- Bank earnings paint a mixed picture of the economy and financials services sector
- Retail sales data shows continued health of U.S. consumer
- J&J beats on the top and bottom line
U.S. stocks were mixed at the start of trade Tuesday, a day after major equity indexes eked out a round of fresh all-time closing highs and as Wall Street digested a fresh, bank-heavy round of earnings reports.
How are the major benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.00% rose 21 points to 27,380, a gain of 0.1%, the S&P 500 index SPX, -0.05% was unchanged at 3,014 and the Nasdaq Composite index COMP, -0.04% moved 0.1% lower at 8,253, losing 5 points.
The Dow set a new intraday high of 27,329.85, Tuesday rising 29.31 points at the start of trade, before paring those gains.
On Monday, the Dow gained 27.13 points, or 0.1% record of 27,359.16, the S&P 500 index added 0.53 point, or less than 0.1%, to end at 3,014.30. The Nasdaq Composite Index rose 14.04 points to reach 8,258.19, a 0.2% increase. All three major indexes scored record closes.
What’s driving the market?
Stocks were largely rangebound after a series of earnings reports from major banks JPMorgan Chase & Co. JPM, +0.03% Goldman Sachs GS, +2.10% and Wells Fargo & Co. WFC, +0.27% painted a mixed picture of the banking industry, and the broader economy’s strength, following a report from Citigroup Inc. C, -0.29% on Monday.
While all four banks were able to surpass much lowered expectations for second-quarter performance, “the broad theme we’re seeing is slowing loan growth, somewhat muted trading revenues and shrinking margins,” said Stephen Biggar, director of financial institution research at Argus Research in an interview. “Lower manufacturing activity, lower housing activity and business-investment slowing are all manifesting themselves” in bank performance, he said.
J.P. Morgan’s performance in particular, however, does reflect the continued strength of the U.S. consumer, given that provisions for losses on consumer loans relative to income remained steady.
Also reflecting a healthy U.S. consumer were data on June retail sales, which rose 0.4% compared to May, above the 0.1% gain expected by economists polled by MarketWatch.
That’s in contrast to the U.S. factory sector, which showed unchanged growth in the three months ended in June, the second straight quarterly decline and below the 0.1% gain expected by economists, per a MarketWatch poll, the Federal Reserve said Tuesday.
The Fed has hinted strongly that it is likely to cut interest rates as it attempts to dull the effect of trade conflicts and expectations that the economy may weaken somewhat in the 11th year of a history-setting economic expansion.
“The bullish move that some equity markets enjoyed thanks to the slight improvement in US-China trade talks, and the chatter about the Federal Reserve lowering rates, has run out of steam, and some traders are taking a breather,” David Madden, market analyst at CMC Markets UK, in a daily research note.
Meanwhile, across the Atantic, the British pound GBPUSD, -0.6871% was under pressure against the dollar, dropping 0.4%, after Boris Johnson and Jeremy Hunt, the two candidates vying to take over from departing Prime Minister Theresa May, both said Monday evening they wouldn’t accept the so-called Irish backstop, previously agreed with the European Union as part of the long negotiations over the U.K’s planned exit from Europe’s trade bloc.
Several Federal Reserve officials are expected to deliver speeches Tuesday, including Federal Reserve Board Gov. Michelle Bowman, Dallas Fed President Rob Kaplan and Chicago Fed President Charles Evans. Chairman Jerome Powell will speak at a conference in Paris at 1 p.m. Eastern Time, though he was not expected to offer different views than those expressed during Congressional testimony last week.
Which stocks are in focus?
Dow-component JPMorgan’s stock fell 0.4% Tuesday, though the bank reported earnings and revenue for the second quarter that beat analyst estimates. Shares in the bank had risen 16.7% year-to-date.
Shares of Goldman Sachs, also in the Dow, rose 1.4% after the bank reported second-quarter earnings and revenue that beat Wall Street expectations, while raising its dividend by 47%.
Shares of Wells Fargo fell 0.7%, even after the bank reported second-quarter earnings and revenue that surpassed analyst forecasts.
Dow-component Johnson & Johnson JNJ, -1.51% was in focus after the health-care retailer produced quarterly results that were better than expected while boosting its full-year outlook, though it reported falling revenue compared with the second-quarter of last year. Shares of J&J were down 1.5%.
Domino’s Pizza, Inc. DPZ, -3.57% stock fell 3.9% Tuesday, after the fast-food retailer reported second-quarter revenue and same-store sales growth that fell short of analyst estimates.
Facebook Inc. FB, +0.50% will be in focus as executives from the social-media giant are set to explain its digital currency venture Libra coin to a Senate banking committee later Tuesday. Facebook’s stock was less than 0.4% lower before the opening bell.
Blue Apron Holdings Inc. APRN, +18.22% rose 9.1% after the meal-kit company announced seasonal recipes that will include plant-based proteins from Beyond Meat Inc. BYND, +1.25%
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, +1.71% rose 3.3 basis points to 2.125%
In Asia, stocks ended mixed, with the China CSI 300 000300, -0.45% falling 0.5%, Japan’s Nikkei 225 NIK, -0.69% declining 0.7% and Hong Kong’s Hang Seng Index HSI, +0.23% advancing 0.2%. European shares were on the rise, with the Stoxx Europe 600 SXXP, +0.31% edging 0.3% higher.
In commodities markets, crude-oil CLQ19, +0.59% was flat along with gold prices GCQ19, -0.08%
The U.S. dollar DXY, +0.36% rose 0.4%, as measured by the ICE U.S. Dollar Index.