By (Bloomberg) — Stocks edged higher as investor attention moved from U.S. politics to a wave of company earnings, with tech heavyweights Tesla Inc. and Alphabet Inc. due to report later Tuesday.
Futures on the S&P 500 were up 0.1 per cent as General Electric Co. climbed in premarket trading on an increase in second-quarter profit. Spotify Technology SA jumped as much as 15 per cent after reporting better-than-estimated subscriber growth. In Europe, the Stoxx 600 Index was 0.4 per cent higher as German software firm SAP SE rose the most since January and Swiss computer accessories maker Logitech International SA jumped.
Companies representing 29 per cent of the S&P 500’s market value are due to report this week and Tesla and Alphabet are the first of the so-called Magnificent Seven tech giants to post earnings this quarter. With valuations among technology firms still high after last week’s retreat, investors are looking for more evidence that their businesses are on track and the euphoria around artificial intelligence is justified.
Analysts are keen for details of Tesla’s robotaxi service, while Google parent Alphabet is expected to see a sales boost from its cloud unit.
About 16 per cent of the companies in the S&P 500 have reported so far, according to data compiled by Bloomberg Intelligence, and most have beaten earnings-per-share expectations. Analysts are predicting that index earnings grew nine per cent in the second quarter from a year earlier.
At the same time, U.S. election developments remain front and center, with Kamala Harris now having more than enough pledged delegates to clinch the Democratic presidential nomination. On the data front, U.S. readings on the economy are due later in the week as well as the U.S. Federal Reserve’s preferred inflation gauge.
“The earnings season is now shifting gear,” said Andrea Tueni, head of sales trading at Saxo Banque France. “This will be this week’s focus before inflation on Friday. I don’t see a repricing of the ‘Trump trade’ taking place just yet.”
The U.S. dollar traded steady while yields on U.S. Treasuries ticked lower.
Yen gains
In Asia, the yen strengthened against the U.S. dollar as traders look set to trim their carry positions during the summer holiday season. Some Bank of Japan officials are open to raising rates at the July meeting while others see weakness in consumer spending complicating their decision, according to people familiar with the matter.
In commodities, oil was steady near a six-week low.
Corporate highlights:
- Coca-Cola Co. raised its full-year outlook as higher prices bolstered the soft-drink giant’s performance.
- General Electric Co. reported a jump in second-quarter profit and raised its guidance for the year as the newly independent jet-engine manufacturer capitalized on strong demand for maintenance services during the busy summer travel season.
- Spotify Technology SA, the Swedish audio-streaming giant, reported second-quarter subscriber growth that exceeded analysts’ projections after rolling out price increases.
- LVMH, the world’s largest luxury group, is seen reporting an increase in second-quarter sales when it posts results after markets close on Tuesday.
- Porsche shares fell the most on record after the company lowered its outlook for the year, saying a shortage of aluminum parts could cause it to stop production of some models, adding to pressure from slowing sales in China.
- Cybersecurity startup Wiz Inc. has turned down a takeover bid of as much as $23 billion from Alphabet Inc., sticking instead with a plan for an initial public offering.
- Toyota Motor Corp. will buy back ¥806.8 billion ($5.2 billion) worth of its stock from major Japanese banks and insurers as part of a broader push to unwind strategic shareholdings with financial partners.
Key events this week:
- Eurozone consumer confidence, Tuesday
- US existing home sales, Tuesday
- Alphabet, Tesla, LVMH earnings, Tuesday
- Canada rate decision, Wednesday
- US new home sales, S&P Global PMI, Wednesday
- IBM, Deutsche Bank earnings, Wednesday
- Germany IFO business climate, Thursday
- US GDP, initial jobless claims, durable goods, Thursday
- US personal income, PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 8:02 a.m. New York time
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 rose 0.4%
- The MSCI World Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.3% to $1.0857
- The British pound fell 0.1% to $1.2914
- The Japanese yen rose 0.5% to 156.19 per dollar
Cryptocurrencies
- Bitcoin fell 2% to $66,751.35
- Ether rose 0.8% to $3,518.14
Bonds
- The yield on 10-year Treasuries declined two basis points to 4.23%
- Germany’s 10-year yield declined five basis points to 2.45%
- Britain’s 10-year yield declined two basis points to 4.14%
Commodities
- West Texas Intermediate crude fell 0.5% to $78.04 a barrel
- Spot gold rose 0.4% to $2,407.15 an ounce
This story was produced with the assistance of Bloomberg Automation.
With assistance from Winnie Hsu and Farah Elbahrawy
©2024 Bloomberg L.P.
