Futures flat ahead of Fed speak
Investors await the Fed's president speech for clues about the economy and tapering.
U.S. equity futures were unchanged in early premarket trade ahead of some key earnings reports, notably from drugstore chain CVS (CVS). Also, a speech from Federal Reserve President Charles Evans could move markets this morning.
In other news, the Reserve Bank of Australia cut its benchmark interest rate to a record low of 2.5% from 2.75%. The RBA Board noted that they expect growth below trend in the near term and that they see further downside for the Australian dollar.
The Italian economy shrunk less than expected in the second quarter. The first estimate of second quarter GDP was reported as a contraction of 0.2%. Economists were looking for a contraction of 0.4% compared to last year's contraction of 0.6%.
British industrial production rose sharply in June, climbing 1.1% compared to the forecast of 0.6%. The prior reading was a flat 0.0% and June's reading is the highest since January of 2011.
S&P 500 futures fell 0.3 points to 1,702.20.
The EUR/USD was higher at 1.3277.
Spanish 10-year government bond yields fell 1 basis point to 4.58%.
Italian 10-year government bond yields were flat at 4.28%.
Gold fell 0.93% to $1,290.30 per ounce.
Asian shares closed off of the lows with some major indices closing higher following the RBA rate decision. The Japanese Nikkei 225 Index gained 1.00% and the Topix Index rose 0.75%. In Hong Kong, the Hang Seng Index fell 1.34% while the Shanghai Composite Index rallied 0.49% in China. Also, the Korean Kospi fell 0.5% and Australian shares declined 0.11%.
European shares were mixed in early trade following mixed earnings reports from companies across the continent. The Spanish Ibex Index gained 0.39% and the FTSE MIB Index rose 0.22%. Meanwhile, the German DAX was flat and the French CAC 40 Index rose 0.22% while U.K. shares fell 0.08%.
Commodities were lower overnight as the RBA warned on the decline of the resource boom. WTI crude futures declined 0.27% to $106.27 per barrel and Brent crude futures fell 0.29% to $108.39 per barrel. Copper futures rose 0.44% to $318.20 per pound. Gold was lower and silver futures declined 0.28% to $19.67 per ounce.
Currency markets were on the move as the euro climbed following the Italian GDP report. The EUR/USD was higher at 1.3277 and the dollar fell against the yen to 98.25 from 98.30. Overall, the Dollar Index declined 0.1% on weakness against the euro, the pound, and the yen.
Earnings reported Monday
Key companies that reported earnings Monday include:
Hologix (HOLX) reported third quarter earnings per share of $0.38 vs. $0.37 expected on revenue of $626.1 million vs. $626.84 million expected.
Tyson Foods (TSN) reported third quarter earnings per share of $0.69 vs. $0.58 expected on revenue of $8.73 billion vs. $8.64 billion expected.
Kindred Healthcare (KND) reported second quarter earnings per share of $0.12 vs. $0.33 expected on revenue of $1.41 billion vs. $1.47 billion expected.
Black Hills Corp. (BKH) reported second quarter earnings per share of $0.41 vs. $0.42 expected on revenue of $279.8 million vs. $285.94 million expected.
Stocks moving in the premarket included:
TRW Holdings (TRW) shares declined 1.42% premarket after the company sold 10.3 million shares in a secondary offering.
Einstein Noah Restaurant Group (BAGL) shares declined 4.56% premarket as the company announced a secondary offering of 1.5 million shares on behalf of Greenlight Capital, the hedge fund run by David Einhorn.
American Eagle Outfitters (AEO) shares declined 17.28% premarket as the company slashed earnings per share guidance to $0.10 from a prior range of $0.19-0.21, below analyst estimates of $0.21.
General Motors (GM) shares fell 0.46% as the UAW is selling 45.5 million of its warrants in the stock.
Notable companies expected to report earnings Tuesday include:
CVS Corp. (CVS) is expected to report second quarter earnings per share of $0.96 vs. $0.81 a year ago on revenue of $31.14 billion vs. $30.71 billion a year ago.
Archer-Daniels-Midland (ADM) is expected to report second quarter earnings per share of $0.44 vs. $0.38 a year ago on revenue of $22.87 billion vs. $22.68 billion a year ago.
Emerson Electric (EMR) is expected to report third quarter earnings per share of $0.98 vs. $1.04 a year ago on revenue of $6.44 billion vs. $6.48 billion a year ago.
Dish Network (DISH) is expected to report second quarter earnings per share of $0.54 vs. $0.50 a year ago on revenue of $3.65 billion vs. $3.57 billion a year ago.
FirstEnergy (FE) is expected to report second quarter earnings per share of $0.54 vs. $0.60 a year ago on revenue of $3.61 billion vs. $3.87 billion a year ago.
On the economics calendar Tuesday, the weekly Redbook is due out followed by the JOLTS job report and the weekly four-week bill auction. Also, the Fed's Evans is set to speak and the Treasury will also auction three-year notes and STRIPS. Overnight, the Bank of England inflation report and a speech from BOE Governor Mark Carney are expected.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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