Energy Sector Helps Wall Street Close on High Note
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U.S. equity markets were higher Tuesday as traders digested a slew of headlines including an Iran nuclear deal, big bank earnings from JPMorgan and Wells Fargo, and disappointing economic data.
The Dow Jones Industrial Average rose 75 points, or 0.42% to 18052. The S&P 500 added 9 points, or 0.44% to 2110, while the Nasdaq Composite gained 33 points, or 0.66% to 5104.
Nine of ten S&P 500 sectors were in positive territory, with energy and health care leading the way higher. Utilities were the only laggard, down roughly 0.13%.
Today’s Markets
A day after Wall Street digested a deal between the Greeks and their international creditors, traders had another agreement to parse. Early Tuesday, and after the most recent round of 18-day negotiations, six world powers came together with Iran to reach a formal agreement aimed at curbing the nation’s nuclear program in exchange for international sanctions relief.
Among other provisions, under the agreement, Iran will abide by a United Nations embargo for up to five more years with opportunity for relief if the International Atomic Energy Agency finds definitively that the nation is not operating any kind of nuclear weapons program.
Global oil prices retreated on the new on increasing fears of oversupply in the market. However, prices clawed their way back from more than 2% losses. U.S. crude prices settled 1.09% higher to $52.77 a barrel, while Brent, the international benchmark, ended 0.47% up to $58.32 a barrel.
“Oil is in full retreat again this morning as the singing of a deal with Iran brings the prospect of fresh supply heading to a market that is already awash with surplus output,” Chris Beauchamp, senior market analyst at IG said in a note. “With Iran’s oil fields operating well below full capacity, the worrying thought for the oil bulls is that the ongoing supply situation will only intensify as the year goes on and output increases.”
Beauchamp continued that while Iran’s production hasn’t topped the list of Wall Street’s oil supply concerns, the timing of a deal with the nation just a day after the wraps were put on Greece’s debt negotiations is likely to provide fuel to the global equity bounce.
News of the Iran deal also initially dented European equity markets, though they bounced back before the close of trade. The Euro Stoxx 50, which tracks large-cap companies in the eurozone closed up 0.38% to 3604. Meanwhile, the German Dax rose 0.21% to 11508, the French CAC 40 gained 0.61% to 5028, while the UK’s FTSE 100 moved 0.16% lower to 6748.
Elsewhere in commodities, gold prices fell 0.16% to $1,153 a troy ounce.
Meanwhile, focus on Wall Street shifted back home on Tuesday as traders monitored the kick off to second-quarter bank earnings season with JPMorgan Chase (JPM) results. The nation’s biggest bank by assets revealed earnings per share of $1.54 on revenue of $24.53 billion, handily beating expectations for $1.44 a share on revenue of $24.51 billion. Shares jumped more than 1% in pre-market trading on the heels of the earnings release.
Wells Fargo (WFC), meanwhile, revealed mixed 2Q results on Tuesday. The nation’s fourth-largest bank by assets reported adjusted earnings per share of $1.03, matching expectations. Revenue, though, came in at $21.3 billion, shy of estimates for $21.7 billion. The bank’s shares slumped nearly 1% in pre-market action.
Johnson & Johnson (JNJ) also unveiled a beat in the second quarter. The consumer products company reported adjusted profits per share of $1.71, topping expectations for $1.68. Sales came in at $17.8 billion, beating estimates for $17.76 billion. The company’s shares saw a boost from the results in the pre-market.
As Federal Reserve Chief Janet Yellen continues to reiterate, the central bank will continue to closely monitor economic data out of the U.S. before it makes a final decision about when to raise interest rates. While many on Wall Street see the first rate hike coming either in September or December, Tuesday’s economic data could put a damper on that forecast.
Retail sales data from June came in unexpectedly weak: The Commerce Department reported sales fell 0.3% for the month, missing Wall Street’s prediction for a 0.2% pickup. Excluding the volatile auto component, sales saw a bigger discrepancy of a 0.1% decline compared to expectations for a 0.5% pick up.
Barclays noted on Tuesday despite softness in core categories including clothing and non-store retailers, general merchandise stores notched a second-straight month of sales, while personal care stores showed “modest” improvement.
“The decline in June retail sales follows solid increases across many categories in May, and does not materially change our outlook for consumption growth,” a Barclays note read. “Furthermore, the data are reported in nominal terms and we have little available data to isolate price effects until Friday’s CPI release.”
Import and export prices didn’t help brighten the economic snapshot. The Labor Department reported export prices for June slumped 0.2% compared to a 0.1% expected climb. Import prices, meanwhile, also fell 0.1% for the month compared to a 0.1% increase.
In corporate news, Chinese-owned Tsinghua Unigroup is reportedly preparing an offer to buy U.S. chip maker Micron Technology (MU) in a $23 billion bid. A spokesperson for the American company told FOX Business the company does not comment on rumor or speculation, but added “we can confirm we have not received an offer.” Shares of Micron jumped nearly 9% in recent trading after news of the potential deal was first reported by the Wall Street Journal Monday night.
In currencies on Monday, the euro rose 0.03% against the U.S. dollar. The yield on the benchmark 10-year U.S. Treasury note fell 0.027 of a percentage point to 2.403. Bond yields move in the opposite direction of prices.
Investors continued to keep an eye on China, where the nation continues to grapple with extreme volatility in the face of a recent massive selloff. On Tuesday the Shanghai Composite index fell 1.16% to 3924. Elsewhere in Asia, Hong Kong’s Hang Seng slid 0.41% to 25120, while Japan’s Nikkei added 1.47 % to 20385.