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Looming Earnings Deluge May Keep Traders On The Sidelines

The major U.S. index futures are currently pointing to a roughly flat opening on Wednesday following the modest pullback seen in the previous session.

Traders may stick to the sidelines as they wait for the earnings season to pick up steam being making more significant bets.

Shares of Bank of America (BAC) are moving modestly lower in pre-market trading even though the financial giant reported second quarter results that beat analyst estimates on both the top and bottom lines.

On the other hand, shares of United Airlines (UAL) may move to the upside after the airline reported better than expected second quarter results.

Traders may be looking to the release of results from companies like IBM Corp. (IBM), eBay (EBAY), and Netflix (NFLX) after the close of trading.

Honeywell (HON), Morgan Stanley (MS), UnitedHealth (UNH), Microsoft (MSFT), Capital One (COF), and American Express (AXP) are also among the companies due to report their quarterly results in the coming days.

After inching up to new record closing highs on Monday, stocks fluctuated over the course of the trading day on Tuesday before closing modestly lower.

The Dow hit a new record intraday high in morning trading but eventually ended the day down 23.53 points or 0.1 percent at 27,335.63.

The tech-heavy Nasdaq also slid 35.39 points or 0.4 percent to 8,222.80, while the S&P 500 fell 10.26 points or 0.3 percent to 3,004.04.

Selling pressure emerged in afternoon trading after President Donald Trump told reporters U.S.-China trade talks still have a "long way to go" and once again threatened to impose tariffs on another $325 billion worth of Chinese goods.

The lower close on Wall Street also came as a mixed batch of U.S. economic data led to uncertainty about the near-term outlook for interest rates.

Raising concerns the Federal Reserve could refrain from cutting rates later this month, the Commerce Department released a report showing much stronger than expected U.S. retail sales growth.

The Commerce Department said retail sales rose by 0.4 percent in June, matching the downwardly revised increase in May. Economists had expected retail sales to inch up by 0.1 percent.

Closely watched core retail sales, which exclude autos, gasoline, building materials and food services, jumped by 0.7 percent in June after climbing by an upwardly revised 0.6 percent in May.

ING Chief International Economist James Knightley said the report suggests consumer spending rose robustly in the second quarter, which he expects to help keep GDP growth above 2 percent.

"Despite this, financial markets continue to price in four 25 basis point interest rate cuts from the Federal Reserve over the next 18 months," Knightley said.

He added, "Yet, in an environment where growth is solid, core inflation is close to target, unemployment is near 50-year lows and stock markets are at all-time highs, there seems little justification for anything more than precautionary rate cuts."

Meanwhile, a separate report from the Fed showed U.S. industrial production was unexpectedly flat June, as a steep drop in utilities output offset increases in manufacturing and mining output.

The Fed said industrial production was unchanged in June after climbing by 0.4 percent in May. Economists had expected production to edge up by 0.2 percent.

Traders were also digesting earnings news from big-name companies such as Goldman Sachs (GS), Johnson & Johnson (JNJ), JPMorgan (JPM), and Wells Fargo (WFC).

Energy stocks came under pressure over the course of the trading session, as the price of crude oil fell sharply after U.S. Secretary of State Mike Pompeo said Iran is prepared to negotiate about its missile program.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 2.1 percent, while the Philadelphia Oil Service Index slumped by 1.4 percent.

Significant weakness was also visible among software stocks, as reflected by the 1.2 percent loss posted by the Dow Jones U.S. Software Index.

Computer hardware and semiconductor stocks also saw considerable weakness on the day, while strength in the transportation sector drove the Dow Jones Transportation Average up by 1.8 percent to a two-month closing high.

J.B. Hunt Transport Services (JBHT) led the transportation sector higher after the trucking company reported better than expected adjusted second quarter earnings on revenues that exceeded estimates.

Commodity, Currency Markets

Crude oil futures are climbing $0.62 to $58.24 a barrel after tumbling $1.96 to $57.62 a barrel on Tuesday. Meanwhile, after falling $2.30 to $1,411.20 an ounce in the previous session, gold futures are sliding $3.70 to $1,407.50 an ounce.

On the currency front, the U.S. dollar is trading at 108.26 yen compared to the 108.24 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1213 compared to yesterday's $1.1211.


Asian stocks fell broadly on Wednesday after U.S. markets fell from record highs overnight on the back of mixed earnings reports and President Donald Trump's latest comments about the ongoing U.S.-China trade war.

Trump threatened to impose tariffs on another $325 billion worth of Chinese goods, saying the U.S. still has a long way to go to conclude a trade deal with China.

Chinese shares edged lower in thin trading on worries over slowing growth and the impact of the trade dispute. The benchmark Shanghai Composite Index slipped 5.92 points or 0.2 percent to 2,931.69, while Hong Kong's Hang Seng Index ended down 26.45 points or 0.1 percent at 28,593.17.

Japanese shares ended lower as tech stocks followed their U.S. peers lower, offsetting gains in the financial sector. The Nikkei 225 Index ended down 66.07 points or 0.3 percent at 21,469.18, while the broader Topix finished marginally lower at 1,567.41.

Tech stocks paced the declines, with TDK Corp losing 2.6 percent and Taiyo Yuden sliding 2.4 percent. Banks and insurers eked out modest gains after U.S. government debt yields rose slightly on Tuesday on the back of stronger than expected economic data.

Aeon Fantasy, which operates entertainment facilities in shopping centers, surged 11.6 percent after reporting a 13 percent jump in June same-store sales.

In economic news, Fitch Ratings retained Japan's sovereign ratings at 'A' with a 'stable' outlook. The agency said the "ratings balance the strengths of an advanced and wealthy economy, with high governance standards and strong public institutions, against weak medium-term growth prospects and high public debt."

Meanwhile, Australian stocks advanced after BHP Group, the world's biggest miner, reported a rebound in iron ore output for the fourth quarter. The benchmark S&P/ASX 200 Index rose 32.30 points or 0.5 percent to 6,673.30, while the broader All Ordinaries Index ended up 28.20 points or 0.4 percent at 6,764.

BHP shares advanced 1.4 percent, while rival Rio Tinto ended marginally lower and Fortescue Metals Group lost 2.1 percent. Banks ANZ, Commonwealth and NAB rose between 0.4 percent and 0.7 percent.

Energy stocks ended flat to slightly lower as oil prices steadied after falling to more than one-week lows overnight. Oil Search fell over 3 percent as Papua New Guinea's new prime minister pressed the company and its oil major partners to pay more taxes.

Estia Health slumped 5.8 percent. The company has been hit with a class action suit that alleges the aged care provider deceived investors and breached market disclosure obligations in 2015 and 2016.

Seoul stocks fell sharply as Trump's comments on trade talks with China dashed hopes of a deal anytime soon. The benchmark Kospi dropped 18.95 points or 0.9 percent to 2,072.92 ahead of the Bank of Korea's rate decision on Thursday. Tech heavyweights Samsung Electronics and SK Hynix ended down 1.7 percent 2 percent, respectively.


European stocks have moved modestly lower on Wednesday as trade worries resurface and investors await cues from the U.S. earnings season. The U.K.'s FTSE 100 Index, the German DAX Index and the French CAC 40 Index are all slipping by 0.2 percent.

U.S. President Donald Trump has threatened to impose tariffs on another $325 billion worth of Chinese goods, saying the U.S. still has a long way to go to conclude a trade deal with China.

In addition, robust U.S. retail sales data released overnight helped lower expectations of an interest rate cut by the U.S. Federal Reserve.

Sweden's Swedbank has moved sharply lower after slashing its dividend. Shares of Ericsson have also slumped after the networking and telecom company warned on its gross margin going ahead.

Energy stocks have also moved to the downside after oil prices fell sharply overnight on data showing a smaller-than-expected decline in inventories.

On the other hand, chip equipment maker ASML Holding has soared after posting better than expected quarterly results.

Specialty biopharmaceutical company Orphan Biovitrum has also jumped after forecasting full-year profit and sales growth.

Dialog Semiconductor has also rallied. The chip designer said it now sees higher-than-anticipated profitability and revenues in the second quarter.

In economic news, Eurozone consumer prices rose by a revised 1.3 percent year-on-year in June, slightly faster than the 1.2 percent rise in May, according to final data from Eurostat. The flash estimate showed steady growth of 1.2 percent.

U.K. consumer prices increased 2 percent year-on-year in June, the same pace of growth as seen in May and in line with expectations.

U.S. Economic Reports

Reflecting a steep drop in multi-family housing starts, the Commerce Department released a report showing a bigger than expected decrease in new residential construction in the month of June.

The Commerce Department said housing starts slid by 0.9 percent to an annual rate of 1.253 million in June after slipping by 0.4 percent to a revised rate of 1.265 million in May.

Economists had expected housing starts to fall by 0.6 percent to a rate of 1.261 million from the 1.269 million originally reported for the previous month.

The report also unexpectedly showed a substantial pullback in building permits, an indicator of future housing demand.

Building permits plunged by 6.1 percent to an annual rate of 1.220 million in June after climbing by 0.7 percent to a revised rate of 1.299 million in May.

Economists had expected building permits to rise by 0.5 percent to a rate of 1.300 million from the 1.294 million originally reported for the previous month.

With the much steeper than expected drop, building permits fell to their lowest level since hitting a rate of 1.201 million in May of 2017.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended July 12th at 10:30 am ET.

Crude oil inventories are expected to drop by 3.4 million barrels after plunging by 9.5 million barrels in the previous week.

At 2 pm ET, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

Stocks In Focus

Shares of Qualcomm (QCOM) are seeing significant pre-market strength after the Justice Department asked an appeals court to put an antitrust ruling against the chipmaker on hold.

Biotechnology company Seattle Genetics (SGEN) is also likely to see an initial jump after reporting a narrower than expected second quarter loss on revenues that exceeded estimates.

On the other hand, shares of CSX Corp. (CSX) are moving sharply lower in pre-market trading after the rail operator reported weaker than expected second quarter earnings and slashed its full-year revenue forecast.

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