Before the Bell
- The U.S. stock market staged an impressive rally yesterday, as investors turned their attention to the nation’s economy and shrugged off concerns about the coronavirus. Of note, the Delta variant (a highly contagious version of the virus) has been presenting health challenges lately, and some parts of the country have imposed restrictions, as a result. No doubt, Wall Street will be monitoring the situation closely in the weeks ahead. Meanwhile, the second-quarter earnings season has commenced, and investors have been busy sifting through numerous corporate reports. Overnight, the international markets have shown some progress. In Asia, the Nikkei logged a healthy advance. In Europe, the FTSE 100 has been moving nicely higher. On our shores, the U.S. equity futures are mixed, suggesting a similar start to the day.
In economic news, yesterday was a fairly quiet day. However, housing starts came in at an annualized rate of 1.6 million units during the month of June. This figure was nicely above the prior month’s reading, and surpassed analyst expectations. Of note, investors were likely pleased to see further strength in the housing market, as the real estate sector plays an important role in the broader economy. Today, will be relatively calm with few major issuances due out. The pace picks up on Thursday, when we get a look at the latest monthly existing home sales figures, the weekly initial jobless claims figures, and the Conference Boards’ Leading Indicators report.
In the corporate arena, the second-quarter earnings season is in progress. Yesterday, Netflix (NFLX) put out a mixed release. The company has been attracting new subscribers at a healthy pace, but some investors were disappointed with the guidance provided. This morning, Coca-Cola (KO) and Verizon (VZ) delivered constructive reports, and that could exert some influence on the market today. It is still the beginning of the earnings season, and we should have greater clarity as more companies weigh in with their results.
Technically, Monday’s selloff pushed the S&P 500 Index back to its 50-day moving average, located at the 4,240 level. Yesterday, stocks found support at this key technical area, as traders quickly moved in to buy on weakness. It remains to be seen if the bulls can mount a sustained buying campaign from here. Much will depend on the quality of the corporate reports that will be issued in the weeks ahead. Also, it will be crucial that the pandemic does not intensify, too much, as Wall Street has probably not been anticipating a major setback in this area. – Adam Rosner