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Day Ahead - Top 3 Things to Watch

Investing.com - Here are the top three things that could rock markets tomorrow.

1. Fed Speak, Industrial Output on Tap

Retail sales and industrial output make up the top-tier U.S. economic data on Tuesday, while speeches from a bevy of Federal Reserve members also will likely come under scrutiny.

The Commerce Department will release its retail sales numbers at 8:30 AM ET (13:50 GMT). Economists on average expect retail sales slowed to a rise of 0.1% in June from 0.5% the prior month. Core retail sales, which exclude automobile sales, were expected to slow to a 0.3% rise.

Ahead of numbers, some have attributed expectations for a slowdown to a fall in gas prices.

“Gas prices were lower by about 5% month-on-month and carry about an 8% weight that could knock a few tenths off month-ago growth in total retail sales,” Scotia Economics said in a note to clients.

The retail sales control group – which has a larger impact on U.S. GDP – is expected to slow from last month's 0.4% print.

U.S. industrial output was expected to slow to a 0.1% rise in June from 0.4% a month earlier.

On the monetary policy front, traders will be on the lookout for insights into the Fed’s thinking on policy measures ahead of widely expected rate cut at the Fed’s meeting next week.

Federal Reserve Chairman Jay Powell speaks Tuesday at a Banque de France event in Paris in a speech titled “Aspects of Monetary Policy in the Post-Crisis Era.” That's scheduled for 1 PM ET (17:00 GMT).

Fed Governor Michelle Bowman speaks at another "Fed Listens" outreach event at 8:15 AM ET (12:15 GMT) followed by speeches from four voting regional Fed presidents.

2. API Data on Watch

The American Petroleum Institute's petroleum data will be eagerly anticipated after oil prices made a negative start to the trading week as oil demand fears resurfaced following further signs of a slowdown in China.

Crude Oil WTI Futures fell 1.1% to settle at $59.58 a barrel on Monday.

Oil prices are expected to remain range-bound as a myriad of different catalysts attempt to sway direction, including weaker oil demand growth, ongoing OPEC production cuts and strong U.S. shale production, Scotia Economics said in a note to clients.

3. Banking Earnings in Focus

Citigroup (NYSE:C) kicked off the earnings season for Wall Street banks on Monday, with a beat on both the top and bottom lines – and investors will be watching with interest on whether JPMorgan, Wells Fargo and Goldman Sachs can follow suit with all three set to release earnings before markets open Tuesday.

JPMorgan (NYSE:JPM) is expected to report earnings of $2.51 a share on revenue of $28.8 billion, according to analysts’ polled by Investing.com.

Like its rivals, JPMorgan’s loan business is expected to have taken a hit from a decline in net interest margin following a plunge in U.S. Treasury yields amid expectations for a Fed interest rate cut later this month.

Wells Fargo (NYSE:WFC), which remains under sanctions from the Federal Reserve since February last year after several allegations of customer abuses, is expected to report earnings of $1.17 a share on revenue of $20.94 billion.

Goldman Sachs (NYSE:GS), meanwhile, is expected to deliver second-quarter earnings of $4.93 a share on $8.88 billion in revenue.

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