Focus On Outlook And Earnings

A deluge of corporate earnings this morning
Is $1 trillion enough to bolster the country post pandemic?
The Fed's balance sheet is ballooning above $9 trillion
Equity Index futures

Equity Index futures

Monday's Close

E-mini S&P 500 Futures (September): Settled at 3232.25, up 28.25

E-mini Nasdaq-100 Futures (September): Settled at 10,675.25, up 216.25

U.S. benchmarks finished higher yesterday after strong technical support held. While the week begins to heat up, some of that enthusiasm dissipated amid overnight volatility. We are in the heart of earnings season, Congress faces off on stimulus, and the Federal Reserve is on deck.

We look to a deluge of corporate earnings this morning, less so for their 2nd quarter results and more for their outlook. Pfizer is up 3% premarket after reporting better than expected earnings coupled with an upbeat outlook to finish the year. Raytheon is also up 3% on strong results. However, McDonald’s and 3M are each down at least 2% after missing. Starbucks and AMD will headline after the close. 

Senate Republicans unveiled their $1 trillion plan to bolster the county post-pandemic. Is it enough? House Democrats calling for $3.5 trillion certainly don’t think so. They must now bridge the divide as remaining measures dry up ahead of the August recess. The Republican plan waters down some unemployment benefits because such hefty handouts disincentivize many workers. Markets though seemed to key off the ball moving forward yesterday and both sides agreeing Americans must receive at least a $1,200 stimulus payment.

Rates rose yesterday and had begun to extend overnight with risk assets broadly climbing. The U.S. Treasury auctioned 2-and 5-year Notes yesterday and auctions 7-year Notes today. The additional supply might be the culprit. But with the Federal Reserve policy meeting in focus, one must wonder if expectations for no rate hike until August 2022 and their balance sheet ballooning above $9 trillion is a bit overzealous. 

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