Bank of America stocks ended their earnings report. Investors paid close attention to the impact of a stronger dollar on other companies, betting that the earnings report is expected to outperform expected stocks. U.S. stocks opened higher on Tuesday (19th), and the market focused on the video streaming platform Netflix (NFLX-US) in its latest quarterly earnings report after the bell.
Before the deadline,Dow Jones Industrial Averagerose more than 200 points or nearly 0.8%,Nasdaq Composite Indexrose more than 100 points or nearly 1%,S&P 500 Indexrose nearly 1%,Philadelphia SemiconductorThe index rose nearly 2 percent.
Large US technology companies continue to report layoffs or tightening of staff. apple (AAPL-US) plans to slow hiring in some sectors and cut spending next year in response to a potential recession. On the other hand, Goldman Sachs (GS-US) also plans to slow down hiring and resume annual performance reviews to contain expenses.
Signs that high inflation and monetary tightening are squeezing the consumer and job market could fuel fears that the stock market recovery since mid-June has been short-lived. In addition, Apple is about to report last quarter earnings, which will help investors assess the risk of a recession.
The July Fund Manager Survey (FMS) released by Bank of America showed that “investor pessimism is at horrific levels”, with global economic growth expectations at a record low and recession expectations at their highest since May 2020.
Bank of America investment strategist Michael Hartnett said overall investor sentiment remains in “stagnant inflation” as companies reduce capital spending and buybacks as they look to prioritize maintaining strong balance sheets.
But Hartnett expects U.S. stocks to rebound in the next few weeks, albeit with poor fundamentals. He believes that if the Fed pauses rate hikes before Christmas and the consumer price index (CPI) cools, the market will have room for contrarian trades, such as short cash/long stocks.
For individual stocks, Johnson & Johnson (JNJ-US) announced its second-quarter earnings before the market. Although sales outside the U.S. were dragged down by the strong U.S. dollar, profits fell 23.3% year-on-year, but strong cancer drug sales boosted performance, but Johnson & Johnson still lowered its full-year adjusted profit expected.
Johnson & Johnson’s second-quarter revenue rose 3% annually to $24.02 billion, with nearly half of its sales coming from markets outside the U.S., beating analysts’ estimates of $23.77 billion; second-quarter adjusted earnings per share were reported at $2.59 , also beat market expectations of $2.54. Johnson & Johnson expects full-year adjusted earnings per share in the range of 10 to 10.1 US dollars, previously forecast for 10.15 to 10.35 US dollars.
In pharmaceutical sales, Stelara’s sales rose 14.3% to $2.6 billion, while cancer drug Darzalex revenue rose nearly 40% to $1.99 billion. However, the new crown vaccine grew slowly due to weak demand, with sales of only $544 million.
In European news, Citi analysts believe that if Russia cuts off natural gas supplies to Europe, it will trigger a recession, and European stocks may fall another 10%.According to Citi data, Russia’s natural gas stoppage mayEURThe region’s gross domestic product (GDP) fell by about 1%, implying a 10% contraction in earnings per share in Europe over the next 12 months.
Affected by soaring food and energy prices,EURThe inflation rate in the region continued to rise in June, and the Eurostat released the JuneEURThe regional consumer price index (CPI) rose 8.6% year-on-year, continuing to hit a new record high; the final monthly growth rate of the CPI in June was 0.8%, which was unchanged from May and in line with market expectations.
On the same day, it was reported that the European Central Bank (ECB) was discussing a larger 2-yard (50 basis point) rate hike at this week’s monetary policy meeting to curb soaring inflation.EURA strong rebound rose more than 1%, writing a two-week high.
Separately, ECB officials will discuss how to help more indebted markets such as Italy’s bond markets, but only if the rules of fiscal discipline are followed.
As of 21:00 on Tuesday (19th) Taipei time:
Stocks in focus:
IBM(IBM-US) fell 5.73% to $130.21 a share in early trade
Although the technology giant IBM delivered a stellar second-quarter financial report, with revenue and profit exceeding market expectations, it warned that the foreign exchange loss caused by the strong dollar this year will reach 3.5 billion US dollars, and it has lowered its 2022 free cash flow forecast. It fell nearly 6%. IBM’s second-quarter revenue rose 9 percent to $15.5 billion, while net profit rose to $1.47 billion, up from $810 million a year earlier.
Boeing (BA-US) rose 1.98% to $150.64 a share in early trade
Boeing shares rose in premarket trading after the Wall Street Journal (WSJ) reported that Boeing will reach an agreement with aircraft leasing company AerCap Holdings to sell a small number of 787 Dreamliners.
Anxun Information (NCR-US) rose 9.42% to $31.84 a share in early trade
Foreign media reported that private equity firm Veritas Capital was in talks to acquire financial technology provider An Xun Information (NCR), and An Xun Information’s share price rose more than 11% before the market.
Today’s key economic data:
- The United States reported 1.685 million building permits in June, an estimate of 1.65 million, and the previous value of 1.695 million
- The monthly growth rate of building permits in the United States in June was -0.6%, the previous value was -7.0%
- The number of new housing starts in the United States in June reported 1.559 million, an estimated 1.58 million, and the previous value of 1.591 million
- The monthly growth rate of new housing starts in the United States in June was -2.0%, the previous value was -11.9%
Wall Street Analysis:
Dennis DeBusschere, founder of 22V Research, sees a sharp slowdown in the economy over the next six to 12 months and lower bond yields, but a recession is not imminent. This backdrop has implications for near-term factors and markets, especially as deflationary forces continue to build.
“The potential for Russia to halt or severely reduce gas exports to Europe should keep markets on edge in the near term,” Mizuho International strategists Peter McCallum and Evelyne Gomez-Liechti wrote in a note to clients.
The European Central Bank has pre-committed to raising interest rates by 1 yard (25 basis points) in July, raising the deposit rate to -0.25%. Martin Weder, senior economist at ZKB, said: “The ECB is so far behind the inflation curve that failure to act decisively could lose its credibility… The negative interest rates should be abandoned quickly in July, followed by two (50 bps) hikes in September and October. basis points).”