Benzinga Market Primer, Friday July 19

Futures Slide On Weak Earnings

U.S. equity futures slid overnight following weak earnings reports from tech giants Microsoft MSFT and Google GOOG. Both companies reported top and bottom line misses.

Top News

In other news around the markets:

• Detroit finally, after years of fiscal troubles, declared the nation's largest ever municipal bankruptcy. The move will allow the city to freeze pension payments and adjust measures such as standard of living increases to help plug budget holes.


• Moody's upgraded its outlook on the U.S. government to stable from negative and maintained the U.S. at a Aaa rating. They noted that if the deficit does not get under control then it could prompt a downgrade.


• S&P 500 futures fell 2.6 points to 1,678.00.


• The EUR/USD was lower at 1.3103.


• Spanish 10-year government bond yields fell 1 basis point to 4.65 percent.


• Italian 10-year government bond yields fell 1 basis point to 4.4 percent.


• Gold rose 0.21 percent to $1,288.20 per ounce.

Asian Markets

Asian shares were lower overnight following the weak U.S. earnings after the bell, which are described in detail below. The Japanese Nikkei 225 Index declined 1.48 percent and the Topix Index fell 0.82 percent. In Hong Kong, the Hang Seng Index rose 0.08 percent while the Shanghai Composite Index declined 1.52 percent in China. Also, the Korean Kospi fell 0.22 percent and Australian shares lost 0.43 percent.

European Markets

European shares were also lower overnight on very little news on the economic front as earnings sentiment weighed. The Spanish Ibex Index declined 0.62 percent and the Italian FTSE MIB Index fell 0.16 percent. Meanwhile, the German DAX fell 0.53 percent and the French CAC 40 Index lost 0.56 percent while U.K. shares declined 0.52 percent.

Commodities

Commodities were mixed overnight as oil pulled back from recent highs. WTI Crude futures fell 0.19 percent to $107.83 per barrel and Brent Crude futures declined 0.17 percent to $108.51 per barrel. Copper futures fell 0.43 percent to $311.80 per pound. Gold was higher and silver futures fell 0.12 percent to $19.37 per ounce.

Currencies

Currency markets were volatile overnight as the dollar retraced some losses from earlier in the overnight session. The EUR/USD was lower at 1.3105 and the dollar fell against the yen. Overall, the Dollar Index fell 0.07 percent on weakness against the pound, the yen, and the Swiss franc.

Earnings Reported Yesterday

Key companies that reported earnings Thursday include:

• UnitedHealth UNH reported second quarter EPS of $1.40 vs. $1.25 expected on revenue of $30.4 billion vs. $30.5 billion expected.


• Verizon VZ reported second quarter EPS of $0.73 vs. $0.72 expected on revenue of $29.79 billion vs. $29.82 billion expected.


• Microsoft MSFT reported fourth quarter EPS of $0.66 vs. $0.75 expected on revenue of $19.9 billion vs. $20.79 billion expected.


• Google GOOG reported second quarter EPS of $9.56 vs. $10.79 expected on revenue of $14.11 billion vs. $14.42 billion.


• Johnson Controls JCI reported third quarter EPS of $0.83 vs. $0.75 expected on revenue of $10.8 billion vs. $10.99 billion. The company also announced an asset sale and hinted at further sales to come in the future.


• Union Pacific UNP reported second quarter EPS of $2.37 vs. $2.35 on revenue of $5.47 billion vs. $5.5 billion expected.

Pre-Market Movers

Stocks moving in the pre-market included:

• Google GOOG shares fell 3.92 percent pre-market on the earnings miss.


• Microsoft MSFT shares fell 6.38 percent as it also missed earnings estimates.


• Chipotle Mexican Grill CMG shares rose 5.34 percent pre-market after reporting stronger than expected earnings and raising full year sales guidance.


• Corelogic CLGX shares rose 0.86 percent pre-market as the company acquired a set of assets from Bank of America BAC, no terms disclosed.

Earnings

Notable companies expected to report earnings Friday include:

• Honeywell HON is expected to report second quarter EPS of $1.21 vs. $1.25 a year ago on revenue of $9.702 billion vs. $9.435 billion a year ago.


• Lab Corp. LH is expected to report second quarter EPS of $1.80 vs. $1.63 a year ago on revenue of $1.44 billion vs. $1.423 billion a year ago.


• Schlumberger SLB is expected to report second quarter EPS of $1.10 vs. $1.05 a year ago on revenue of $11.12 billion vs. $1045 billion a year ago.


• General Electric GE is expected to report second quarter EPS of $0.35 vs. $0.38 a year ago on revenue of $35.56 billion vs. $36.11 billion a year ago.

Economics

On the economics calendar Friday, there is no important data due out. Over the weekend, watch out for the Japanese upper house elections to set the tone for the overnight session heading into Monday's trading.

Good luck and good trading.

Tune into Benzinga's PreMarket Info show with Dennis Dick and Joel Elconin here.

For a recap of Thursday's market action, read Benzinga's daily market wrap here.