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Stock-index futures indicated a slightly higher start for Wall Street Monday as investors watched for progress toward another coronavirus rescue program and braced for the busiest week of earnings season.
What are major benchmarks doing?
Futures on the Dow Jones Industrial Average YM00, +0.47% rose 87 points, or 0.3%, to 26,409, while S&P 500 futures ES00, +0.57% advanced 14.60 points, or 0.5%, to 3,218.50. Nasdaq-100 futures NQ00, +1.10% NQ00, +1.10% were up 100 points, or 1%, at 10,559.
Major benchmarks ended modestly lower Friday, leaving the Dow DJIA, -0.68% with a weekly loss of 0.8%, while the S&P 500 SPX, -0.61% declined 0.3% for the week. The tech-heavy Nasdaq Composite COMP, -0.93% lost 1.3% in a week that saw previously highflying tech shares suffer the brunt of selling pressure.
What’s driving the market?
Stocks stumbled late last week as U.S.-China tensions continued to ratchet up, with Beijing ordering the U.S. to close its consulate in the western Chinese city of Chengdu days after Washington ordered the closure of China’s Houston consulate. A lack of progress toward a second U.S. spending plan and a continued rise in COVID-19 cases were also cited for the soft tone.
After disagreements between themselves and the White House, Senate Republicans were expected Monday to release their proposal, news reports said.
“After a generally down day Friday on Wall Street, markets are somewhat encouraged this morning by news that the Republicans have at least agreed among themselves on a proposal for fixing the ‘fiscal cliff’ that millions of unemployed in the U.S. are about to fall off of when their federal unemployment benefits expire at the end of this week,” said Marshall Gittler, head of investment research at BDSwiss Group, in a note.
However, Republican plans to approach the legislation in a piecemeal approach remain stiffly opposed by Democrats, he noted. The talks come as a provision that provides an additional $600 a week in unemployment benefits to more than 32 million out-of-work Americans expires at the end of the month.
Earnings season continues apace this week, including results from a host of tech heavyweights. Google parent Alphabet Inc. GOOG, -0.25% GOOGL, -0.56% Amazon.com Inc. AMZN, +0.74%, Apple Inc. AAPL, -0.24% and Facebook Inc. FB, -0.81% are all due to report within a 24-hour window Wednesday and Thursday.
Earnings Watch:Big Tech’s big test arrives in the busiest week of earnings season
Through the end of last week, companies representing 30.5% of the S&P 500’s market cap had reported second-quarter results, with earnings beating expectations by 13.7% in aggregate, with 79% of companies beating lowered estimates, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse, in a note.
See:S&P 500 earnings have been as bad as feared, even as the beat rate has improved
Price action, however, has been more muted than normal, he wrote, with companies beating both revenues and earnings outperforming the market by 1.2% verus a historical average of 1.6%. Companies missing on both measures have lagged by just 0.7% versus a historical average of 3.1%.
On the economic front, data on durable goods orders for June are due at 8:30 a.m. Eastern.
The Federal Reserve will conclude its two-day policy meeting on Wednesday. Investors generally don’t expect the central bank to make any major announcements, but look for Chairman Jerome Powell to maintain a dovish tone.
Powell’s remarks might also resonate on Capitol Hill as negotiations toward a rescue package continue, said Bernard Baumohl, chief global economist at the The Economic Outlook Group, in a note.
“If the Fed chairman emphasizes the urgent need for fiscal policy to address the widening economic divide in this country caused by the COVID-driven recession, it will be hard for those on Capitol Hill to ignore it,” he said.
Which companies are in focus?
- Moderna Inc. MRNA, -2.81% shares rose over 7% in premarket trade after it said over the weekend that it had secured another $472 million commitment from the government to develop a COVID-19 vaccine.
- Shares of toy-maker Hasbro Inc. HAS, -2.76% were off more than 3% ahead of the bell. after reporting an adjusted second-quarter profit and revenue that came in below expectations, as the COVID-19 pandemic has led to temporary store closures, product shortages and lower retail inventories.
How are other markets trading?
In Asia, China’s CSI 300 gauge 000300, +0.50% rose 0.5%, the Shanghai Composite Index declined gained 0.3%, while Hong Kong’s Hang Seng index HSI, -0.41% shed 0.4%.
In Europe, the Stoxx 600 Europe index SXXP, -0.19% headed 0.2% lower, while the U.K.’s FTSE 100 UKX, -0.17% declined 0.3%.
Gold futures GCQ20, +1.91% touched an all-time intraday high and was on pace to extend its record run on Monday, up 2.1%, to $1,938 an ounce on the New York Mercantile Exchange.
September futures for the U.S. crude benchmark CLU20, +0.67% added 10 cents, or 0.2%, to settle at $41.39 a barrel on the New York Mercantile Exchange.
The 10-year Treasury note yield TMUBMUSD10Y, 0.579% hung around the lowest levels since April 21 at 0.57%. Yields move in the opposite direction of prices.
In currency markets, the dollar fell 0.7% lower against its six major rivals, around its lowes level in two years, as gauged by the ICE U.S. dollar index DXY, -0.65%.
