Here are the key events taking place on Tuesday that could impact trading.
EARNINGS REPORTS RELEASED: Big financial firms kicked off a bumper week of earnings reports Monday. Goldman Sachs gained $7.39, or 2.5%, to $301.26 after reporting better-than-expected earnings. Synchrony Financial, which reported earnings per share that fell year over year but were better than analysts expected, gained 9 cents, or 0.3%, to $31.48. Bank of America finished up 1 cent, or less than 1%, after it said second-quarter profits declined 32%. Charles Schwab, which reported second-quarter profits that rose by 42%, lost 94 cents, or 1.5%, to $61.24.
HOME CONSTRUCTION REPORT: The Commerce Department is expected to say the number of new homes under construction in June rose 2% to a seasonally adjusted annual rate of 1.580 million in June when it releases its monthly report Tuesday. That’s after plunging 14.4% in May to a 13-month low of 1.549 million. For context, April’s reading of 1.810 million was the highest since June 2006. Permits for future construction, a good gauge of future housing activity, are anticipated to fall 2.7%, the third straight monthly drop, to 1.650 million in June, the lowest since October (January’s print of 1.899 million was the highest since May 2006). The report follows the NAHB’s housing market index, out Monday, that showed homebuilder sentiment plunging much more than expected this month. Higher borrowing costs are weighing heavily on housing, which could worsen an economic slowdown as policy makers raise interest rates to try and tame four-decade high inflation.
|I:DJI||DOW JONES AVERAGES||36247.87||+130.49||+0.36%|
|I:COMP||NASDAQ COMPOSITE INDEX||14403.972456||+63.98||+0.45%|
MARKET WATCH: The Dow Jones Industrial Average, which entered a correction on March 7, finished Monday’s moderately negative session a little more than 15.5% below its record closing high on Jan. 4. The S&P 500, which fell into a bear market on June 13 for the first time since early 2020, is down more than 20% from its record close on Jan. 3. The Nasdaq, which has been in a bear market since March 7, finished 29.25% below its peak on Nov. 19. The small-cap Russell 2000, which officially entered a bear market on Jan. 27, is nearly 29% below its high on Nov. 8. After several weeks of volatility on inflation, rate hike and recession worries, the major averages are still up more than 65% from their pandemic lows on March 23, 2020 (March 18, 2020, for the Russell 2000), led by the economically sensitive Dow Transports which have almost doubled since that time.
ECB EXPECTED TO RAISE RATES: The European Central Bank is expected to raise interest rates for the first time in 11 years at a meeting Thursday. The region's economy is feeling the effects of the war in Ukraine and an energy crisis more acutely than other economies. The Bank of Japan is expected to buck the trend among global central banks and keep rates unchanged on Thursday. The Federal Reserve has signaled it will raise interest rates by 0.75 percentage point for the second time in a row later this month. Central banks are raising interest rates rapidly, adding another cloud on the economy's horizon.
OVERSEAS GLOBAL MARKETS: Overseas, global markets were higher across the board. In Europe, the pan-continental Stoxx Europe 600 finished up 0.9%. In Hong Kong, the Hang Seng Index jumped 2.7% while in mainland China, the Shanghai Composite Index rose 1.6%. Markets in Japan were closed for a holiday.