By Chris Matthews and Mark DeCambre, MarketWatch
JPMorgan Chase, Wells Fargo and Goldman reported second-quarter
results on Tuesday
U.S. stocks traded flat Tuesday, a day after major equity
indexes eked out a round of fresh all-time closing highs and as
Wall Street digested a fresh, bank-heavy round of earnings
reports.
How are the major benchmarks performing?
The Dow Jones Industrial Average rose 25 points to 27,384, a
gain of 0.1%, the S&P 500 index fell roughly one point to 3,013
and the Nasdaq Composite index edged about a point lower to
8,257.
The Dow set a new intraday high of 27,398.68.85, rising 39.52
points Tuesday morning before paring those gains.
On Monday, the Dow gained 27.13 points, or 0.1% record of
27,359.16, the S&P 500 index added 0.53 point, or less than
0.1%, to end at 3,014.30. The Nasdaq Composite Index rose 14.04
points to reach 8,258.19, a 0.2% increase. All three major indexes
scored record closes.
What's driving the market?
Stocks were largely range bound after a series of earnings
reports from major banks JPMorgan Chase & Co. (JPM), Goldman
Sachs (GS), and Wells Fargo & Co.(WFC) painted a mixed picture
of the banking industry, and the broader economy's strength,
following a report from Citigroup Inc. (C)on Monday.
While all four banks were able to surpass much lowered
expectations for second-quarter performance, "the broad theme we're
seeing is slowing loan growth, somewhat muted trading revenues and
shrinking margins," said Stephen Biggar, director of financial
institution research at Argus Research in an interview. "Lower
manufacturing activity, lower housing activity and
business-investment slowing are all manifesting themselves" in bank
performance, he said.
J.P. Morgan's performance in particular, however, does reflect
the continued strength of the U.S. consumer, given that provisions
for losses on consumer loans relative to income remained
steady.
Also reflecting a healthy U.S. consumer were data on June retail
sales,
(http://www.marketwatch.com/story/retail-sales-pop-again-in-june-in-good-sign-for-consumer-driven-us-economy-2019-07-16)
which rose 0.4% compared to May, above the 0.1% gain expected by
economists polled by MarketWatch.
That's in contrast to the U.S. factory sector, which showed
unchanged growth in the three months ended in June, the second
straight quarterly decline and below the 0.1% gain expected by
economists, per a MarketWatch poll, the Federal Reserve said
Tuesday
(http://www.marketwatch.com/story/us-industrial-production-slumps-in-second-quarter-2019-07-16).
The Fed has hinted strongly that it is likely to cut interest
rates as it attempts to dull the effect of trade conflicts and
expectations that the economy may weaken somewhat in the 11th year
of a history-setting economic expansion.
"The bullish move that some equity markets enjoyed thanks to the
slight improvement in US-China trade talks, and the chatter about
the Federal Reserve lowering rates, has run out of steam, and some
traders are taking a breather," David Madden, market analyst at CMC
Markets UK, in a daily research note.
Meanwhile, across the Atlantic, the British pound was under
pressure against the dollar, dropping 0.4%, after Boris Johnson and
Jeremy Hunt, the two candidates vying to take over from departing
Prime Minister Theresa May, both said Monday evening they wouldn't
accept the so-called Irish backstop, previously agreed with the
European Union as part of the long negotiations over the U.K's
planned exit from Europe's trade bloc.
Several Federal Reserve officials are expected to deliver
speeches Tuesday, including Federal Reserve Board Gov. Michelle
Bowman, Dallas Fed President Rob Kaplan and Chicago Fed President
Charles Evans. Chairman Jerome Powell will speak at a conference in
Paris at 1 p.m. Eastern Time, though he was not expected to offer
different views than those expressed during Congressional testimony
last week.
Which stocks are in focus?
Dow-component JPMorgan's stock rose 1.1% Tuesday, after the bank
reported earnings and revenue
(http://www.marketwatch.com/story/jpmorgan-tops-profit-and-revenue-estimates-2019-07-16)
for the second quarter that beat analyst estimates.
Shares of Goldman Sachs, also in the Dow, rose 1.7% after the
bank reported second-quarter earnings and revenue that beat Wall
Street expectations
(http://www.marketwatch.com/story/goldman-sachs-stock-surges-after-big-profit-and-revenue-beats-raised-dividend-2019-07-16),
while raising its dividend by 47%.
Shares of Wells Fargo fell 1.8%, even after the bank reported
second-quarter earnings
(http://www.marketwatch.com/story/wells-fargo-earnings-blow-past-estimates-2019-07-16)
and revenue that surpassed analyst forecasts.
Dow-component Johnson & Johnson(JNJ) was in focus after the
health-care retailer produced quarterly results
(http://www.marketwatch.com/story/shares-of-jj-up-08-after-earnings-and-revenue-beat-2019-07-16)
that were better than expected while boosting its full-year
outlook, though it reported falling revenue compared with the
second-quarter of last year. Shares of J&J were down 1.3%.
Domino's Pizza, Inc. (DPZ) stock fell 6.2% Tuesday, after the
fast-food retailer reported second-quarter revenue
(http://www.marketwatch.com/story/dominos-shares-sink-after-revenue-miss-2019-07-16-7914128)
and same-store sales growth that fell short of analyst
estimates.
Facebook Inc.(FB) will be in focus as executives from the
social-media giant are set to explain its digital currency venture
Libra coin to a Senate banking committee later Tuesday. Facebook's
rose 0.1%.
Blue Apron Holdings Inc. (APRN) rose 23.5% after the meal-kit
company announced seasonal recipes
(http://www.marketwatch.com/story/blue-apron-shares-jump-after-beyond-meat-recipes-announced-2019-07-16)
that will include plant-based proteins from Beyond Meat Inc.
(BYND).
How are other markets trading?
The yield on the 10-year Treasury note rose 3.3 basis points to
2.123%
In Asia, stocks ended mixed, with the China CSI 300 falling
0.5%, Japan's Nikkei 225 declining 0.7% and Hong Kong's Hang Seng
Index advancing 0.2%. European shares were on the rise, with the
Stoxx Europe 600 0.4% higher.
In commodities markets, crude-oil rose 0.3%, while gold prices
fell 0.1%.
The U.S. dollar rose 0.4%, as measured by the ICE U.S. Dollar
Index.
(END) Dow Jones Newswires
July 16, 2019 11:23 ET (15:23 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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