The Goldman Sachs booth on the floor of the New York Stock Exchange
U.S. stock futures were basically flat Tuesday morning after the Dow Jones Industrial Average on Monday closed just shy of 35,000.
JPMorgan Chase unofficially kicked off second-quarter earnings season with better-than-expected earnings and revenue. JPMorgan shares, which are up 24% this year through Tuesday’s close, were slightly lower in premarket trading.
Boeing shares fell about 1.8% in premarket trading, pressuring the Dow a bit, after cutting 787 Dreamliner production after finding a new flaw.
The market will also be watching a key inflation report due at 8:30 a.m. ET with the release of June’s Consumer Price Index. CPI is expected to increase 0.5% month-over-month and 5% from a year ago, according to economists polled by Dow Jones. The 10-year Treasury yield was flat ahead of the report.
JPMorgan Chase shares fell about 1% in premarket trading even after posting second-quarter earnings of $11.9 billion, or $3.78 per share, which exceeded the $3.21 estimate of analysts surveyed by Refinitiv. The bank received a net benefit of $2.3 billion because of better than expected loan performance and the release of money it had set aside for credit losses. That benefit, along with a drop in Wall Street trading revenue, may be some reasons for the stock weakness. The shares also had a nice run into the report.
Goldman Sachs is set to report earnings shortly.
Overall earnings reports are expected to be stellar for the second quarter over the coming weeks with profit growth estimated at 64% year-over-year for the quarter, according to FactSet. That would be the biggest quarterly profit increase since 2009.
Banks’ earnings are expected to more than double for the second quarter, with an estimated 119.5% estimated year-over-year growth rate, according to analysts polled by FactSet.
PepsiCo on Tuesday reported a sizable beat for second-quarter earnings and revenue. The drink and snack giant also raised its forecast. Shares added 1.7% in premarket trading.
In the regular trading session on Monday the Dow rose 126.02 points to close just below 35,000. The blue-chip measure is up 14% this year. The S&P 500 and Nasdaq Composite gained 0.3% and 0.2%, respectively, to record closes.
“High expectations for earnings and each companies’ forward guidance will push markets higher or disappointment may create a small pullback in equity markets,” said Jeff Kilburg, chief investment officer at Sanctuary Wealth. “Eyes will be on the major banks to set the tone for the next few weeks of earnings.”
Federal Reserve Chairman Jerome Powell is scheduled to appear in front of Congress Wednesday and Thursday to provide an update on monetary policy. He has maintained that the Fed’s easy policies will remain intact until there’s more progress on its employment and inflation goals.