a touch lower ahead of
the open.
Events to watch for on Tuesday:
* U.S. corp earnings: AMD, Mosaic, Caterpillar, Uber, Pfizer, Merck,
Marathon, Prudential Financial, AIG, Eaton, Altria, Starbucks,
Molson Coors, Boston Properties, Stanley Black & Decker, Zimmer
Biomet, Caesars Entertainment, Marriott, Illinois Tool Works,
Pioneer Natural Resources, Solaredge, First Energy, Progressive,
Devon Energy, VF, Match, Gartner, Allstate, Paycom Software, Global
Payments, STERIS, IQVIA, Assurant, Electronic Arts, Vertex, Aflac,
WEC, Rockwell, Revvity, Incyte, Howmet, Zebra, Sysco, Leidos,
AMETEK, Public Service Enterprise, Ecolab
* U.S. June JOLTS job openings data, final U.S. July S&P Global
business survey readings, Dallas Fed July service sector readings
* Chicago Federal Reserve President Austan Goolsbee speaks
(By Mike Dolan, Editing by Bernadette Baum; mike.dolan@thomsonreuters.com.
Twitter: @reutersMikeD)
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