Benzinga Market Primer, Tuesday July 17
U.S. equity futures rose early Tuesday as Moody's downgraded Italian banks by one to two notches last Thursday. Notable was Intessa Sanpaolo and Unicredit were each downgraded by two notches from A3 to Baa2, the same as the sovereign cut. S&P futures rose 5.4 points to 1352.80 and NASDAQ futures rose 11.5 points.
In other news:
- German Zew economic sentiment came in largely in line, reading -19.6 vs. -20 estimate and prior -16.9.
- Goldman Sachs believes that the euro will survive and that the currency zone will emerge stronger from the crisis
- The Bank of Spain Governor Linde said that Spain's economy will contract 1.5 percent in 2012 and that its biggest banks will not need bailouts, in a speech in Madrid.
- S&P 500 futures +5.4.
- NASDAQ futures +11.5.
- EUR/USD 1.2291.
- Gold $1,594.70.
- U.S. 10-Year Yield 1.487 percent.
- Spanish 10-Year Yield 6.872 percent.
- Italy 10-Year Yield 6.142 percent.
On Monday, Citigroup (NYSE: C) and Gannet (NYSE: GCI) both beat earnings expectations. Citigroup's stronger earnings followed J.P. Morgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) reporting strong earnings. On Tuesday, Goldman Sachs (NYSE: GS) is expected to report earnings, with analysts expecting $1.15 EPS compared to $1.85 a year ago. Other notable earnings are:
- Coca Cola (NYSE: KO) is expected to report 2Q EPS of $1.19 vs. $1.17 a year ago.
- CSX Corp. (NYSE: CSX) is expected to report 2Q EPS of $0.47 vs. $0.46 a year ago.
- Forest Labs (NYSE: FRX) is expected to report 2Q EPS of $0.24 vs. $1.04 a year ago.
- Intel (NASDAQ: INTC) is expected to report 2Q EPS of $0.52 vs. $0.54 a year ago.
- Johnson and Johnson (NYSE: JNJ) is expected to report 2Q EPS of $1.29 vs. $1.28 a year ago.
- Yahoo (NASDAQ: YHOO) is expected to report 2Q EPS of $0.23 vs. $0.18 a year ago.
Overnight, Asian shares were strong, following strength in U.S. markets Monday. China's Shanghai Composite Index rose 0.62 percent after touching its lowest level since March of 2009 Monday. Of note was the Hang Seng Index, which rose 1.75 percent in Hong Kong. European shares were mixed in early trading, with Spanish stocks notably outperforming. Spain's Ibex rose 0.96 percent and Italian shares rallied in tandem. English shares, measured by the FTSE 100, fell 0.45 percent on weak inflation data.
Commodities were rather strong Tuesday on the bullish sentiment. WTI oil futures rose 0.07 percent to $88.49 per barrel and Brent Crude futures rose 0.66 percent to $104.05 per barrel. Metal futures followed strength in energy, as copper futures rose 0.2 percent to $349.20 per pound. Gold futures rose to $1,594.70 per ounce and silver futures rose as well.
The dollar was notably weak over the past 24 hours, especially against the euro. The EUR/USD has rallied nearly 100 pips since early Monday to 1.2291. The dollar index fell 0.05 percent to 83.06. One notable mover was the EUR/AUD cross, which fell to new record lows after the Royal Bank of Australia issued its minutes from its last meeting.
In economics, the main event Tuesday is Federal Reserve Chairman Ben Bernanke speaking on Capitol Hill in his semi-annual monetary policy testimony, which begins at 10:00 am est. Traders will first get data on the Consumer Price Index at 8:30 am est followed by the Redbook at 8:55. Treasury International Capital Flows, or TIC Flows for short, are set to be released at 9:00 am and Industrial Production Data for June is due out at 9:15. Lastly, at 10:00 am, data on house prices is due from the NAHB.
Good luck and good trading.
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