U.S. stocks steady; investors focus on quarterly earnings deluge
Investing.com - U.S. stock futures hover around the flatline, with a new slate of earnings from big-name companies due to be released. Results have been broadly upbeat so far during the latest reporting period, even as tariff-driven murkiness surrounds the economic outlook. Elsewhere, OpenAI and SoftBank’s (TYO:9984) massive artificial intelligence joint effort is reportedly struggling to get off the ground, while rumors swirl around possible acquisition activity in the U.S. freight rail industry.
1. Futures muted
U.S. stock futures were subdued on Tuesday, as investors took a breath before a fresh round of corporate earnings.
By 03:31 ET (07:31 GMT), the Dow futures contract, S&P 500 futures, and Nasdaq 100 futures were all mostly unchanged.
The benchmark S&P 500 and tech-heavy Nasdaq Composite both touched record levels in the prior session, partly fueled by optimism around recent company results.
Shares of Google-owned Alphabet (NASDAQ:GOOGL) climbed, in particular. The search giant is due to kick off earnings from the crucial “Magnificent Seven” group of mega-cap tech names on Wednesday, along with electric vehicle manufacturer Tesla (NASDAQ:TSLA). Elon Musk-led Tesla’s stock price inched down on Monday.
Verizon Communications (NYSE:VZ) shares, meanwhile, added around 4%, driven by the telecom company’s decision to raise the lower end of its annual profit growth guidance.
While earnings season has been shifting into higher gear (see below), markets have also been keeping tabs on developments around sweeping U.S. tariffs. An August 1 deadline for President Donald Trump’s elevated “reciprocal” levies to take effect is inching ever closer, with media reports suggesting that the White House has yet to make significant progress on trade negotiations with a host of nations.
How Corporate America plans to respond to potentially heightened duties remains a key feature of the second-quarter reporting period.
2. Earnings ahead
Traders will now be monitoring a series of company earnings reports due out on Tuesday.
Of note will be figures from home builders DR Horton (NYSE:DHI) and PulteGroup (NYSE:PHM), which could offer a glimpse into the state of U.S. real estate market. Home demand has been weighed down recently by higher mortgage rates and broad economic uncertainty — although possible Federal Reserve interest rate cuts later this year could bolster home buying activity, analysts have suggested.
General Motors (NYSE:GM) has already warned of a $4 billion to $5 billion annual earnings headwind from U.S. tariffs, but investors may be curious to hear more on the trade outlook from the carmaker.
Also highlighting the docket today will be results before the opening bell from soda titan Coca-Cola (NYSE:KO) and tobacco firm Philip Morris International (NYSE:PM), as well as defense names like RTX Corp. and Lockheed Martin (NYSE:LMT). Chipmaker Texas Instruments (NASDAQ:TXN) and medical devices company Intuitive Surgical (NASDAQ:ISRG) will post returns after the markets close.
Following the end of trading on Monday, NXP Semiconductors (NASDAQ:NXPI) unveiled a 6% fall in second-quarter revenue that stemmed from weakness at its communications and infrastructure segment. Shares dropped in extended hours trading.
3. OpenAI-SoftBank’s AI project ramp-up struggling, WSJ reports
A $500 billion mega-deal between OpenAI and Japanese tech investor SoftBank to rapidly build out the artificial intelligence ambitions of the U.S. has struggled to get off the ground, according to a Wall Street Journal report.
Cuiting people familiar with the matter, the paper said that the project, known as "Stargate," has sharply scaled back its near-term plans. Roughly a half of a year after Stargate was announced by OpenAI CEO Sam Altman, SoftBank’s billionaire leader Masayoshi Son and President Trump, it has yet to sign a single deal for a data center, the WSJ said.
SoftBank and OpenAI have been dealing with disagreements over the terms of the partnership, including differences in opinion over where to build data center facilities, the WSJ added.
Despite having promised to "immediately" plug $100 billion into the initiative in January, the project is now looking to roll out a more modest data center, likely in the U.S. state of Ohio, later this year, the WSJ said. However, Altman and Son have said that their joint effort is progressing well.
In a note, analysts at Vital Knowledge suggested that the report could be a "tailwind" for Microsoft (NASDAQ:MSFT), as it could imply that OpenAI may have to keep more workloads on its Azure cloud product for "longer than envisioned."
"But it does raise questions about some of the hype that’s formed around the industry, where huge investment figures are cavalierly thrown out and used as justification for ever-expanding valuations when a lot of the numbers are either recycled, double-counted, or vaporware," the Vital Knowledge analysts argued.
4. Freight rail industry deal talk
Berkshire Hathaway-owned BNSF has hired Goldman Sachs to consider the purchase of a rival freight rail company, according to Semafor.
The news outlet noted that it was not clear whether BNSF would pursue a tie-up with Norfolk Southern (NYSE:NSC) or CSX Corp (NASDAQ:CSX).
Elsewhere, Jacksonville-based CSX is in talks to bring on financial advisers, Reuters reported.
These moves come after peer Union Pacific (NYSE:UNP), the biggest U.S. freight operator, reportedly began exploring a possible acquisition of Norfolk that would create a sprawling $200 billion rail network which would span the width of the continental U.S. It would be one of the most consequential deals in the sector since Canadian Pacific (NYSE:CP) fused with Kansas City Sourthern -- notably with Goldman’s help -- four years ago.
Analysts flagged that any potential deal may face scrutiny from U.S. regulators, raising questions around the appetite of the Trump administration for major transactions.
5. Gold edges down from one-month high
Gold prices fell slightly, pulling back slightly from an over one-month high hit in the prior session, due to some profit-taking and a modest rebound in the U.S. dollar.
The yellow metal’s safe haven appeal was recently boosted by reports that the European Union was preparing new countermeasures against the U.S. over Trump’s reciprocal tariffs. Washington seen seeking at least 15% tariffs on the bloc, but Brussels is looking to keep the rate at its current level of 10%, reports said.
Uncertainty over U.S. interest rates and the independence of the Federal Reserve also boosted haven demand. The Fed is widely expected to keep rates unchanged at meeting next week, despite growing calls from Trump that he cut borrowing costs immediately.
Spot gold dropped 0.4% to $3,383.63 an ounce, while gold futures fell 0.3% to $3,395.62/oz by 03:30 ET. Spot prices surged 1.4% to nearly $3,400/oz on Monday.