New York Stock Market Rises Early Ahead of Tesla and Other Earnings Reports

The three major indices of the U.S. New York stock market showed an early rise on the 19th (local time) as investors awaited the second-quarter earnings reports of major companies such as Tesla and Netflix. The Dow Jones Industrial Average, composed of blue-chip stocks, is currently continuing its rally for the eighth consecutive trading day, supported by better-than-expected earnings from large banks. After the market closes today, earnings reports from Tesla, Netflix, IBM, and others will be released.

At around 10:07 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 35,186, up 234.94 points (0.67%) from the previous close. The S&P 500, which focuses on large-cap stocks, rose 19.26 points (0.42%) to 4,574, while the tech-heavy Nasdaq index was up 34.85 points (0.24%) at 14,388.

Currently, nine of the 11 sectors in the S&P 500, excluding materials and technology stocks, are all rising. In particular, utilities, real estate, energy, and health-related stocks are recording gains in the 1% range. Carvana surged about 23% after announcing an agreement with creditors to reduce $1.2 billion in debt. Goldman Sachs showed a 1% rise despite reporting second-quarter net income below expectations before the market opened. Tesla, which is scheduled to report earnings today, is up nearly 1%. Microsoft (MS), which hit an all-time high yesterday, showed a slight decline after extending the merger deadline with Activision Blizzard from the original deadline of yesterday to mid-October. Joby Aviation fell more than 12% after JP Morgan downgraded its investment rating.

[Image source=Reuters Yonhap News]

Investors are closely watching the earnings reports of major companies today as the second-quarter earnings season unfolds. Last week, inflation indicators such as the Consumer Price Index (CPI) showed a clear easing trend, which reduced concerns about Federal Reserve (Fed) tightening, shifting investors' focus to corporate earnings. The better-than-expected earnings of large banks until yesterday also contributed to spreading expectations of a soft landing, where inflation can be lowered without a recession. However, Goldman Sachs, which released earnings before the market opened today, reported second-quarter earnings per share of $3.08, falling short of the market estimate of $3.18.

While the net income of S&P 500-listed companies is expected to decline by more than 7% year-over-year in the second quarter of this year, the early earnings season atmosphere has been smooth so far. According to FactSet, 78% of S&P 500 companies that have reported earnings so far have exceeded expectations. Economic media CNBC reported that this "strengthens the soft landing scenario" and that momentum was gained following encouraging inflation data last week.

In the afternoon, earnings reports from big tech companies attracting investor attention, such as Tesla and Netflix, are scheduled. The market expects Tesla’s second-quarter revenue to be $24.88 billion and earnings per share to be 83 cents. Although second-quarter new vehicle deliveries hit a record high, some evaluations attribute this to price cuts, so investors are focusing on margins. Meanwhile, Netflix’s current market consensus is revenue of $8.29 billion and earnings per share of $2.85. Investors are expected to closely monitor Netflix’s subscriber numbers, which were counted at 232.5 million worldwide at the end of the first quarter.

The U.S. housing starts for June, released today, fell 8.0% from the previous month. Contrary to the initial forecast of a 7.2% increase, the figure dropped significantly. The number of new housing permits, an indicator that gauges future housing market trends, also decreased by 3.7% compared to the previous month.

In the New York bond market, the yield on the U.S. 10-year Treasury note is around 3.78%, while the 2-year Treasury yield, sensitive to monetary policy, is around 4.75%. The dollar index, which shows the value of the dollar against the currencies of six major countries, rose more than 0.4% from the previous close to 100.37.

Fed officials have entered a blackout period ahead of the July Federal Open Market Committee (FOMC) regular meeting scheduled for the 25th-26th, refraining from public comments. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) futures market currently sees the possibility of a rate hold in September as the most likely scenario following a baby step rate hike in July.

European stock markets are showing gains. The UK FTSE index surged more than 2% as the UK Consumer Price Index (CPI) inflation rate fell to its lowest in 15 months. The German DAX index is trading up 0.10%, and the French CAC index is up 0.36%.