U.S. stocks: Dow 17,000 hinges on Goldman, Yellen
Madrid (July 15) Stock futures stuck to the flat line on Tuesday, with the 17,000 level for the Dow Jones Industrial Average set to inch away as investors took in some bad economic news from Germany and awaited results from banking heavyweights Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.
The data front is also busy enough, with testimony from Federal Reserve Chairwoman Janet Yellen as well as retail sales and producer prices on the calendar.
Sara Murray and Jon Hilsenrath discuss Federal Reserve Chairwoman Janet Yellen's upcoming congressional testimony.
Futures for the Dow Jones Industrial Average DJU4 +0.04% fell 8 points to 16,970, while those for the S&P 500 index SPU4 -0.01% slipped 2.3 points to 1,968.70. Futures for the Nasdaq 100 NDU4 +0.06% rose 0.75 point to 3,920.
The German ZEW economic-sentiment reading on Tuesday fell far short of expectations, which weighed on Europe stocks XX:SXXP -0.14% , and triggered something of a pullback for U.S. stock futures.
Bank earnings are of immediate focus for investors, with Goldman Sachs GS +0.60% expected to report a dip in second-quarter net income to $3.05 a share, and a decline in revenue to $7.97 billion. Read 6 big-bank stocks with the best prospects
J.P. Morgan Chase JPM +2.06% is expected to see a fall in net income, to $1.29 per share, as well as a decline in revenue, to $23.7 billion for the quarter. Those bank earnings come a day after Citigroup Inc. C +0.79% posted a sharp drop in second-quarter profit, owing to a charge over a deal with the Justice Department, but still managed to top estimates.
Also in premarket, investors will get the latest read on retail sales. Economists polled by MarketWatch expected sales to rise 0.6% in June, after a modest 0.3% rise in May. The report is due at 8:30 a.m. Eastern Time.
There’s little evidence so far that consumers are ready to sustain a faster pace of spending. Joao Monteiro, analyst at Valutrades, said growth in retail sales will be “instrumental if the Fed intends to maintain its hawkish stance.”
Import prices will be released at 8:30 a.m. Eastern, as will the Empire State index for July, which gauges the health of manufacturers in the New York region.
Fed Chairwoman Yellen will give testimony to Congress on economy and monetary policy, on Tuesday and Wednesday. Investors will watch her comments closely for clues as to how she will manage monetary policy in the coming months. Yellen is expected to sound optimistic about the economy, but not so positive as to give a hint of any tightening, said analysts.
Stock futures were so far not showing any signs of building on Monday’s rebound for Wall Street., when gains for Citigroup and other banks helped the Dow industrials DJIA +0.66% close back above the 17,000 mark. The index rose 0.7% to 17,055.42, while the S&P 500 SPX +0.48% gained 0.5% to 1,977.10.
Asian markets did build on those gains, with the Nikkei 225 index JP:NIK +0.64% settling at a more than one-week high. Gold GCU4 +0.31% was also higher after Monday’s heavy losses, gaining $6.10, while oil CLQ4 -0.71% was pushing lower.
The British pound GBPUSD +0.45% rallied after U.K. inflation inched closer to the Bank of England’s 2% target. The euro EURUSD -0.04% fell sharply against the dollar after the German ZEW index dropped for a seventh month.
Among stocks to watch on Tuesday, Johnson & Johnson JNJ +0.34% is expected to report a profit of $1.54 per share, on revenue of $7.98 billion.
Yahoo Inc. YHOO +0.25% and Intel Corp. INTC +0.32% are both due to report after the close.
