US Stock Futures Retreat Ahead Of Earnings
US stock futures retreated early on late Sunday as the Dow and S&P 500 looked to cut a fourth straight week of gains as we enter the week packed with earnings reports. Although stock futures opened higher on Sunday evening, the Dow Jones was down 0.5% while S&P 500 futures and Nasdaq-100 futures were both down 0.3%.
It will be an interesting week to watch. Investors will be looking at the market’s own dynamics as more companies are reporting their earnings this week. There is tension within the market between the bubbly run-up of tech stocks and momentum names on the Nasdaq, and the broader market S&P 500. The Nasdaq outperformed the broader market and is up 17% year to date, but has lagged both the Dow and S&P 500 last week.
Many experts are beginning to anticipate a correction in the tech-centric index. This belief came after a recent surge of retail activities in stocks like Tesla (TSLA Stock Report). TSLA stock surged from $1,000 at the end of June to a high of $1,795 during last Monday’s session. It has since been about $300 per share lower from the peak.
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Congressional Testimony From Vaccine Developers
Moderna (MRNA Stock Report), AstraZeneca (AZN Stock Report), Johnson & Johnson (JNJ Stock Report), Merck (MRK Stock Report), and Pfizer (PFE Stock Report) are not the only biotechs or pharmaceutical companies developing vaccine candidates. However, they are the five tapped to participate in the government’s Operation Warp Speed program. The program is contributing resources to help the most promising vaccine candidates through the development process. Among these, Moderna is considered as the leader in the vaccine race. The company is expected to begin its phase 3 trial by the end of this month.
In its official announcement, the committee said that “We look forward to hearing from each of the companies about their research and development efforts, safety and efficacy standards and their ongoing preparations to manufacture and distribute an eventual vaccine.”
Week Packed With Earnings
Investors are also gearing up for a packed slate of quarterly earnings results this week. They will reflect the extent of the damage the pandemic has done to corporate profits. The second-quarter earnings season continues to wind down as the big names to report this week include Tesla, Microsoft (MSFT Stock Report), Amazon (AMZN Stock Report), IBM (IBM Stock Report), and Intel (INTC Stock Report). The Tesla earnings report is especially important. A profitable Q2 may push TSLA stock into the S&P 500 index. There are also other notable names reporting this week as well from the consumer space. They include Chipotle Mexican Grill (CMG Stock Report) and Coca-Cola (KO Stock Report). There will be tons of companies reporting their second quarter this week. And if you are looking to trade in this volatile week, there’s a lot to digest.
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Next Stimulus Package
With Congress returning from a more than two-week recess on Monday, lawmakers are set to begin discussions for another round of stimulus. This would be to provide relief to individuals and companies impacted by the coronavirus pandemic. What’s going to be in the new stimulus, you ask? There is no guarantee on which issues make the final cut. But here’s one likely scenario of what will be part of the new stimulus based on bipartisan overlap: From second stimulus checks, unemployment benefits, state/ local aid to liability protection for businesses.
On the other hand, what’s probably not included are payroll tax cuts, student loan forgiveness, and a $4,000 travel bonus. Many people are in need of such subsidies to carry on with their lives. This is as the coronavirus continues to ravage the US economy. No one can be sure of the amount of the stimulus for now. But some speculated that the amount will be in the $1.5- $2 trillion range.