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Day Ahead: Top 3 Things to Watch

Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Smaller Banks Weigh in With Earnings

Financial stocks had a strong performance Wednesday and earnings in the sector will again dominate trading talk ahead of the bell Thursday.

The big-name banks have largely topped expectations and now investors will get a chance to drill down into the numbers for the smaller institutions.

Bank of New York Mellon (NYSE:BK) stock climbed 2.9% Wednesday ahead of its report. Analysts predict the company will report a profit of $1.02 per share on revenue of a little more than $4.1 billion. Fifth Third Bancorp (NASDAQ:FITB) stock gained around 2.4%. It’s expected to earn 57 cents per share on revenue of about $1.6 billion.

Blackstone (NYSE:BX), KeyCorp (NYSE:KEY), BB&T (NYSE:BBT) and Capital One Financial (NYSE:COF) will also issue numbers.

Insurer and Dow component Travelers (NYSE:TRV) is also on the earnings calendar ahead of Thursday trading.

The company is expected to report earnings of $2.43 per share and revenue of $6.92 billion. A lot of the attention will be on the rise in premiums for the quarter, according to Zacks.

2. Jobless Claims, Philly Fed Expected Slightly Higher

The most important economic numbers are scheduled before the open on Thursday, with data on the labor market and manufacturing on tap.

Initial jobless claims are expected to rise slightly to 220,000 for the week ended July 13 from 214,000 the previous week. The jobs market has shown continued strength without much of a jump in wages to exacerbate inflation concerns.

“With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC believes that -- for now -- the best way forward is to keep gradually raising the federal funds rate,” Federal Reserve Chairman Jay Powell said in remarks to the Senate Tuesday. He reiterated that position Wednesday before the House.

Also on the calendar, the Philadelphia Fed releases its estimate of July manufacturing activity. Economists expect that the index rose to 21.6 from 19.9 in June.

3. Oil Prices Show Resilience Despite Rising Stockpiles

Investors should keep an eye on oil prices, with the energy sector having a strong influence on overall market direction lately.

Oil prices took a surprising path on Wednesday, settling higher despite the Energy Information Administration reporting an unexpected rise in U.S. crude inventories.

On the New York Mercantile Exchange crude futures for July delivery rose 1% to settle at $68.76 a barrel. Inventories of U.S. crude rose by 5.836 million barrels for the week ended July 13, confounding expectations for a draw.

The higher settlement in U.S. oil prices comes as oil observers continued to expect that major oil producers would have little room to address a potential global supply shortage.

OPEC countries have limited room to address any shortage and in the next 12-18 months the market will realize the U.S. can't support the entire market with spare capacity, RBC said earlier this week.

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