U.S. stock futures fell Tuesday as investors navigated a flood of corporate earnings reports. Dow Jones Industrial Average futures dropped 110 points, or 0.3%. Futures linked to the S&P 500 and Nasdaq-100 futures lost 0.45% and 0.6%, respectively. Pharmaceutical giant Merck reported a smaller-than-expected loss and revenue that exceeded expectations thanks to strong Keytruda sales. Merck shares rose 1%. Caterpillar also reported better-than-expected earnings and revenue, boosting shares 1.3%. Pfizer, meanwhile, posted mixed results as Covid product sales plummeted. Uber also reported mixed numbers, but posted a surprise profit lifting shares about 1% before the bell. More than 160 S&P 500 constituents are slated to report their latest quarterly results this week. More than half of the companies in the broad market index have already reported, with 80% posting earnings beats, according to FactSet. This further raises hopes that the economy will be able to avoid a recession as inflation begins to show signs of slowing. To be sure, Globalt Investments senior portfolio manager Keith Buchanan noted that expectations coming into this season were negative. “We beat that bar, but still, thus far [there have] been indications that we’re going to end up in a negative year-over-year growth from an earnings standpoint,” said Buchanan. “But we’re more concerned and frankly, somewhat optimistic about the earnings picture for the second half of this year, in particular 2024.” He added that signs of a widening market rally have emerged in the past month. “As this market continues to kind of turn higher, we’re expecting a broader participation with small cap participating, [with] some spaces of the value cohort participating as well,” Buchanan added. Economic indicators, including job openings and labor turnover numbers from June and the July manufacturing purchasing managers’ index will also be released Tuesday. The major indexes all ended Monday’s main trading session modestly higher. The Dow rose 0.28%, while the S&P 500 and the Nasdaq Composite edged up 0.15% and 0.21%, respectively. In July, the S&P 500 and the Dow each gained more than 3%, while the tech-heavy Nasdaq advanced about 4.1%. Asia-Pacific markets rose on Monday as China’s factory activity for July remained in contraction territory for the fourth straight month. Hong Kong’s Hang Seng index rose 0.83% in its final hour of trade, while the Hang Seng Tech index saw a larger climb of 1.87%. At current levels, this would be the first time that the HSI breached the 20,000 mark in over a month. Mainland Chinese markets were all higher as well but pared earlier gains, with the Shanghai Composite up 0.46% to finish at 3,291.04 and the Shenzhen Component 0.75% higher to end at 11,183.91. Japan’s Nikkei 225 gained 1.26% to close at 33,172, while the Topix saw a larger rise of 1.39% to end the day at 2,322.56, setting a new 33-year record. The country’s industrial output for June came in lower than expected, registering a 2% growth month on month compared to the 2.4% expected by economists. South Korea’s Kospi advanced 0.93% to end at 2,632.58 and recorded a third straight day of gains. The Kosdaq climbed 2.25% to close at 935.97, near its 16-month high. Australia’s S&P/ASX 200 climbed marginally and closed at 7,410.4, as investors prepare for the Reserve Bank of Australia’s rate decision on Tuesday. Economists polled by Reuters were expecting a 25 basis points hike in its benchmark policy rate to 4.35%. Oil price were little changed on Tuesday, trading near a three-month high reached on Monday, on signs of tightening global supply as producers implement output cuts and strong demand in the United States, the world’s biggest fuel consumer. Brent crude futures for October were at $85.30 a barrel at 0135 GMT, down 13 cents or 0.15% lower from its close. Front-month Brent settled at its highest since April 13 on Monday. U.S. West Texas Intermediate crude was at $81.69 a barrel, down 0.1% or 11 cents from the previous session’s settlement, which was its highest since April 14. Gold prices edged lower on Tuesday as the U.S. dollar climbed, while investors looked forward to key economic data this week for signs on how long the interest rates could keep rising to quell sticky inflation. Spot gold was down 0.1% at $1,961.49 per ounce by 0343 GMT, while U.S. gold futures dropped 0.5% to $1,961.10 per ounce.
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