U.S. stock futures saw a slight increase on Tuesday as investors anticipated market-moving earnings and the start of the Federal Reserve’s policy meeting. The market’s direction during the session could be influenced by the quarterly results from major companies such as Merck, Pfizer, PayPal, Procter & Gamble, and JetBlue, which are expected before the opening bell. Additionally, investors are keenly awaiting the earnings reports from Microsoft, Advanced Micro Devices, and Starbucks, set to be released after the market closes.

European markets experienced a slight uptick as earnings reports continued to influence stock movements and investors prepared for the European Central Bank’s upcoming decision. The euro zone’s second-quarter gross domestic product (GDP) showed a modest growth of 0.3%, according to a preliminary reading. The Stoxx 600 index was up by 0.2%, with most sectors trading in positive territory.

The Bank of Japan’s two-day monetary policy meeting begins on Tuesday, drawing traders’ attention for insights on benchmark interest rates and the bond-buying program. Additionally, Japan released its unemployment rate for July, which came in slightly lower than anticipated at 2.5%, compared to the forecasted 2.6%. This unexpected dip in unemployment could influence the central bank’s policy decisions, as it reflects a marginally stronger labor market than expected.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include, AGCO, AEP, AMT, ADM, ARCC, AWI, CCJ, CECO, CNP, CVLT, GLW, CTS, DTM, EXP, ECL, EPD, IT, GPK, HEES, HAYW, HUBB, ITW, INCY, IGT, IPGP, JBLU, LDOS, LGIH, LOGI, MRK, NEOG, PG, PYPL, PFE, PSX, PEG, RGEN, QSR, STNG, SOFI, SWK, SYY, UFPI, WSO, WYL, & ZBRA.  After the bell include ATEN, AKR, AMD, ACGL, AROC, ANET, AXS, AX, BLKB, BXP, CZR, CCCS, CRK, DENN, DV, EA, EQH, EQC, ESS, EXR, FSLR, FE, FRSH, HA, HLI, HURN, NARI, INFA, JBT, KAI, LMND, LC, LFUS, LYV, MSFT, MTCH, MOD, MDLZ, NMH, NOG, NEW, OI, OVV, PCRX, PFN, PINS, POWL, PROS, PSA, QRVO, SWKS, STAG, SBUX, SYK, TEX, UDR, WMBF, UNM, VOYA, WPC, WERN, WU & ZWS.

News & Technicals’

Delta has enlisted the services of renowned attorney David Boies to seek potential damages from CrowdStrike and Microsoft following a significant outage earlier this month, as reported by CNBC’s Phil Lebeau on Monday. The outage, which has been estimated to cost Delta between $350 million and $500 million, has had a notable impact on the airline. In response to the news, CrowdStrike shares were trading lower in extended trading. This legal move underscores the substantial financial repercussions of the outage and Delta’s determination to address the issue.

Shares of spirits giant Diageo fell sharply on Tuesday morning after the company reported its first sales decline since the onset of the pandemic. Despite this setback, Guinness, the popular Irish stout, drove an impressive 18% growth in overall net beer sales, thanks in part to its rising popularity among younger consumers and celebrity endorsements. Diageo, which also owns well-known brands such as Baileys, Smirnoff, Captain Morgan, Don Julio, and Tanqueray, is navigating this challenging period with a focus on its diverse portfolio.

British oil giant BP reported an underlying replacement cost profit of $2.8 billion for the second quarter, surpassing analyst expectations of $2.6 billion, according to an LSEG-compiled consensus. In response to this strong performance, BP announced a 10% increase in its dividend and an extension of its share repurchasing program. These moves reflect the company’s confidence in its financial health and commitment to returning value to shareholders.

Merck reported second-quarter revenue and adjusted earnings that exceeded estimates, driven by robust sales of its blockbuster cancer drug Keytruda, along with other treatments in its oncology and vaccines portfolios, and a new cardiovascular drug. The pharmaceutical giant also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion. However, it lowered its adjusted profit guidance to between $7.94 and $8.04 per share. These results come as Merck strategizes to mitigate the impact of Keytruda’s patent expiration in 2028, leveraging a series of new deals and key drug launches to sustain growth.

Anticipation of market-moving earnings and uncertainty with central bank decision on the horizon set the stage for challenging price volatility.  Big point morning gaps are possible as the market reacts to after the bell big tech reports. Plan your trading carefully avoiding the knee jerk reaction trading that commonly accompanies the fear of missing out as markets react to the data.

Trade Wisely,

Doug