The trend remains slightly positive before the stock market on Tuesday on the American market, while Donald Trump’s increased chances for the presidential election following the assassination attempt on Saturday during a meeting in Pennsylvania seem to support the rating. In addition, the latest comments from Fed Chairman Jerome Powell suggest that a rate cut is imminent. The S&P 500, the Dow Jones and the Nasdaq are up around 0.3% in pre-market trading, at or near their peaks.
On the Nymex, the barrel of WTI crude dropped 1.7% to $79.5. The ounce of fine gold gained 0.4% to $2,439. The dollar index gained 0.1% against a basket of reference currencies.
Speaking at the Economic Club of Washington, Powell discussed recent progress on the inflation front. “We didn’t gain confidence in the first quarter, but the three numbers in the second quarter, including last week’s, add a little bit to confidence,” the Fed leader summarized, as inflation approaches the 2% target. The consumer price index excluding volatile food and energy prices rose 3.3% year-on-year in June, compared with 3.4% in May and 3.6% in April. Powell therefore believes that confidence is increasing with “more reliable inflation data.” “And lately, we’ve had some of that,” the leader insisted.
In political news, Donald Trump has chosen Senator JD Vance to be his vice president. Trump was also warmly welcomed at the Republican convention in Milwaukee, two days after the assassination attempt. The billionaire has also been officially nominated by the Republicans for the November election and has therefore decided to nominate Vance as his running mate.
On the economic front on Wall Street this Tuesday, import prices in the United States for the month of June came out stable compared to the previous month, against a consensus of -0.2% and after a decline of 0.2% a month earlier.
U.S. retail sales for June were flat compared to May, compared to the FactSet consensus of -0.2%. A month earlier, these sales had climbed 0.3%. Excluding autos, retail sales rose 0.4% month-over-month, compared to +0.1% consensus and +0.1% for the previous month’s revised reading. Finally, excluding autos and gasoline, retail sales rose 0.8%, compared to +0.3% consensus and +0.3% in May – in revised data.
Company inventories and sales for the month of May will be released at 4 p.m. (consensus +0.4% compared to the previous month for inventories).
The NAHB and Wells Fargo US Housing Market Index will be released at the same time (consensus 43).
Fed Governor Adriana Kugler will speak later today.
As for companies listed on Wall Street, UnitedHealth, Bank of America, Morgan Stanley, State Street, Charles Schwab and PNC Financial Services are publishing their results before the market closes today. Omnicom, JB Hunt and Interactive Brokers are announcing after the close.
ASML and Johnson & Johnson report tomorrow, while TSMC, Netflix and Abbott Laboratories report on Thursday. American Express, Schlumberger, Halliburton and The Travelers Companies will report on Friday.
Values
Google parent company Alphabet Inc. is reportedly on the verge of making its largest acquisition in history. Talks are reportedly in advanced stages to acquire cloud cybersecurity startup Wiz, multiple outlets including CNN have reported. A CNN source familiar with the discussions adds that Google and Wiz reportedly began talks after the startup raised $1 billion in funding from venture capitalists earlier this year. CNN reports that terms of a potential deal have yet to be finalized and that negotiations could still fall apart. The Wall Street Journal first reported the talks. The $23 billion valuation would be nearly double the $12 billion it was last year.
Bank of America is gaining ground on Wall Street, as the Charlotte-based lender reported second-quarter results that beat expectations. Net income came in at $6.9 billion, or 83 cents a share, compared with $7.4 billion a year earlier. Net interest income, at $13.9 billion on an adjusted basis, also beat consensus, as did trading revenue. Total revenue for the period was $25.4 billion, compared with $25.2 billion expected by analysts. Provisions for credit losses were $1.5 billion, in line with expectations. Net interest income guidance was also better than expected.
Morgan Stanley reported second-quarter earnings of $1.82 per share, beating market expectations, on total revenue of $15 billion, also better than expected. Net interest income of $2.07 billion came in above expectations, while wealth management revenue disappointed somewhat. Trading revenue was robust. Ted Pick, the New York-based bank’s chief executive, called it “another strong quarter in an improving capital markets environment.” For the full half, revenue was $30.2 billion, on earnings per share of $3.85 and a ROTCE of 18.6%. Total client assets rose to about $7.2 trillion.
UnitedHealth, a U.S. health insurance company, is maintaining its annual guidance for adjusted earnings per share ranging from $27.5 to $28. The company’s medical loss ratio, which is the percentage of premiums devoted to medical care, was 85.1% in the second quarter, compared with 83.2% a year earlier and 84.4% consensus. For the quarter ended, adjusted earnings per share were $6.80, above the market consensus. Revenues increased by nearly $6 billion, to $98.9 billion. The impact of the cyberattack is however heavy, at 92 cents per share in the second quarter, with an annual impact estimated between $1.90 and $2.05.
State Street reported total revenues for its fiscal second quarter up 3% to $3.19 billion, with net income down 7% to $711 million. Management reported encouraging financial performance, with revenue growth and expense control. Earnings per share came in at $2.15. Net interest income (NII) rose 6%. ROE reached 11.9%.
Match Group is up nearly 7% in pre-market trading on Wall Street, as Tinder’s parent company benefits from speculation following activist investor Starboard’s rise in capital, increasing its stake to around 6.5%. According to the Wall Street Journal, the activist intends to push for a sale of the group if its recovery is not feasible.
Tesla. Multi-billionaire Elon Musk plans to commit about $45 million a month to a political action committee supporting former President Donald Trump, according to the well-informed Wall Street Journal. Trump is gaining more and more support, particularly in the business world. “I completely rally behind Donald Trump and hope he recovers quickly,” Musk wrote on July 14 to his 189 million subscribers on X, the day after the assassination attempt. His enthusiasm only grew in the hours that followed, as he added, still on his own network, that “the last time America had a candidate this strong, it was Theodore Roosevelt.” The markets are betting on a Trump victory, which could translate into an aggressive trade policy and relaxed regulations. Trump is also known for putting pressure on the Fed, at the risk of rekindling inflation…
