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The Tuesday Market Minute

  • Global stocks grind to a fresh record high following stronger-than-expected China trade figures, but caution holds ahead of bank earnings and CPI data. 
  • China’s June exports rise 32.2% from last year, pared by a 36.7% gain in imports.
  • JPMorgan and Goldman Sachs kick-off a second quarter earnings season that is expected to show a 65% gain in collective S&P 500 profits.
  • CPI data could show a moderating of inflation pressures over June, but debate still rages as to the fate of the Federal Reserve’s myriad support programs.
  • Oil prices hold gains ahead of API inventory data as domestic stockpiles continue to dwindle amid a surge in travel and industrial demand. 
  • U.S. equity futures suggest mixed open on Wall Street ahead of second quarter earnings from JPMorgan, PepsiCo and Goldman Sachs as well as June CPI data at 8:30 am Eastern Time.

Wall Street futures traded mixed Tuesday as stocks remained within touching distance of another trio of record highs ahead of the unofficial start of second quarter earnings and a key reading of June inflation. 

JPMorgan  (JPM) – Get Report and Goldman Sachs  (GS) – Get Report will get the ball rolling Tuesday with second quarter updates that are expected to lead a robust earnings season posed for a 65% year-on-year increase in collective profits as companies benefit from the consumer economy’s post-pandemic rebound.

The specter of higher corporate profits, alongside the tailwind of $1.9 trillion in stimulus from the American Rescue Act and record-low interest rates and myriad support programs from the Federal Reserve, has lifted U.S. stocks to nearly 40 record highs so far this year, with the S&P 500 closing at 4,384.63 points – some 96% higher than the pandemic low it touched on March 23 of last year.

Faster inflation has shadowed that spectacular rebound, however, and investors will eye today’s reading of June CPI for any suggestion that it could compel the Fed to remove one of the legs supporting this historic run for stock prices. 

Analysts are looking for a month-on-month gain of around 0.5% when the data is released at 8:30 am Eastern time.

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Stock futures, meanwhile, are indicating a modestly weaker open with contracts tied to the Dow Jones Industrial Average suggesting a 25 point decline while those linked to the S&P 500 are priced for a modest half point gain.

Another pullback in Treasury bond yields, which has taken 10-year notes to 1.369%, is giving tech stocks some support, with contracts tied to the Nasdaq Composite indicating a 40 point opening bell gain.

Oil prices were also holding gains heading into today’s release of domestic inventory data from the American Petroleum Institute which are expected to indicate the eighth consecutive weekly decline from levels that are already the lowest since February of last year.

WTI futures contracts for August delivery were marked 51 cents higher in European trading at $74.60 per barrel while Brent contracts for September added 50 cents to $75.66 per barrel.

In overseas markets, European stocks were little-changed ahead of the U.S. bank earnings and CPI data release, with the Stoxx 600 trading 0.05% lower in the opening hours of trading in Frankfurt, while an easing of dividend restrictions on U.K. banks by the Bank of England helped the FTSE 100 to a 0.2% gain in London.

Overnight in Asia, Japan’s Nikkei 225 gained 0.52% to close at 28,718.24 points while stronger-than-expected export data from China helped the region-wide MSCI ex-Japan index to a 0.92% gain, its best since late June, heading into the close of trading.