By How Stock-Index Futures are Trading
- S&P 500 futures (ES00) rose 1 point, or 0%, to 4555.
- Dow Jones Industrial Average futures (YM00) added 10 points, or 0%, to 34773.
- Nasdaq 100 futures (NQ00) eased 3 points, or 0%, to 15838.
On Monday, the Dow Jones Industrial Average (DJIA) rose 76 points, or 0.22%, to 34585, while the S&P 500 (SPX) increased 17 points, or 0.39%, to 4523. The Nasdaq Composite (COMP) gained 131 points, or 0.93%, to 14245.
Second-Quarter Earnings Season Ramps Up
The second-quarter earnings season is revving up again with a flurry of reports due over the next few sessions.
Tuesday brings a distinct financials flavor, with reports from companies such as:
- Bank of America (BAC)
- Morgan Stanley (MS)
- BNY Mellon (BK)
- Interactive Brokers (IBKR)
- Charles Schwab (SCHW)
However, Lockheed Martin (LMT) is somewhat of an industrial outlier among these financial institutions.
Investors will be closely watching these earnings reports and management forecasts to see if they justify the market’s current levels, which sit at their highest since April 2022. Year-to-date, the S&P 500 and Nasdaq Composite indices are up by 17.8% and 36.1%, respectively.
Sentiment Boosted by Lower Borrowing Costs
The recent decline in implied borrowing costs, with the 10-year Treasury yield dropping to 3.77% from over 4%, has bolstered market sentiment. This decrease has raised hopes that cooling inflation will allow the Federal Reserve to take a less aggressive approach in raising interest rates.
Monetary Policy Still Driving Markets
Many analysts believe that monetary policy continues to be the key driver of market movements. Speculators and hedge funds closely monitor every piece of information, searching for any potential trigger that could burst the S&P 500 bubble. However, considering the steady nominal growth, easing inflation, and relatively modest expectations for earnings, interest rates are expected to remain the primary factor influencing risk markets.
Retail Sales Report to Gauge Consumer Resilience
At 8:30 a.m., the retail sales report for June will provide valuable insight into how well U.S. consumers have managed amidst the Fed’s rate hike campaign. Despite headwinds from higher interest rates and inflation, retail sales and consumer spending have exceeded expectations so far this year. It is anticipated that consumer spending will continue to make a positive contribution to Q2 GDP growth. However, uncertainties prevail regarding the second half of 2023.
Additional Economic Updates
In addition to the retail sales report, other economic updates scheduled for Tuesday include June industrial production and capacity utilization at 9:15 a.m. Eastern. Furthermore, business inventories for May and the home builder confidence index for July will be published at 10 a.m.
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