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Dow Futures Rise 95 Pts; Strong Earnings Season Continues

Stock MarketsAug 02, 2021 13:22
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By Peter Nurse - U.S. stocks are seen opening higher Monday, continuing the recent positive tone on the first trading day of August as investors digest generally strong corporate earnings and a dovish message from the Federal Reserve.

At 7 AM ET (1100 GMT), the Dow Futures contract was up 95 points, or 0.3%, S&P 500 Futures traded 17 points, or 0.4%, higher, and Nasdaq 100 Futures climbed 55 points, or 0.4%.

The major U.S. indices posted their sixth straight month of gains in July, with the broad-based S&P 500 gaining over 2%, the blue-chip Dow Jones Industrial Average adding 1.3% and the Nasdaq Composite 1.2%.

Helping the tone were comments over the weekend from Fed officials Lael Brainard and Neel Kashkari, both of whom warned of risks to the economic outlook and the big progress still needed to reach pre-pandemic employment levels. 

Additionally, the U.S. Senate looks set to complete work this week on a $1 trillion infrastructure investment bill, adding even more stimulus to the markets.

The major focus, however, has been on the corporate earnings season, which so far has been generally positive. Nearly two-thirds of the S&P 500 companies have reported second-quarter figures so far, and according to FactSet 88% have beaten consensus expectations. Companies' forward guidance hasn't been so uniformly positive, with Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN) all warning of various risks ahead.

Investors will get a fresh batch of reports in the week ahead from companies such as Eli Lilly (NYSE:LLY), CVS Health (NYSE:CVS), Uber (NYSE:UBER), Amgen (NASDAQ:AMGN) and General Motors (NYSE:GM).

Away from earnings, Square (NYSE:SQ) will be in focus after the payments company agreed to buy Australian fintech company Afterpay (ASX:APT) in an all-stock deal valued at $29 billion, which represents a roughly 30% premium to Afterpay’s last closing price.

Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) will also be in the spotlight after the drugmakers agreed a new contract with the European Union for their Covid-19 vaccines which included a substantial price rise.

Also, the Wall Street Journal reported that Foot Locker (NYSE:FL) will buy two retailers for a total of about $1.1 billion in cash deals.

The economic data slate includes the Institute of Supply Management’s final purchasing managers index for July, which is expected to stay close to historic highs.

Earlier Monday, China’s Caixin Manufacturing PMI fell to 50.3, its lowest since April last year, while Germany's final Purchasing Managers' Index for manufacturing, which accounts for about a fifth of the economy, rose to 65.9 in July from 65.1 in June.

Elsewhere, oil prices weakened Monday in response to the Chinese factory data slowing sharply in July, suggesting weakening economic growth in the largest crude importer in the world.

At 7 AM ET, U.S. crude futures traded 1.7% lower at $72.67 a barrel, while the Brent contract fell 1.4% to $74.34.

Additionally, gold futures fell 0.3% to $1,811.40/oz, while EUR/USD traded 0.2% higher at 1.1889.


Dow Futures Rise 95 Pts; Strong Earnings Season Continues

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