Summary
Companies
Wall Street gains as investors await earnings
Packed earnings diary includes Tesla, more banks
Dollar, Treasury yields little changed
World equities fall after China data
China GDP up 0.8% q/q, monthly data mixed
NEW YORK, July 17 (Reuters) – U.S. stocks rose on Monday on expectations corporate earnings will exceed forecasts, but global shares and the dollar traded little changed after data showed the Chinese economy grew slower than anticipated.
China overnight reported growth of 0.8% in the second quarter, above the 0.5% forecast, but the annual pace was 6.3%, well below expectations for a reading of 7.3%. The data indicates China’s post-COVID boom is over, analysts said.
But fears earlier in the year of a U.S. hard landing have lessened as slower consumer inflation has brightened the outlook on Wall Street as companies begin to report second-quarter results. Inflation, however, is still above the Federal Reserve’s 2% target.
The tech-heavy Nasdaq led U.S. stocks higher, supported by megacap growth stocks including Apple, Nvidia and Tesla, ahead of quarterly results from industry heavyweights later this week.
Tesla Inc (TSLA.O) is due to report on Wednesday, followed by Bank of America Corp (BAC.N), Morgan Stanley (MS.N), Goldman Sachs Group Inc (GS.N) and Netflix Inc (NFLX.O) later this week.
“The hurdle rate for companies is a little bit higher than it’s been over the last couple of quarters but S&P 500 companies have been able to mostly surpass really low analyst estimates coming into the earnings season,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
“What the market is going to be looking for over the next few weeks is whether demand is holding up and are the corporate outlooks still generally positive for the rest of the year?”
James Ragan, director of wealth management research at D.A. Davidson in Seattle, said while earnings are likely to be better than expected, U.S. stocks are unlikely to go much higher given the S&P 500 index is trading at a relatively high 19.7 times forward earnings.
Second-quarter earnings are expected to decline 8.1%, according to Refinitiv data, down further than the 5.7% decline expected at the start of the month.
“We don’t see a great path for equities to go a lot higher from here. One reason is just their valuation overall,” he said. ”Our view is the estimates are still a bit aggressive, especially if we look ahead to 2024. We would not be surprised to see some earnings weakness over the balance of this year.”
Stocks in Europe closed lower, with the pan-regional STOXX 600 index (.STOXX) down 0.63% while MSCI’s gauge of stocks across the globe (.MIWD00000PUS), which is heavily weighted to U.S. megacaps, edged up 0.11% to a new 14-month high.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.22%, the S&P 500 (.SPX) gained 0.39% and the Nasdaq Composite (.IXIC) added 0.93%.
The dollar traded little changed against a basket of currencies after last…
Source from www.reuters.com