#PreMarket Primer: Wednesday, July 16: Yellen Hints At Sooner Than Expected Rate Hike
U.S. employment figures became a lot more important on Tuesday after Federal Reserve Chair Janet Yellen said the US central bank would consider raising its interest rate sooner if the job market improves ahead of expectations.
Speaking before Congress, Yellen defended the bank's accommodative stance, saying that the U.S.’ recovery was still in progress and that the economy was not yet ready to stand on its own.
However, Yellen did admit that the bank was open to a sooner than expected rate hike if jobs data improves more quickly than anticipated.
In other news around the markets:
- European policymakers will meet on Wednesday to discuss whether or not to approve a new round of sanctions against Moscow because of the Kremlin’s lack of effort in diffusing the crisis in Ukraine. The new round of sanctions, expected to be approved later in the day, will target companies linked to the conflict in Ukraine rather than individuals tied to the government.
- More evidence that Beijing’s stimulus efforts were paying off came in the form of GDP data on Wednesday. The report showed that China’s economy expanded 7.5 percent in the second quarter, surpassing expectations for 7.4 percent growth. The figure helped boost confidence as it indicates that the nation’s economy is getting back on track after months of lackluster economic reports.
- Research firm Counterpoint released the results of a survey which showed that Samsung Electronics’ market share in the smartphone space is slowly slipping away. The company is losing customers to cheaper rivals and will likely see a decline in purchases once Apple launches its new iPhone 6. Samsung is still nursing wounds from a poor reception of the Galaxy S5, as it didn’t meet consumer expectations.
- Apple and IBM announced that the former rivals will team up in the mobile device space in order to help both companies expand their reach in the marketplace. The Wall Street Journal reported that two will work together to create easy to use business apps and plan to sell iPhones and iPads to IBM’s corporate customers.
Asian markets were mostly lower with the exception of the KOSPI and the Hang Seng Index, which gained 0.04 percent and 0.27 percent respectively. The NIKKEI was down 0.10 percent, the Shanghai composite lost 0.15 percent and the Shenzhen composite was down 0.76 percent.
European markets were up across the board; the UK’s FTSE rose 0.89 percent, the STOXX 600 gained 1.02 percent, the DAX was up 1.10 percent and the CAC 40 rose 1.29 percent.
Energy futures were higher; Brent futures gained 0.35 percent and WTI futures were up 0.79 percent. Gold was up 0.10 percent, silver declined 0.52 percent, while industrial metals were mostly higher. Copper gained 0.03 percent, aluminum rose 0.93 percent and tin was up 0.07 percent.
The euro was on the decline on Wednesday, falling 0.29 percent against the dollar, 0.23 percent against the yen and 0.20 percent against the pound. The dollar was flat against the yen, but gained 0.21 percent against the franc and 0.20 percent against the Australian dollar.
Notable earnings released on Tuesday included:
- J P Morgan Chase (NYSE: JPM) reported second quarter EPS of $1.59 on revenue of $24.45 billion, compared to last year’s EPS of $1.60 on revenue of $25.96 billion.
- Johnson & Johnson (NYSE: JNJ) reported second quarter EPS of $1.66 on revenue of $19.50 billion, compared to last year’s EPS of $1.48 on revenue of $17.88 billion.
- Intel Corporation (NASDAQ: INTC) reported second quarter EPS of $0.55 on revenue of $13.80 billion, compared to last year’s EPS of $0.39 on revenue of $12.81 billion.
- Goldman Sachs (NYSE: GS) reported second quarter EPS of $4.10 on revenue of $9.13 billion, compared to last year’s EPS of $3.70 on revenue of $8.61 billion.
- Yahoo! (NASDAQ: YHOO) reported second quarter EPS of $0.37 on revenue of $1.04 billion, compared to last year’s EPS of $0.35 on revenue of $1.07 billion.
Stocks moving in the Premarket included:
- Intel (NASDAQ: INTC) was up 5.01 percent in premarket trade after rising 2.99 percent over the past week.
- Apple (NASDAQ: AAPL) rose 2.04 percent in premarket trade after losing 1.17 percent on Tuesday.
- International Business Machines (NYSE: IBM) gained 1.95 percent in premarket trade after falling 0.72 percent on Tuesday.
- Yahoo! (NASDAQ: YHOO) was down 1.83 percent in premarket trade after gaining 3.13 percent over the past five days.
Notable earnings releases expected on Wednesday include:
- Bank of America (NYSE: BAC) is expected to report second quarter EPS of $0.30 on revenue of $21.71 billion, compared to last year’s EPS of $0.32 on revenue of $22.73 billion.
- eBay (NASDAQ: EBAY) is expected to report second quarter EPS of $0.69 on revenue of $4.38 billion, compared to last year’s EPS of $0.63 on revenue of $3.88 billion.
- Abbott Laboratories (NYSE: ABT) is expected to report second quarter EPS of $0.51 on revenue of $5.53 billion, compared to last year’s EPS of $0.46 on revenue of $5.45 billion.
- U.S. Bancorp (NYSE: USB) is expected to report second quarter EPS of $0.77 on revenue of $4.92 billion, compared to last year’s EPS of $0.76 on revenue of $4.95 billion.
- PNC Financial Services (NYSE: PNC) is expected to report second quarter EPS of $1.78 on revenue of $3.82 billion, compared to last year’s EPS of $1.99 on revenue of $4.06 billion.
Notable economic releases due out on Wednesday include U.S. industrial production, U.S. oil inventory data, the British unemployment rate and U.S. PPI.
For a recap of Tuesday’s market action, click here.
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