Disappointing Earnings News Likely To Weigh On Wall Street

The major U.S. index futures are currently pointing to initial weakness on Wall Street on Wednesday, with stocks likely to come under pressure after ending yesterday’s lackluster session modestly lower.

Early selling pressure is likely to be seen on Wall Street amid a negative reaction to the latest corporate earnings news.

Shares of Tesla (TSLA) are plunging by 8.9 percent in pre-market trading after the electric vehicle maker reported weaker than expected second quarter earnings.

Google parent Alphabet (GOOGL) is also seeing notable pre-market weakness after reporting second quarter earnings that beat analyst estimates but missing expectations for YouTube advertising revenue.

On the other hand, shares of Texas Instruments (TXN) may see initial strength after the chipmaker reported second quarter earnings that exceeded analyst estimates.

Stocks showed a lack of direction over the course of the trading session on Tuesday, with the major averages bouncing back and forth across the unchanged line following the strong upward move seen in the previous session.

The major averages eventually ended the day modestly lower. The Dow slipped 57.35 points or 0.1 percent to 40,358.09, the Nasdaq edged down 10.22 points or 0.1 percent to 17,997.35 and the S&P 500 dipped 8.67 points or 0.2 percent to 5,555.74.

The choppy trading on Wall Street came as traders expressed some uncertainty about the outlook for the markets following recent volatility.

Stocks moved sharply higher over the course of the trading session on Monday, with technology stocks seeing a significant rebound following last week’s sell-off.

Traders may also have been reluctant to make significant moves ahead of the release of key earnings and economic news in the coming days.

Later in the week, focus is likely to shift to a report on personal income and spending in June, which includes readings on inflation said to be preferred by the Federal Reserve.

The data could have a significant impact on the outlook for interest rates, with the Fed currently widely expected to lower interest rates by a quarter point in September.

Most of the major sectors ended the day showing only modest moves on the day, contributing to the lackluster close by the broader markets.

Oil producer stocks showed a significant move to the downside, however, with the NYSE Arca Oil Index falling by 1.9 percent. The weakness among oil producer stocks came amid a steep drop by the price of crude oil.

Considerable weakness was also visible among transportation stocks, as reflected by the 1.5 percent loss posted by the Dow Jones Transportation Average.

Semiconductor and natural gas stocks also moved to the downside, while networking stocks showed a strong move to the upside.

Commodity, Currency Markets

Crude oil futures are jumping $0.89 to $77.85 a barrel after tumbling $1.44 to $76.96 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,417.40, up $10.10 compared to the previous session’s close of $2,407.30. On Tuesday, gold climbed $12.60.

On the currency front, the U.S. dollar is trading at 153.94 yen compared to the 155.59 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0846 compared to yesterday’s $1.0854.

Asia

Asian stocks struggled for direction before closing mostly lower on Wednesday after the release of disappointing earnings from Tesla and Alphabet.

Lingering concerns over slowing growth in the world’s second largest economy also kept investors nervous.

The U.S. dollar was broadly firm in Asian trading, as investors awaited U.S. GDP data and the Fed’s favored measure of inflation this week for additional clarity on whether the Federal Reserve will cut interest rates twice this year, in September and December.

Oil rebounded to snap a three-day decline amid signs of falling U.S. crude inventories and growing supply risks from wildfires in Canada. Gold consolidated above $2,400 per ounce after snapping a four-day losing streak on Tuesday.

China’s Shanghai Composite Index dipped 0.5 percent to 2,901.95 on worries that a trade war with the EU and the U.S. may weigh on economic growth.

Hong Kong’s Hang Seng Index fell 0.9 percent to 17,311.05. Taiwan financial markets were closed due to a typhoon.

Japanese markets led regional losses as the yen strengthened due to rising expectations of a rate hike at next week’s Bank of Japan policy meeting.

The central bank should more clearly show its intention to normalize monetary policy, ruling party heavyweight Toshimitsu Motegi said on Monday as inflation continues to outpace the BOJ’s target and wage growth.

Meanwhile, Japanese factory activity contracted slightly in July, while the service sector picked up the slack, a business survey showed today.

The Nikkei 225 Index slumped 1.1 percent to 39,154.85, while the broader Topix Index settled 1.4 percent lower at 2,793.12.

Seoul stocks ended lower due to losses in the auto and tech sectors. The Kospi shed 0.6 percent to close at 2,758.71. Market bellwether Samsung Electronics lost 2.3 percent and Hyundai Motor gave up 1.9 percent.

Australian markets ended a choppy session marginally lower, dragged down by property developers and energy stocks.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index climbed 0.9 percent to 12,530.99 as investors cherry picked beaten down stocks.

Europe

European stocks are moving lower on Wednesday as a survey showed business activity in the eurozone slowed further in July, signaling a “near-stagnation” and raising concerns about economic recovery.

The Composite PMI fell to 50.1, hitting a five-month low due to a slowdown in services growth and worsening contraction in the manufacturing sector.

Elsewhere, U.K. private-sector business activity expanded faster this month and a measure of Germany consumer confidence hit its highest level in more than two years, offering some respite.

While the French CAC 40 Index has slid by 1.0 percent, the German DAX Index is down by 0.7 percent and the U.K.’s FTSE 100 Index is just below the unchanged line.

Industrial cable specialist Nexans jumped more than 8 percent after posting better-than-expected first-half results and raising its annual outlook.

Banco Santander advanced 1.7 percent. The Spanish lender beat expectations to post a record profit in the second quarter.

British luxury car maker Aston Martin Lagonda soared 8.3 percent. The company reiterated full-year guidance despite reporting lower sales and larger losses for the first half.

Events group Informa rose 1.4 percent after it agreed to buy Ascential Plc, the owner of the Money20/20 and Cannes Lions conferences, for about £1.2 billion ($1.5 billion) in cash.

Marston’s rallied 2.2 percent. The pub operator confirmed its full-year guidance after reporting positive trading momentum for the 16-week period.

Fresnillo jumped 3.8 percent after the gold and sliver miner said it was on track to meet full-year guidance.

Airline EasyJet surged 5.6 percent after a strong Q3 trading update.

French luxury group LVMH slumped 4 percent after sales slowed in the second quarter. Peer Kering tumbled 3.1 percent and Hermes International dropped 1.2 percent.

Lender BNP Paribas declined nearly 2 percent despite reporting better-than-expected Q2 2024 earnings.

Spirits maker Remy Cointreau fell more than 1 percent in choppy trade as it reported a wider-than-expected 15.6 percent decline in first-quarter sales.

Rheinmetall AG shares jumped 2.2 percent. The German automotive and arms maker reported significantly higher sales and operating result in the second quarter, beating market expectations.

Deutsche Bank plummeted 7 percent after the lender reported its first quarterly loss in four years.

Kontron, an IoT technology company, rose 1.2 percent after securing a new order from Hanwha Phasor.

U.S. Economic Reports

The Commerce Department is scheduled to release its report on new home sales in the month of June at 10 am ET. New home sales are expected to climb to an annual rate of 640,000 in June after plunging to a rate of 619,000 in May.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended July 19th.

Crude oil inventories are expected to edged up by 0.7 million barrels after falling by 4.9 million barrels in the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $70 billion worth of five-year notes.