Day Ahead: 3 Things to Watch for July 15
By Christiana Sciaudone
Investing.com -- The Dow rallied to close up Tuesday, led by Caterpillar (NYSE:CAT), to reach its highest in more than two weeks.
Covid cases in California -- where all indoor activity was shut down Monday -- may be close to peaking, which boosted risk sentiment and triggered a recovery in tech stocks.
Bank earnings came in mixed, with JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) beating consensus estimates thanks to strong trading revenue, and Wells Fargo (NYSE:WFC) cutting its dividend by 80% and reporting its first quarterly loss in more than a decade. The three banks socked away nearly $28 billion to fortify themselves for a potential wave of bad loans.
Energy was a big driver of gains, ahead of an OPEC+ meeting and EIA crude oil inventories.
Here are three things that may move markets tomorrow:
1. Show Us the Money
Earnings out Wednesday include UnitedHealth (NYSE:UNH) and Goldman Sachs (NYSE:GS).
UnitedHealth reports before the open. Earnings per share is expected at $5.18, versus $3.60 in the same quarter a year earlier. Revenue for the period is forecast to come in at $63 billion versus $61 billion a year earlier. Shares are trading near an all-time high.
Goldman Sachs also reports before the open. Revenue is forecast at $9.7 billion, versus $9.5 billion a year earlier. Analysts see EPS at $3.90, versus $5.81 a year earlier. The stock is up 56% since hitting a 2020 low in March.
2. Slick Like Oil
OPEC+ meets Wednesday, and there is speculation that a rollback in production cuts is coming, even as the U.S. shuts back down again with Covid cases raging.
In April, the Saudis led a push that saw the 23-producer OPEC+ alliance, that includes Russia and other non-members of the group, cut output by 9.7 million barrels a day, as Covid-19 triggered a collapse in oil demand.
Riyadh and most participants in the coalition now support a loosening of the curbs by 2 million barrels a day to 7.7 million barrels a day, said officials speaking on conditions of anonymity to reporters.
Ahead of the Wednesday meeting, OPEC said it saw 2020 oil demand falling by around 8.9 million barrels a day versus a June forecast for a fall of around 9 million barrels a day. But it added that in 2021, it expects oil demand to partially recover from this year's drop, rising by 7 million barrels a day.
The EIA also reports crude oil inventories on Wednesday, with an expected draw of 2.1 million barrels, compared to last week’s 5.6 million-barrel spike.
3. Fed Beige Book out
Ahead of the Fed’s Beige Book coming out Wednesday, Federal Reserve Governor Lael Brainard said the Fed should begin to pivot to offering an accommodative policy framework amid increasing Covid cases. “The recovery is likely to face headwinds even if the downside risks do not materialize, and a second wave would magnify that challenge,” she said. “Fiscal support will remain vital.”
Robert Kaplan, Dallas Fed president, reiterated on CNBC that wearing masks will help economic growth.
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