Morning Briefing - Futures moderately higher as investors weigh first set of earnings reports

Stocks are pointed toward modest gains ahead of Tuesday's opening bell after a sharp intra-day reversal saw big gains evaporate during Monday's session. Earnings from JP Morgan (JPM) and Citigroup (C) were better than expected while Delta Air Lines (DAL) and Wells Fargo (WFC) fell short of estimates. Wells Fargo also announced that it is lowering its quarterly dividend to 10 cents per share. The Dow Jones is up 0.55%, the Nasdaq is up 0.53%, the S&P is up 0.41%.

Today's Market Outlook

Neutral

 The S&P 500 futures trade 14 points, or 0.4%, above fair value as investors review the first batch of Q2 earnings after yesterday's market reversal. Futures have tracked sideways for most of the pre-market session.
JPMorgan Chase (JPM 99.49, +1.84, +1.9%) exceeded top and bottom-line expectations, which has outweighed a $9.3 billion yr/yr increase in provision for credit losses and a suspension of its share buyback program through at least the end of Q3. 

 Wells Fargo (WFC 34.48, -0.93, -3.7%) and Delta Air Lines (DAL 26.65, -0.17, -0.6%) both missed top and bottom-line estimates. Wells Fargo also announced plans to reduce its Q3 dividend. Citigroup (C 53.35, +1.15, +2.2%) is scheduled to report earnings relatively soon. 
On the data front, investors will receive the Consumer Price Index for June (Briefing.com consensus 0.5%) at 8:30 a.m. ET. Earlier, the NFIB Small Business Optimism Index increased to 100.6 in June from 94.4 in May.
U.S. Treasuries have ticked higher, pushing yields slightly lower. The 2-yr yield is down one basis point to 0.15%, and the 10-yr yield is down one basis point to 0.63%. The U.S. Dollar Index is down 0.1% to 96.40. WTI crude is down 0.9%, or $0.37, to $39.73/bbl.
In U.S. Corporate news:
  • JPMorgan Chase (JPM 99.49, +1.84): +1.9% after beating top and bottom-line estimates. The company also announced the suspension of repurchases at least through the end of Q3 and noted a provision for credit losses at $10.5 billion, up $9.3 billion from the prior year.
  • Wells Fargo (34.48, -0.93: -3.7% after missing top and bottom-line estimates and announcing plans to reduce its Q3 dividend.
  • Delta Air Lines (DAL 26.65, -0.17): -0.6% after providing mixed earnings results. Delta missed EPS estimates but beat revenue estimates. 
  • Fastenal (FAST 44.00, +0.62): +1.4% after beating top and bottom-line estimates. 
  • Travelers (TRV 114.25, +0.01): UNCH despite issuing downside Q2 guidance.
BEIJING (AP) — China’s trade improved in June in a fresh sign the world’s second-largest economy is recovering from the coronavirus pandemic. But its exporters face threats including tension with Washington and a possible downturn in U.S. and European demand.
Chinese imports rose 3% over a year earlier to $167.2 billion, rebounding from May’s 3.3% decline, customs data showed Tuesday. Exports edged up 0.4% to $213.6 billion, an improvement over the previous month’s 16.7% contraction.
Imports of U.S. goods surged 10.6% to $10.4 billion despite tariff hikes in a fight with Washington over trade and technology. Exports to the United States gained 1% to $39.8 billion.
China, where the pandemic began in December, was the first economy to start the struggle to revive normal business activity in March after declaring the virus under control. Manufacturing is recovering, but consumer spending is weak. Forecasters say exports are likely to slump as demand for masks and other medical supplies recedes and U.S. and European retailers cancel orders.
Leading indicators “suggest that exports will start to contract again before long,” Martin Rasmussen of Capital Economics said in a report.
Relations with the United States, China’s biggest national export market, have deteriorated to their lowest level in decades.
Disputes over Hong Kong, human rights and the South China Sea added to strains that began with a tariff war launched by the Trump administration in 2018 over Beijing's technology ambitions and trade surplus.
The two sides have announced sanctions on some prominent Chinese and U.S. political figures in a dispute over abuses in the northwestern region of Xinjiang, though it is unclear whether those officials will be affected.
President Donald Trump said Friday that work on the second stage of a deal aimed at ending the tariff war is a low priority because relations were “severely damaged” by Beijing’s handling of the pandemic.
_______________________________________________________
 When we find out if the real world is going to intrude on the stock market world," CNBC's Jim Cramer declared as the largest U.S. banks begin reporting their Q2 results. "If the banks can rally, then maybe we've gone 'through the looking glass,'" he said. "If the banks get hammered, things could get ugly." While investors should expect another big hit as lenders set aside more loan loss provisions, that could be offset by a boost in fee incomes from elevated investment banking and trading activity, as well as mortgage demand. Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) will all release earnings before the opening bell, followed by Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) later this week.
Futures rise after volatile session
U.S. stock futures moved higher in overnight trade following a stunning reversal on Monday as California rolled back its reopening plans, triggering worries about another coronavirus lockdown (see below). Contracts tied to the Dow, S&P 500 and Nasdaq are all up 0.4% as investors get ready for earnings reports from some of the nation's largest banks. A senior Trump administration official also announced that production of a potential coronavirus vaccine was expected to begin before the end of the summer following news that Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) were granted fast track designation by the FDA for two of the companies' four COVID-19 vaccine candidates.
Biggest reopening rollback in the U.S.
California is the latest to roll back reopening plans as the coronavirus continues to surge in some of the most populous U.S. states. Governor Gavin Newsom ordered a full shutdown of bars, movie theaters, museums and dine-in restaurants, while forcing gyms, barbers and places of worship to close in the state's hardest hit regions. The closures are similar to the recent, but less extensive, U-turns taken by Arizona and Texas. In addition to the statewide bans in California, school districts in Los Angeles and San Diego announced they would not reopen their buildings for students in the fall.
In a volatile session on Monday, shares of Tesla (NASDAQ:TSLA) closed down 3%, giving back an earlier 16% jump that had pushed the stock to a new all-time intraday high of $1,794.99. At one point Tesla's market cap reached $321B, briefly making it the 10th-largest U.S. stock by market value. As the company's valuation climbs higher, speculation is growing that it will soon join the S&P 500. In fact, Tesla CEO Elon Musk is now the seventh-richest person in the world, surpassing legendary investor Warren Buffett. TSLA +4.7% premarket.
Go deeper: Tesla short sellers may be key to stock's momentum.
Ford goes off-road with revived Bronco
Nearly a decade since plotting its return, Ford (NYSE:F) has unveiled a new retro-looking Bronco reminiscent of the rugged, boxy original from the 1960s. The new SUV will have two sizes: a smaller Bronco Sport to be released later this year, and two- and four-door versions arriving next spring and priced starting at $29,995, just $205 above a base Jeep (NYSE:FCAU) Wrangler. Reviving the Bronco is a key piece of Ford CEO Jim Hackett's turnaround plan, which is sharpening the company's focus on more-profitable pickup trucks (2021 F-150) and SUVs (the electric Mustang), while purging passenger cars from Ford's U.S. showrooms.
Beijing reports trade data as tensions rise
China's exports rose 0.5% in dollar terms in June from a year earlier, while imports climbed 2.7%, resulting in a trade surplus of $46.42B for the month (below the $59.3B surplus expected by economists). The figures also showed China's trade surplus with the U.S. widening to $29.41B, compared to $27.89B in May. Tensions between the countries have worsened this year, with President Trump blaming China for the pandemic, saying last week that he wasn't even thinking about Phase Two of the trade deal and formally rejecting Beijing's expansive claims in the South China Sea.
Go deeper: China to sanction Lockheed Martin over Taiwan arms sale.
More semiconductor dealmaking
SoftBank (OTCPK:SFTBY) is exploring alternatives including a full or partial sale or public offering of British chip designer Arm Holdings, which the Japanese conglomerate bought four years ago for $32B, WSJ reports. Goldman Sachs is advising the company on the review, which is still in the early stages. It isn't known how much interest industry players might have in Arm, but the division has announced plans to spin off its two IoT businesses to SoftBank - to focus on its core semiconductor business - while Apple's (NASDAQ:AAPL) recently announced in-house silicon is based on Arm architecture.
Skipping the checkout line
After opening its first Amazon Go stores to the public in 2018, Amazon (NASDAQ:AMZN) is doubling down on cashierless technology with innovative smart shopping carts. The Dash Carts are embedded with cameras, sensors, a weighing component and a smart display that automatically track a shopper's order, and allow for a digital checkout without a human cashier. The carts, designed for small- to mid-sized grocery trips, will come first to Amazon's grocery store in the Woodland Hills neighborhood of Los Angeles, which is slated to open in 2020.

What else is happening...
American Airlines (NASDAQ:AAL) to warn staff about potential furloughs.
Founder Jack Ma cuts stake in Alibaba (NYSE:BABA).
Luckin Coffee (NASDAQ:LK) ousts chairman Lu, names Guo as CEO.
KFC (NYSE:YUM) to close dine-in areas in Florida.
Apple (AAPL) shifts retail staff to remote work.
Pandemic will push up the already 'record high' corporate debt.
Monday's Key Earnings
PepsiCo's (NASDAQ:PEP) +0.3% as lockdowns boosted snack sales.
Today's Markets
In Asia, Japan -0.9%. Hong Kong -1.1%. China -0.8%. India -1.5%.
In Europe, at midday, London -0.5%. Paris -1.6%. Frankfurt -1.5%.
Futures at 6:20, Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -1.3% to $39.57. Gold -0.5% to $1804.40. Bitcoin -0.3% to $9196.
Ten-year Treasury Yield -1 bps to 0.63%
Today's Economic Calendar




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