The Dow is set to retreat from a record with futures down 100 points to start the week
12 Jul 2021
Traders work on the floor of the New York Stock Exchange.
Dow Jones Industrial average futures declined after the measure closed out the prior week at a record. Second-quarter earnings season kicks off on Wall Street this week with big banks set to start reporting results Tuesday.
Futures on the Dow shed 144 points, or 0.4% and S&P 500 futures fell 0.2%. Nasdaq 100 futures bucked the trend and gained 0.2%.
The 10-year Treasury yield lost 2 basis points to 1.33%, continuing its losses from last week (1 basis point equals 0.01%).
Bank shares, despite expectations for strong earnings reports this week, fell as yields declined. Bank of America and JPMorgan were both lower.
Other shares linked to the economic comeback from the pandemic were slightly weaker with Boeing and Carnival Corp. lower.
Key technology stocks were higher in premarket trading with Tesla, Facebook and Apple in the green slightly.
Virgin Galactic shares jumped 8% after its founder Richard Branson made history by reaching space on Sunday in the company’s VSS Unity spacecraft.
The three major indexes closed at record highs on Friday after a sell-off Thursday as investors worried about a potential slowdown in U.S. economic growth. Friday’s rally brought the averages into the green for the week; the Dow added 0.24% week-to-date, while the S&P 500 and Nasdaq each rose about 0.4% in the same period.
Stocks tied to the economic recovery that fell during Thursday’s session logged gains on Friday. Financial names rebounded, with Bank of America and Goldman Sachs both jumping more than 3%. Travel-related stocks also rose; Royal Caribbean popped 3.6%, Wynn Resorts gained close to 2%, and American Airlines and United Airlines both added more than 2%.
The major averages’ record highs come ahead of the start of quarterly earnings reports. S&P 500 companies’ profits are expected to be up 65% from the same quarter a year ago, according to Refinitiv, bouncing back from the worst of the pandemic. The expected surge in profits would be the strongest earnings growth since the fourth quarter of 2009, as stocks recovered from the financial crisis.
“The second quarter could be as good as it gets for economic growth,” Callie Bost, senior investment strategist at Ally Invest, said. “Earnings growth may slow, but analysts still expect S&P profits to grow by double digits in the next two quarters. It’s crucial not to lose faith in the market just because the economy’s strongest growth may be behind us.”
JPMorgan Chase, Goldman Sachs and PepsiCo kick off earnings season with results due out before the bell on Tuesday. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock report on Wednesday, and Morgan Stanley, Truist and UnitedHealth post results on Thursday.
Investors also anticipate important data to be released this week, including key readings on inflation on Tuesday and Wednesday, and June retail sales on Friday.