Here are five things you must know for Tuesday, July 27:
1. — Stock Futures Fall Ahead of Tech Earnings
Stock futures declined Tuesday as earnings season kicks into another gear with reports from mega-cap tech companies and investors await the Federal Reserve’s outlook for stimulus.
Stocks also were unsettled by the third consecutive session of heavy selling in China amid Beijing’s crackdown on tech and education companies.
Contracts linked to the Dow Jones Industrial Average fell 91 points, S&P 500 futures were down 8 points and Nasdaq futures declined 2 points.
The yield on the benchmark 10-year Treasury fell Tuesday to 1.249% as investors awaited the Fed’s policy update. The central bank’s two-day meeting begins Tuesday and ends Wednesday with a statement followed by a press conference from Fed Chairman Jerome Powell.
“We expect Jay Powell to reiterate that the tapering discussion is underway, but that it’s too soon to reveal a specific date on when the initial curtailment of asset purchases will begin,” said Danielle DiMartino Booth, CEO and chief strategist of Quill Intelligence. “Because home prices have risen at a blistering double-digit pace for 13 straight months, there is a risk of a dissent on the (Federal Open Market Committee) in this week’s meeting.”
Stocks finished higher Monday and the three major stock exchanges closed at record highs Monday as Wall Street readied for a big week of earnings. Apple (AAPL) – Get Report and Alphabet (GOOGL) – Get Report, the parent company of Google, will be reporting earnings after Tuesday’s closing bell.
2. — Tesla Rises After Quarterly Profit Tops $1 Billion
Tesla (TSLA) – Get Report shares were rising more than 2% in premarket trading Tuesday after the electric vehicle company reported second-quarter earnings that topped analysts’ estimates and net income surpassed $1 billion.
Adjusted earnings in the quarter were $1.45 a share, well ahead of Wall Street estimates of 98 cents. Tesla has reported a profit for eight straight quarters.
Second-quarter revenue at Tesla rose 98% from last year to a record $11.96 billion, firmly ahead of analysts’ forecasts of $11.3 billion. Gross automotive margins were 28.4%.
Tesla CEO Elon Musk cautioned in an investor call that the global shortage in semiconductor supplies remains “quite serious” and could impact production rates over the second half of the year. He added that volume growth will depend on the availability of other parts in the global supply chain.
“The global chip shortage situation remains quite serious,” Musk said on the call. “It does seem like it’s getting better, but it’s hard to predict.”
Musk also said Monday he would no longer participate in regular earnings calls, unless he had “something really important to say.”
Tesla rose 2.31% to $672.80 in premarket trading Tuesday.
3. — Tuesday’s Calendar: Apple, Alphabet, Microsoft and AMD Earnings
Earnings reports are expected Tuesday from Apple (AAPL) – Get Report, Microsoft (MSFT) – Get Report, Alphabet (GOOGL) – Get Report, Visa (V) – Get Report, Starbucks (SBUX) – Get Report, 3M (MMM) – Get Report and Advanced Micro Devices (AMD) – Get Report.
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The economic calendar in the U.S. Tuesday Durable Goods Orders for June at 8:30 a.m. ET, the Case-Shiller Home Price Index for May at 9 a.m. and Consumer Confidence for July at 10 a.m.
The Federal Reserve’s two-day meeting begins Tuesday, with a policy statement to be issued Wednesday afternoon.
4. — Intel Unveils Plan to Catch Rivals TSMC and Samsung
Intel (INTC) – Get Report was trading lower early Tuesday after the world’s biggest semiconductor company unveiled a plan to catch rivals Taiwan Semiconductor Manufacturing (TSM) – Get Report and Samsung Electronics by 2025.
“Building on Intel’s unquestioned leadership in advanced packaging, we are accelerating our innovation roadmap to ensure we are on a clear path to process performance leadership by 2025,” Intel CEO Pat Gelsinger said during the “Intel Accelerated” event on Monday. “We are leveraging our unparalleled pipeline of innovation to deliver technology advances from the transistor up to the system level. Until the periodic table is exhausted, we will be relentless in our pursuit of Moore’s Law and our path to innovate with the magic of silicon.”
The company announced it would begin building chips for Qualcomm (QCOM) – Get Report using 20A process technology. Qualcomm, the biggest maker of smartphone chips, has used Taiwan Semi and Samsung in the past to build
Intel shares fell 1.97% to $53.24 in premarket trading.
5. — Lucid Motors Falls After Solid Debut
The stock fell 2.05% to $26.28 early Tuesday. The stock closed at $26.83 on Monday.
Lucid’s stock market listing follows the close Friday of the merger between special purpose acquisition company Churchill Capital, a blank check company started by investment banker Michael Klein.
The startup received about $4.4 billion in cash from the transaction, valuing Lucid at about $24 billion.