Market Wrap-up for July 13th: Earnings Season Kicks Off

Earnings season will kick off this week, with a number of blue chips set to take the stage on Tuesday and Wednesday. Across the pond, European leaders were locked in meetings for 17 hours on Sunday, with a bailout deal finally coming to fruition in the early hours. Requesting a €53.5 billion loan, Prime Minister Tsipras received a three year bailout estimated at €86 billion. Terms will need to be approved by the European and Greek Parliaments. Market commentary was mixed with a number of analysts’ citing the damaging effects the agreement would have on European relations.

Goldman Sachs over the weekend highlighted that the recent Chinese equity market pullback was more like a ‘fast and furious correction’ than a ‘crash’. Although positive on the outlook, the investment bank still believes that the market could sell off a further 400 million renminbi. The Shanghai Composite has rallied over 10% since stabilization measures were implemented last week.

Macro-wise, a host of data will be released including PPI, Retail Sales, Initial Claims, CPI, Building Permits and Housing Starts. The Fed will comment on the Beige Book on Wednesday at 2pm.

The Dow looks set to follow European markets with the futures pointing to a 0.7% rise on the open. News that Greece had agreed to bailout terms over the weekend, helped subdue investors’ concerns. The Treasury Budget for June will be announced at 2pm with the market expecting a $41.2 billion surplus.

• MPLX LP (MPLX ) announced their purchase of MarkWest Energy Partners LP premarket Monday with a $15.8 billion price tag put on the deal. MPLX has a dividend yield of 2.38%.
• Comcast (CMCSA) launched their $15 a month streaming service over the weekend, with the company hinting at a full nationwide rollout next year. CMCSA has a dividend yield of 1.58%.
• Halliburton (HAL ) confirmed over the weekend that they would agree to antitrust review period demands from the Justice Department. This is in relation to the merger of the company with Baker Hughes. HAL has a dividend yield of 1.74%.

Earnings will take prime position on Tuesday with Wells Fargo, Yum Brands, JP Morgan and Johnson & Johnson expected to report. Economically, Retail Sales will be released before the market opens with a 0.3% rise expected. This would be an adjustment of 0.9% from the previous period. Export and Import Prices will also be announced during the session.

• Johnson & Johnson (JNJ ) is set to release earnings before market on Tuesday with an estimated EPS of $1.68 per share. JNJ has a dividend yield of 3.01%.
• JP Morgan (JPM ) will announce its quarterly earnings during the morning session, with the market factoring in an EPS of $1.44. JPM has a dividend yield of 2.62%.

Leading up to the Fed’s Beige Book in the afternoon, key economic data including the Producer Price Index and Industrial Production data will be released. PPI is forecast to come in below the previous period at 0.2%. Core PPI, which excludes food, energy and trade is expected to remain at 0.1%.

• Bank of America (BAC ) could report earnings of 36 cents per share when the company releases its quarterly results before market on Wednesday. BAC has a dividend yield of 1.20%.
• Intel Corp (INTC ) which has a dividend yield of 1.74%, is expected to release earnings after market close with an EPS estimate of 51 cents per share.

Investors will be cautiously looking for signs of a recovery in Initial Jobless Claims, with the market factoring in 282,000 for the period.

• Schlumberger (SLB ) which has a dividend yield of 2.38%, is expected to announce quarter earnings of $0.79 per share. In June, Credit Suisse downgraded their 2016 forecast with a target full year EPS of $3.50.

Key economic data to be released on Friday included CPI, Building Permits, and Housing Starts. Investors will watch for changes in inflation and how this could affect the Fed’s monetary policy decision.

• General Electric (GE ) which recently divested its lending business, will report its quarter earnings on Friday. Analysts have weighed in with a $0.3 EPS forecast. GE has a dividend yield of 3.50%.

Greece’s decision to agree on bailout terms could help support the markets early in the week, with European leaders expected to meet on Wednesday. Investors will be closely watching for earnings surprises, with Tuesday and Wednesday the busiest reporting days.