Stocks Hold Near Record Highs as Earnings Roll In: Markets Wrap
(Bloomberg) — US stocks hovered near a record as investors turned their focus to corporate earnings after weeks of choppy trading spurred by concerns over tech valuations and the conflict in the Middle East.
S&P 500 futures edged up after a tech-led rally on Wall Street on Monday lifted the index to within striking distance of an all-time high. Contracts on the Nasdaq 100 climbed 0.6%. Palantir Technologies Inc. jumped 16% in premarket trading after raising its forecasts, with SpaceX and Advanced Micro Devices Inc. due to report today.
The rebound in US technology shares followed a volatile month as investors questioned whether billions of dollars of spending on artificial intelligence will translate into stronger growth and profits. But the positive earnings season so far has eased some of those concerns. S&P 500 companies are beating expectations at a rate of 86%, the highest in five years, while year-on-year growth in earnings per share is running at 29%, according to Bloomberg Intelligence.
“The combination of resilient economic growth, strong corporate earnings and AI-driven investment continues to provide a favorable backdrop for equities,” said Jeff Buchbinder, chief equity strategist at LPL Financial. “While investors are right to scrutinize elevated capital spending by hyperscalers and monitor developments in the Middle East, we believe these risks will be offset by the powerful earnings tailwind.”
The Stoxx Europe 600 rose 0.3%, set for a record-high close. Bayer AG jumped more than 4% and BP Plc rose 1.3% after earnings beats. Zalando SE plunged 16% after cutting full-year guidance, while Deutsche Lufthansa AG fell after warning of uncertainty due to volatile jet fuel prices.
In currency markets, the yen gave back some of its recent advance that was triggered by US and Japanese intervention, slipping 0.3% to 157.70 per dollar. A gauge of dollar strength was little changed.
What Bloomberg Strategists say:
“The yen intervention looks more symbolic than decisive. A sustained yen rally would likely require either meaningful dollar sales or broader international participation, neither of which looks likely.”
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Treasuries slipped as oil rebounded from the previous session, when optimism that geopolitical tensions in the Middle East was easing sent the commodity lower. The 10-year yield rose three basis points to 4.71%. Brent crude climbed 2.8% to more than $86 per barrel, after falling 4.7% on Monday.
A potential challenge for markets comes later Tuesday, when SpaceX reports its first earnings as a public company.
It also sets the stage for one of the largest share unlocks in capital markets history, with as much as $116 billion of stock becoming eligible for sale for the first time next month. SpaceX stock is more than 15% lower than its closing price on June 11, when the shares started trading.
“The bigger issue for SpaceX remains the looming share overhang,” said Chris Weston, head of research at Pepperstone Group Ltd. “There is a sense that many investors remain interested in owning the stock but are waiting for the selling pressure associated with these lock-up expiries to begin fading.”
Other US earnings due today include Pfizer Inc., Apollo Global Management Inc., Spotify Technology SA, McDonald’s Corp., Merck & Co. Inc. and Caterpillar Inc.
Amazon.com Inc., meanwhile, fell in premarket trading after Chair Jeff Bezos filed to sell more than $4 billion worth of shares.
In commodities, copper advanced to the highest in two months, nearing $14,000 a ton in London, as traders monitored ballooning volumes held in the US ahead of an expected decision on an import tariff by President Donald Trump.
Corporate News:
Apple Inc. exceeded $10 billion in annual sales in India for the first time, underscoring surging demand for its pricey devices in a market where it’s steadily ramping up its retail network. Prologis Inc. is set to buy Segro Plc for about £14 billion ($18.8 billion), a deal that will see the UK’s largest real estate investment trust exit the market. HSBC Holdings Plc announced a fresh stock buyback and raised its cost-cutting target as it reported second-quarter earnings that beat estimates despite China’s crackdown on cross-border wealth flows. Toyota Motor Corp. unveiled a ¥1 trillion ($6.3 billion) buyback and lifted its profit outlook as resilient hybrid demand and a weak yen helped make up for rising costs, tariffs and supply disruptions. Saudi Aramco reported a 33% increase in second-quarter profit as it benefited from a war-driven surge in oil prices, while keeping exports flowing through a pipeline that bypasses the Strait of Hormuz. Continental AG’s operating profitability improved in the second quarter after the German parts maker sold more of its premium tires. India is aiming to raise as much as $3.3 billion by selling a small stake in Life Insurance Corp. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.3% as of 10:17 a.m. London time S&P 500 futures were little changed Nasdaq 100 futures rose 0.4% Futures on the Dow Jones Industrial Average were little changed The MSCI Asia Pacific Index fell 0.2% The MSCI Emerging Markets Index fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1507 The Japanese yen fell 0.5% to 157.92 per dollar The offshore yuan was little changed at 6.7545 per dollar The British pound was little changed at $1.3440 Cryptocurrencies
Bitcoin fell 0.4% to $63,486.37 Ether fell 0.7% to $1,853.54 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.70% Germany’s 10-year yield was little changed at 3.16% Britain’s 10-year yield advanced three basis points to 4.99% Commodities
Brent crude rose 2.9% to $86.22 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Anand Krishnamoorthy.
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