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Growing worries about inflation and the resurgence of COVID-19 infections among unvaccinated, unvaccinated Wall Streets, major benchmarks suffering their worst declines since May, even as quarterly profits continue to reflect a strengthening rebound economic.
This week’s revenue bundle will feature industry leaders like Netflix (NFLX) and Johnson & Johnson (JNJ), providing a more complete picture of where businesses stand as more sectors of the economy have reopened in spring and early summer. All eyes will also be on Robinhood, the retail newcomer, who filed his prospectus Monday morning for a valuation of $ 35 billion. The platform is targeting a capital increase of $ 2 billion and aims to price the stock in a range of $ 38 to $ 42 per share.
But in early trades, fears of a resurgence in coronavirus cases drove the Nasdaq and S&P 500 to their biggest drop in two months, and sent benchmark yields to their biggest drop in more than 3 months. .
Last week, the major benchmarks abandoned their initial gains and closed in the red as traders digested a slew of earnings results and June consumer spending data that blew expectations. However, an impression on consumer sentiment disappointed, hinting at mounting price pressures that could derail the recovery.
In Monday’s European session, stock markets sank as the UK celebrated its ‘Freedom Day’, which ironically began with the Prime Minister and Chancellor having to go into self-isolation after being told they were came into contact with someone who tested positive for COVID-19.
The incident refocused attention on the Delta variant, which is causing a wave of new cases in the United States, and sent the 10-year Treasury bond (TNX) yield to its lowest level since early March. In Los Angeles, indoor masking requirements have returned, with other regions considering similar measures.
“Fears that the Delta mutation will slow or even reverse recovery efforts appear to be sapping appetite for risk taking,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Last week, Federal Reserve Chairman Jerome Powell suggested that it was still too early for the central bank to step in and slow down some ultra-accommodative monetary policies to contain inflation, given that the labor market and other areas of the economy still need to recover. fully from the pandemic.
“The makeup of recent data suggests that inflation will be largely transient as the Fed has said,” Ryan Detrick, chief markets strategist at LPL Financial, said in a note to clients last week.
“The big question is how much ‘transient’ time will last. We’re in the middle of the season where we expected to see some hot impressions, so this week hasn’t necessarily been a surprise, ”added Detrick. “But with each report that passes, market participants will be increasingly anxious to see these numbers start to moderate. . “
Against a backdrop of strong demand and price increases, Corporate America continues to surprise investors on the upside with second quarter results. About 8% of S&P 500 companies have released results so far, mostly banks. Of those who reported, 85% exceeded estimates, according to FactSet data.
Banks such as Bank of America (BAC), JPMorgan Chase (JPM) and Morgan Stanley (MS) have beaten consensus estimates, but have also shown signs of slowing growth under the hood in business segments of base, as demand for loans and fixed income trading came in. and lighter than expected.
Late Sunday, Zoom (ZM) – the company that has become synonymous with remote working during COVID-19 lockdowns – announced a $ 15 billion stock deal to buy cloud provider Five9. The video communications star faces increased competition from Facebook (FB) and Google (GOOG), both of which are increasing their video capabilities.
Meanwhile, Wall Street is cautiously considering a growing resurgence in COVID-19 infections, as the Delta variant takes hold. Last week, Los Angeles relaunched its indoor masking policy amid a surge in new coronavirus diagnoses, and as the number of cases in the United States hit a three-month high – pointing out to how much the mass vaccination effort seems to have lost momentum.
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12:07 p.m. ET: Rent the Runway sets up IPO
The online clothing rental company is going the confidential route, with the number of shares and target price range for its IPO not disclosed. Rent the Runway, based in New York City, allows customers to rent clothes and purchase second-hand items from more than 750 designer brands.
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Noon ET: Shares are heavy as COVID blues rock Wall Street
Here is where the main indices were trading at 12 o’clock:
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S&P 500 (^ GSPC): 4,258.00, -69.16 (-1.60%)
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Dow (^ DJI): 33,921.09, -766.76 (-2.21%)
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Nasdaq (^ IXIC): 14,280.00, -147.24 (-1.02%)
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11:45 am ET: “Confused by the contradiction”
… so says CFRA’s Sam Stovall, who in a morning research note pointed out that despite a strong start to quarterly earnings, many stocks across all industries and sizes fell. Why?
Investors seemed baffled by the contradiction [year over year] gains in consumer and producer prices, as well as Fed Chairman Powell’s recognition of accelerating inflation in his semi-annual Humphrey-Hawkins testimony, which was then offset by a drop in almost a percentage point of the 10-year yield. Over the coming week, investors will likely view further weakening bond yields as a potential ‘canary in the coal mine’.
And if Monday’s hectic session is any indication, investors may want to buckle up, Stovall wrote:
In an attempt to guess this message, the market may dismiss better than expected future EPS growth as symptomatic of the transition from windward slope to downwind slope of the current BPA cycle as it passes its peak, resulting in a increased volatility.
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10:15 am ET: A tough day for crypto
Crypto cohorts are down with declining risk appetite, with Bitcoin (BTC-USD) and dogecoin (DOGE-USD) leading the way. Bitcoin hovers dangerously close to $ 30,000, while the coin itself has lost 9%.
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10 a.m. ET: Homebuilder confidence drops to lowest in nearly a year
U.S. builders’ confidence in the single-family home market fell in July to its lowest level since August 2020.
The NAHB / Wells Fargo Housing Market Index fell to 80 this month from 81 in June. Economists polled by Reuters had expected the index to rise slightly to 82. A reading above 50 means more manufacturers view market conditions as favorable rather than bad. The index hit an all-time high of 90 in November 2020.
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9:30 a.m. ET: stocks open lower
Here is where the main indicators were trading at the opening bell
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S&P 500 (^ GSPC): 4,276.64, -50.52 (-1.17%)
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Dow (^ DJI): 34 238.96 -448.89 (-1.29%)
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Nasdaq (^ IXIC): 14,235.50, -191.74 (-1.33%)
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Gross (CL = F): $69.13 per barrel, -2.68 $ (-3.73%)
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Gold (CG = F): $1,813.80 per ounce, – $ 1.20 (-0.07%)
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10-year cash flow (^ TNX): -0.085, assignor 1.215%
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7:00 a.m. ET Monday: Stock futures tumble as earnings season picks up
Here are the main moves in the markets at 7:01 a.m. ET:
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S&P 500 Futures Contracts (ES = F): 4,284.25, -34.25 (-0.79%)
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Dow Futures (YM = F): 34 188.00, -376.00 (-1.09%)
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Nasdaq Futures (NQ = F): 14,614.75, -55.75 (-0.38%)
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Gross (CL = F): $69.85 per barrel, – $ 1.96 (-2.73%)
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Gold (CG = F): 1,803.10 per ounce, -11.90 $ (-0.66%)
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10-year cash flow (^ TNX): return of 1.24%, the lowest since March 4
Javier David is editor-in-chief for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek
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