Mixed Earnings News May Lead To Mixed Open On Wall Street

The major U.S. index futures are currently pointing to a mixed open on Wednesday, with the major averages likely to move in opposite directions after ending the previous session sharply higher.

The Dow may benefit from early strength among big-name companies such as Coca-Cola (KO), Verizon (VZ) and Johnson & Johnson (JNJ).

Coca-Cola, Verizon and Johnson & Johnson, which are all Dow components, are all moving higher in pre-market trading after reporting better than expected quarterly results.

Shares of Coca-Cola and Verizon are seeing particularly notable strength after the beverage and telecom giants also raised their full-year guidance.

United Airlines (UAL) and Harley-Davidson (HOG) are among other well-known companies likely to see initial strength after reporting quarterly results that exceeded analyst estimates.

On the other hand, a drop by shares of Netflix (NFLX) may weigh on the tech-heavy Nasdaq, with the streaming giant moving lower in pre-market trading.

Netflix is seeing pre-market weakness after reporting weaker than expected second quarter earnings and forecasting subscriber growth in the current quarter below analyst estimates.

Overall trading activity may be somewhat subdued, however, as traders may take a breather following the volatility seen over the past few sessions.

Stocks moved sharply higher over the course of the trading day on Tuesday, regaining ground following the sell-off seen on Monday. The major averages all showed strong moves back to the upside but remain well off their record highs.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Dow spiked 549.95 points or 1.6 percent to 34,511.99, the Nasdaq surged up 223.89 points or 1.6 percent to 14,498.88 and the S&P 500 jumped 64.57 points or 1.5 percent to 4,323.06.

The rebound on Wall Street came as traders picked up stocks at relatively reduced levels after the steep drop seen on Monday dragged the major averages down to their lowest levels in almost a month.

A positive reaction to the latest earnings news also contributed to strength on Wall Street, with tech giant IBM Corp. (IBM) moving notably higher after reporting better than expected second quarter results.

HCA Healthcare (HCA) also spiked after the hospital company reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Halliburton (HAL) and J.B. Hunt Transport Services (JBHT) also posted strong gains after reporting better than expected second quarter earnings.

In U.S. economic news, the Commerce Department released a report showing a substantial increase in new residential construction in the month of June.

The Commerce Department said housing starts spiked by 6.3 percent to an annual rate of 1.643 million in June after jumping by 2.1 percent to a revised rate of 1.546 million in May.

Economists had expected housing starts to increase by 1.1 percent to a rate of 1.590 million from the 1.572 million originally reported for the previous month.

Meanwhile, the report showed building permits tumbled by 5.1 percent to an annual rate of 1.598 million in June after slumping by 2.9 percent to a revised rate of 1.683 million in May.

Building permits, an indicator of future housing demand, had been expected to climb by 1.1 percent to a rate of 1.700 million from the 1.681 million originally reported for the previous month.

Airline stocks showed a substantial rebound on the day, with the NYSE Arca Airline Index soaring by 5.8 percent after ending the previous session at its lowest closing level in over five months.

Bargain hunting also contributed to considerable strength among banking stocks, driving the KBW Bank Index up by 3.2 percent. The index bounced off a nearly four-month closing low.

Oil service stocks also saw significant strength amid a rebound by the price of crude oil, resulting in a 2.5 percent jump by the Philadelphia Oil Service Index.

Computer hardware, housing and brokerage stocks also moved notably higher on the day, reflecting broad based strength on Wall Street.

Commodity, Currency Markets

In commodities trading, crude oil futures are jumping $1.29 to $68.49 a barrel after climbing $1 to $67.42 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,800.90, down $10.50 compared to the previous session’s close of $1,811.40. On Tuesday, gold rose $2.20.

On the currency front, the U.S. dollar is trading at 110.18 yen compared to the 109.85 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1766 compared to yesterday’s $1.1781.

Asia

Asian stocks ended mixed on Wednesday despite Wall Street bouncing back overnight on the back of upbeat earnings reports and renewed optimism about economic growth.

Chinese shares gained ground despite lingering regulatory risks. The benchmark Shanghai Composite Index rose 25.87 points, or 0.7 percent, to 3,562.66, while Hong Kong’s Hang Seng Index dipped 0.1 percent to 27,224.58.

Japanese shares rose to snap a five-day losing streak after official data showed exports in June jumped 48.6 percent from a year earlier, marking the fourth straight month of growth. The jump was led by U.S. demand for cars and China-bound shipments of chip-making equipment.

Meanwhile, minutes from the Bank of Japan’s June meeting revealed that officials were divided on the country’s inflation outlook.

The Nikkei 225 Index climbed 159.84 points, or 0.6 percent, to 27,548 ahead of a long weekend that will mark the start of the Tokyo 2020 Olympics. The broader Topix closed 0.8 percent higher at 1,904.41.

NOK Corp. jumped 5.8 percent after the maker of oil seals raised its profit outlook.

Homebuilder Tama Home slumped 10.2 percent after reports the company was effectively banning its workers from getting COVID-19 vaccines. The company in a statement denied it put pressure on workers not to get vaccines.

Australian markets rose sharply despite disappointing retail sales data and escalating COVID-19 woes. Retail turnover in June fell 1.8 percent from a month earlier, preliminary figures showed, as the country’s two largest states reported sharp increases in new COVID-19 cases.

The benchmark S&P/ASX 200 Index climbed 56.50 points, or 0.8 percent, to 7,308.70 after two straight sessions of losses. The broader All Ordinaries Index ended up 55.10 points, or 0.7 percent, at 7,580.90.

Mining heavyweight BHP advanced 1.3 percent after a report that the company is considering getting out of its oil and gas businesses. Rival Rio Tinto gained 1.2 percent.

The big four banks rose between 0.8 percent and 1.2 percent after the minutes of the RBA’s July policy meeting revealed that condition for rate hikes would not be met before 2024.

Diversified miner South32 rallied 1.1 percent after reporting record annual production at a number of operations globally.

Beach Energy tumbled 3.2 percent after its fourth-quarter market update failed to meet expectations.

Construction and infrastructure giant CIMIC surged 4.5 percent after posting strong first-half revenue growth.

Seoul stocks ended lower as South Korea reported a daily record of novel coronavirus cases. The Kospi average dropped 16.79 points, or 0.5 percent, to 3,215.91, extending losses for the fourth day running. SK Hynix, Samsung Biologics, and Celltrion lost 1-2 percent.

Europe

European stocks have advanced on Wednesday, as travel stocks rebound and investors look ahead to the European Central Bank’s policy meeting on Thursday for directional cues.

The ECB is expected to adjust its forward guidance, reflecting the new 2 percent inflation goal adopted by the central bank under the new strategy unveiled earlier this month.

The new strategy allows the ECB to retain interest rates at record lows for longer periods, while tolerating higher inflation.

ECB President Lagarde remarked last week that the PEPP program would continue until “at least” March 2022.

While the U.K.’s FTSE 100 Index has surged up by 1.5 percent, the French CAC 40 Index is up by 1.2 percent and the German DAX Index is up by 0.7 percent.

Travel and leisure stocks have rebounded after recent string of losses on worries about the spread of the COVID-19 delta variant.

Nordea Bank has also advanced as it reported a better than expected profit for the second quarter.

Dutch semiconductor company ASML has also moved to the upside after raising its 2021 sales outlook and announcing a new share buyback plan.

British fashion retailer Next has soared after raising its full-year profit forecast and announcing a special dividend.

Chilean miner Antofagasta has also rallied after maintaining its full-year production guidance.

Meanwhile, Royal Mail shares have fallen. The postal service company said parcel deliveries slowed in the last quarter as COVID restrictions eased.

German business software group SAP has also slid despite raising its revenue forecast.

Mercedes-Benz maker Daimler AG has edged lower after a warning that a global shortage of semiconductor chips will continue in the second half of 2021.

In economic news, the U.K. budget deficit narrowed in June as the economy started to recover, yet the borrowing was the second highest on record for the month, the Office for National Statistics said.

The public sector net borrowing decreased 5.5 billion pounds from the last year to 22.8 billion pounds in June and was below the Office for Budget Responsibility’s forecast of 25.2 billion pounds.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended July 16th at 10:30 am ET.

Crude oil inventories are expected to decrease by 4.2 million barrels after tumbling by 7.9 million barrels in the previous week.

At 1 pm ET, the Treasury Department is due to announce the results of this month’s auction of $24 billion worth of twenty-year bonds.

Stocks In Focus

Shares of Chipotle Mexican Grill (CMG) are seeing significant pre-market strength after the restaurant chain reported second quarter earnings that exceeded analyst estimates.

Surgical equipment maker Intuitive Surgical (ISRG) is also likely to move to the upside after reporting better than expected second quarter results.

Meanwhile, shares of Sleep Number (SNBR) are moving sharply lower in pre-market trading after the mattress retailer reported second quarter results that missed analyst estimates.