Stock Market Futures Inches Higher After Selloff Drags On Wall Street
The stock market futures rose in Tuesday’s pre-market trading session, indicating Wall Street would open higher this morning. During Monday’s session, major benchmarks suffered their worst declines in nine months, despite the quarterly earnings showing a strong rebound. The bearish sentiment came after COVID-19 infections reasserted themselves among the unvaccinated populations, pushing the major benchmarks lower.
Over the past few months, Big Tech and major banks have been rolling out memos telling their staff to come back to the office. But today, Apple (NASDAQ: AAPL) is delaying its return-to-office deadline by at least a month, to October at the earliest, as Covid variants surge across many countries. “The impact of Covid on the stock market isn’t over yet,” said Lori Calvasina, head of U.S. equity strategy with RBC Capital Markets in New York. “We’re not saying it’s going to derail the recovery. We don’t think that, but we do think it could cause some additional bumps.”
With an expected strong job report coupled with the strong earnings season thus far, could we expect a strong rebound today? Sure, corporate earnings are off to a flying start. But the positive surprises have yet to generate any sustainable upward momentum for the stock market. As of 8:15 a.m. ET, all the major indexes are trading in the positive territory. The Dow, S&P 500, and Nasdaq futures are rising, 0.74%, 0.61%,0.47% respectively.
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UBS Reports 63% Jump In Net Profit
UBS Group (NYSE: UBS) posted better than expected second-quarter earnings as the wealth management division soars. The Swiss banking giant reported net profit attributable to shareholders of $2 billion in the latest quarter. This marks an increase of 63% year-over-year, and significantly above analysts’ expectations of $1.34 billion. The bank saw wealth clients traded more, pushing transaction revenues 16% higher from a year earlier.
From its earnings report, UBS attributed its success to favorable market conditions and investor sentiment. Chief Executive Ralph Hamers said that wealth clients are investing more with the bank in private markets and in separately managed accounts. There has also been increasing activity in refinancing assets, further strengthening the bank’s business in the second quarter. He also said that momentum is on UBS’s side and their strategic choices are paying off.
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Bitcoin Declines Below $30,000 For The First Time In A Month
Bitcoin resumes its slide to below $30,000 on Tuesday morning as crypto confidence ebbs. The retreat comes amid a broader risk-off environment that’s also seen U.S. stocks fall due to fears of slowing growth. Another major concern to note is a renewed crackdown in China on cryptocurrency trading. That appears to have weighed on the bitcoin price.
The People’s Bank of China (PBOC) issued a white paper outlining initial research for the nation’s digital currency project. In it, it mentioned that cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability.
Recall that Binance, the world’s largest cryptocurrency exchange was barred by British authorities from carrying out any regulated activities in the country. For sure, the cryptocurrency market will take a hit when there’s a crackdown. But some major institutional investors also find comfort with the regulation in place as it could drive out some of the bad actors in the market. Thus, it would not be surprising to see investors watching crypto stocks such as Coinbase Global (NASDAQ: COIN) and Square (NYSE: SQ).
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Netflix Earnings Coming Up
Among the earnings reports today, or even this week, Netflix (NASDAQ: NFLX) easily grabs most of the attention. The streaming giant is preparing for a major expansion into video games. This comes as subscriber growth slows in its core streaming business. Investors will watch closely for details about Netflix’s video game strategy and global paid streaming subscribers when it reports earnings after the market closes today.
The streaming video pioneer would post revenue growth of about 19% to around $7.3 billion. However, there is consensus among analysts that Netflix won’t have much to impress markets today. In fact, this outcome is hardly a surprise. That’s because Netflix has been warning for months that growth would slow when pandemic restrictions are lifted.
Of course, another big question many investors are looking at is how Netflix is faring with the unprecedented competition from Disney (NYSE: DIS), AT&T (NYSE: T), and Amazon (NASDAQ: AMZN) vying for market share. And the report this week will show investors if it’s still the leader in the streaming space. Given the “pull-forward” effect, it’s not realistic to expect a blowout quarter considering growth has slowed. Analysts expect growth in global paid streaming subscribers to slow to 8.2% in the second quarter and to 9.8% for full-year 2021.
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United Airlines Recovery In Focus With The Rise Of The Delta Variant
Airline stocks were among the most badly hit sectors in the stock market when COVID-19 struck. Of course, the fast-spreading Delta variant has been driving up the number of cases in many places. Therefore, there are increasing concerns about renewed travel restrictions and slower than anticipated recovery. United Airlines (NASDAQ: UAL) will be the first major airline to report earnings this season.
“We like United Airlines (UAL) confidence in providing a 2023 cost guide which includes a goal to permanently reduce $2 bn of cost and at least match 2019 margins. The market is also very keen to see UAL’s go-to-market strategy on the revenue side as travelers return,” noted Ravi Shanker, equity analyst at Morgan Stanley.
Wall Street is expecting the airline to report revenue of $5.34 billion. That would be an increase of 261.71% over the prior-year quarter when the company reported $1.48 billion. The analysts also expect a full-year loss of $12.758 per share. On average, analysts estimate full-year revenue to be $24.18 billion, compared to $15.36 billion in the previous year. There are also other notable names from other sectors reporting today. They include Intuitive Surgical (NASDAQ: ISRG), Phillip Morris (NYSE: PM), Chipotle Mexican Grill (NYSE: CMG).
