Shares wobble as profit expectations document: Markets Wrap

(Bloomberg) — Stocks rose near all-time highs as investors eyed the start of profit-taking season while keeping an eye on the United States presidential race and any clues regarding the Federal Reserve’s then-current moves.

Learn from Max Bloomberg

If the S&P 500 ends higher, it would be its 35th record this year. The Fed’s Untouchable York survey shows that US consumers’ near-term inflation expectations fell for a moment or an hour. Probably the greatest banks will begin second-quarter reporting season on Friday, and analysts’ upgrades outnumber downgrades when it comes to estimating estimates. At the same time, 12-month-ahead profit expectations rise to an all-time high.

John Stoltzfus at Oppenheimer Asset Control said a strong profits outlook and a flexible financial system could also help drive upside valuations. He raised his year-end target for the S&P 500 to 5,900 – a 6% upside from like-for-like.

“The S&P 500’s earnings results in the most recent reporting season and economic data providing evidence of resiliency remain at the core of our bullish outlook for stocks,” he said.

The S&P 500 remained near 5,570. Nvidia Corp rallied after UBS Staff AG raised its target, citing “extremely strong” demand. Taiwan Semiconductor Production Co. briefly surpassed $1 trillion. The Treasury 10-year yield was revised up marginally to 4.29%.

The lack of a victorious winner in France’s elections is being watched with some speculating that major policy changes are unlikely to happen amid the political impasse. In the interim, President Joe Biden promised fellow Democrats that he would remain in the presidential race.

According to Morgan Stanley’s Mike Wilson, investors should be prepared for a correction in the reserve market as hesitations revolve around corporate profits, Fed policy and the United States presidential campaign. “The third quarter is going to be turbulent,” he told Bloomberg TV.

August is set to begin a painful two-week period for U.S. stocks as money flows out of equities, according to Scott Rubner of Goldman Sachs Staff Inc.

He says the bar is prime for company impacts as speculators are already set, which means profits season is “no longer a tailwind for the stock.”

Generation For two years, a small group of businesses have contributed to most of the gauge’s comeback: The S&P 500 has gained more or less 55% from the October 2022 low — though 58% of that gain has come just from Bloomberg. According to data compiled by , 10 stocks are ahead in the benchmark.

the story continues

“S&P 500 earnings growth is likely to continue at a respectable pace over the next year,” said Nicholas Colas at Datatrack. “Moreover, those reforms should be broad-based rather than just in a few tech-heavy areas. “This all adds up to continued strength in U.S. large caps.”

According to Ed Clissold of Ned Davis Analysis, the S&P 500 is in its eleventh longest stretch without a 2% downside move since 1928.

“There have been mixed returns since the end of the last long period, but on average the bull market is not over,” he said.

In the interim, Jerome Powell will take this opportunity to face power from lawmakers impatient for the Fed to cut rates and others dissatisfied with its untouched plan to boost capital requirements for Wall Side Street lenders. The Fed chair will head to Capitol Hill on Tuesday and Wednesday for his semiannual testimony.

Barring Powell’s testimony, June consumer price index data could be a spotlight, except Thursday. The so-called core CPI, which excludes food and effort costs and is intended as a broad measure of underlying inflation, is expected to turn in the smallest back-to-back gains since August, which will be more palatable for Fed officials. there is time.

“While the CPI release will be important, we will be looking for signs from Powell that the Fed is getting closer to a decision about cashing in its chips and moving into September, provided ongoing inflation news broadly confirms that the run-rate back up.” It has come down,” said Krishna Guha at Evercore.

According to Jason Pledger and Michael Reynolds at Glenmede, if US inflation eases without causing any additional damage to the economy, the resulting Fed easing cycle could likely be a tailwind for assets.

“Synchronized global easing cycles have historically been a bullish signal for equities in the short-to-medium term,” he said.

Glenmede said the S&P 500 posted a forward return of 9.9% within a year, shortly after central banks around the world eased coverage to 40-60%. This volume rises to 18.7% within the 80-100% tranche – suggesting equities could benefit if more central banks are expected to ease.

According to leading asset control strategists, “The Fed is cutting rates due to the slowdown in the US economy.” “We expect cuts in September and December, but this would require additional evidence of a recession.”

Company Highlights:

• Exxon Mobil Corp expects refining earnings to continue to beat profit estimates for the second quarter due to a squeeze on margins at the business.

• Southwest Airways Co., which is dealing with demands for sweeping management and industry adjustments from activist Elliot Funding Control, has named gliding business veteran Rakesh Gangwal to its board.

• Eli Lilly and Co. acquired American gut-drug maker Morphine Protect Inc. has confirmed it will buy the company for about $3.2 billion, plowing most of the proceeds from obesity blockbuster Zepbound into its experimental pipeline.

• Devon Power Corp. has confirmed the purchase of Grayson Mill Power’s Williston Basin Industries for $5 billion as consolidation in the United States oil sector continues.

• Paramount World has confirmed it is to merge with Skydance Media in a deal that will give producer David Ellison control of the iconic Hollywood studio, completing one of the business’s most dramatic acquisitions yet.

• Lucid Staff Inc. beat expectations for quarterly production and deliveries, boosting the automaker’s shares as it shrugged off concerns about a slowdown in the electric-vehicle market.

Major events on this occasion:

• China mix financing, cash supply, untouched yuan debt, Tuesday

• Jerome Powell delivers Fed Conservative semi-annual testimony to the Senate Banking Committee on Tuesday

• US Treasury Secretary Janet Yellen will testify before the Space Monetary Products and Services Committee on Tuesday

• The Fed’s Michael Barr and Michelle Bowman discussed Tuesday

• China PPI, CPI, Wednesday

• Jerome Powell testifies to the Space Monetary Products and Services Committee on Wednesday

• The Fed’s Austin Goolsby, Michelle Bowman and Lisa Cook discuss the issue over dinner on Wednesday

• US CPI, preliminary jobless claims, Thursday

• The Fed’s Raphael Bostic and Alberto Musallem discussed Thursday

• China Industry, Friday

• Michigan College Consumer Sentiment, US PPI, Friday

• Citigroup, JPMorgan and Wells Fargo reported profits on Friday

Possibly the biggest strikes in the markets:

shares

• The S&P 500 was little changed as of 12:03 p.m. Untouched York Hour

• Nasdaq 100 rose 0.2%

• Dow Jones Commercial Reasonable fell 0.2%

• Stoxx Europe 600 was slightly revised once

• MSCI International Index made little changes

currencies

• Bloomberg Buck Spot Index little changed

• The euro was once slightly revised at $1.0832

• The British pound was slightly revised at $1.2822

• The eastern yen was little changed at 160.77 per dollar.

cryptocurrency

• Bitcoin fell 2.5% to $55,810.79

• Ether fell 0.8% to $2,974.63

bond

• 10-year Treasuries traded little changed at 4.29%

• Germany’s 10-year yield fell two basis points to 2.54%

• Britain’s 10-year yield fell one basis point to 4.11%

Goods

• West Texas Intermediate crude fell 1% to $82.34 a barrel

• Spot gold fell 1.7% to $2,352.43 an ounce.

This story was generated from a backup of Bloomberg Automation.

– with backup from Cecile Gutscher, Juliette Laffont, Catherine Bosley, Matthew Burgess, Vildana Hajrik, Sagarika Jaisinghani, Alexandra Semenova and Natalia Kniazevich.

Learn the Most from Bloomberg Businessweek

©2024 Bloomberg LP