Stocks edge higher ahead of earnings deluge - MarketWatch

• More than 140 S&P 500 companies and a third of Dow components due to report earnings this week
• Investors look for Federal Reserve to deliver at least a quarter-point rate cut at end of the month
• Oil prices rise after Iran seized British-flagged tanker in Strait of Hormuz on Friday

Most stock-market indexes rose Monday morning, as investors adjusted expectations around a widely anticipated rate cut by the Federal Reserve at the end of the month and braced for a deluge of corporate results after a strong start to earnings season.

How are the major benchmarks faring?

The Dow Jones Industrial Average DJIA, -0.23%   edged 15 points, or less than 0.1%, lower to 27,140, while the S&P 500 index SPX, +0.01%  rose 5 points, or 0.2%, at 2,982, supported almost entirely by gains in the information technology sector (up 1.1%). The Nasdaq Composite Index COMP, +0.39%  gained 44 points, or 0.5%, to trade at 8,190.

Major stock indexes ended lower on Friday, leaving them with weekly losses. The Dow Jones Industrial Average fell 0.7% last week, while the S&P 500  declined 1.2% and the Nasdaq Composite lost 1.2%.

What’s driving the market?

After a strong start to earnings season last week, investors will see results from 144 S&P 500 companies and a third of Dow components this week.

“Investor optimism has been supported by a better-than-expected start to the Q2 EPS reporting season, as well as the ongoing possibility of a rate cut by the end of the month,” said Sam Stovall, chief investment strategist at CFRA, in a Monday note.

Stocks were bruised late last week as investors scaled back expectations for a half-point rate cut after the New York Federal Reserve emphasized that dovishly interpreted remarks by its president, John Williams, weren’t about potential policy actions at the next Fed meeting. Also, The Wall Street Journal on Friday, citing public remarks and interviews, reported Fed officials were signaling a quarter-point cut when policy makers meet July 30-31.

Shares of energy services firm Haliburton Co. HAL, +5.22%  rose 6.8%, after the company reported second-quarter profit that topped expectations. Heavyweights due to report in the week ahead include Facebook Inc. FB, +0.81% Coca-Cola Co. KO, -0.28% Caterpillar Inc. CAT, -1.19%  and McDonald’s Corp. MCD, +0.22%

Read: Forget the Fed — stock-market investors brace for Dow’s busiest week of earnings

“So far in 2Q19 reporting season, 79% of the S&P 500 results that have come in have beaten consensus EPS expectations (down from 83% in our last update) while 63% have beaten consensus on sales (down from 75% in our last update),” wrote Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “Despite the slippage, EPS beats are still near the high end of their historical range, and both EPS and sales beats are still tracking well above the 1Q19 reporting season.”

Analysts said investors will also be focusing on results and management commentary for concerns over the global economic outlook and the impact of the U.S.-China trade war on performance and outlook.

Read: Here are the 9 S&P 500 companies blaming the trade war for performance or outlook, so far

U.S.-China trade negotiations could be in focus Monday, after reports that the two sides would meet soon face-to-face, with the South China Morning Post saying that U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steve Mnuchin would travel to Beijing next week.

Oil futures CLQ19, +0.92% BRNU19, +1.04%  were up strongly on Monday as tensions between Iran and Western nations rose following Tehran’s announcement on Friday that it had seized a British-flagged oil tanker.

See: Iran seizes British-flagged oil tanker — here’s what you need to know about the Strait of Hormuz

The Chicago National Activity index rose to -0.02 in June, up from -0.05 in May, the Federal Reserve Bank of Chicago said Monday.

Check out: The economy is likely to get a mediocre grade on its next report card, but don’t take it at face value

Which stocks are in focus?

Equifax Inc. EFX, +0.59%   came to a $700 million settlement with federal regulators and U.S. states related to a 2017 data breach that exposed the personal data of nearly 150 million Americans. Shares rose 2.1% in early trade Monday.

Shares of DaVita Inc. DVA, +4.59%   rallied 5% Monday, after the dialysis-services company raised its profit outlook for the second quarter, ahead of an expected execution of a $1.2 billion share repurchase program.

Apple Inc. AAPL, +1.65%   shares rose 1.7% Monday, making it the best-performing Dow component on the day, after Morgan Stanley analyst Katy Huberty raised her price target on the stock to $247 from $231 ahead of the company’s Tuesday afternoon earnings report.

How are other markets trading?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.19% fell about one basis point to 2.036%.

Stock markets in Asia closed mostly lower Monday, with China’s CSI 300 000300, -0.69% falling 0.7%, Japan’s Nikkei 225 NIK, -0.23% losing 0.2% and Hong Kong’s Hang Seng HSI, -1.37%  retreated 1.4%. European stocks were edging higher, with the Stoxx Europe 600 HSI, -1.37% rising 0.1%.

The price of gold GCQ19, +0.03% tticked higher, while the U.S. dollar DXY, +0.08% rose slightly relative to its major trading partners.

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https://www.marketwatch.com/story/stock-futures-point-to-higher-start-ahead-of-earnings-deluge-2019-07-22

2019-07-22 13:42:00Z
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