Here are five things you need to know before Tuesday, July 27:
1. — Stock futures are ahead of tech earnings
Equity futures fell Tuesday as the earnings season kicks into another gear with reports from mega-cap tech companies and investors awaiting the Federal Reserve’s stimulus outlook.
Shares were also unsettled by the third consecutive session of heavy selling in China amid Beijing’s crackdown on technology and education companies.
Contracts linked to the Dow Jones Industrial Average were down 91 points, S&P 500 futures were down 8 points and Nasdaq futures were down 2 points.
The benchmark 10-year Treasury yield fell to 1.249% on Tuesday as investors waited for 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 Chair Jerome Powell.
“We expect Jay Powell to reiterate that the winding-down discussion is ongoing, but it’s too early to announce a specific date when the initial curtailment of asset purchases will begin,” said Danielle DiMartino Booth, CEO and Quill Intelligence’s chief strategist. “As house prices have risen in double digits for 13 consecutive months, there is a risk of dissent from the (Federal Open Market Committee) at this week’s meeting.”
Shares closed higher on Monday and the three major exchanges closed at record highs on Monday as Wall Street geared up for a big week of gains. Apple (AAPL) – Get Report and alphabet (GOOGL) – Get Report, Google’s parent company, will report earnings after Tuesday’s closing bell.
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2. — Tesla Soars After Quarterly Profit Hits $1 Billion
Tesla (TSLA) – Get Report shares rose more than 2% in premarket trading Tuesday after the electric vehicle company reported second-quarter profits that beat analysts’ estimates and net income was more than $1 billion.
Adjusted earnings for the quarter were $1.45 per share, well above Wall Street’s estimates of 98 cents. Tesla has already made a profit for eight quarters in a row.
Tesla’s second quarter revenue rose 98% year-over-year to a record $11.96 billion, well ahead of analysts’ forecasts of $11.3 billion. The gross margin in the automotive sector was 28.4%.
Tesla CEO Elon Musk warned in an investor call that the global shortage of semiconductor supplies remains “fairly serious” and could affect production speeds in 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 remains quite severe,” Musk said during the call. “It looks like it’s getting better, but it’s hard to predict.”
Musk also said on Monday that he would no longer participate in regular earnings talks unless he “had something very 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 expected from Apple on Tuesday (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 microdevices (AMD) – Get Report.
General Electric (TO GIVE) – Get Report reported adjusted earnings of 5 cents per share for the second quarter, 2 cents higher than analyst estimates.
United Parcel Services (UPS) – Get Report second quarter earnings and sales exceeded analysts’ forecasts.
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US economic calendar Tuesday at 8:30 a.m. ET for June durable goods orders, May’s Case-Shiller home price index at 9 a.m. and July consumer confidence at 10 a.m.
The Federal Reserve’s two-day meeting begins Tuesday, with a policy statement to be released Wednesday afternoon.
4. — Intel unveils plan to capture rivals TSMC and Samsung
Intel (INTC) – Get Report traded lower Tuesday after the world’s largest semiconductor company unveiled a plan to trap rivals Taiwan Semiconductor Manufacturing (TSM) – Get Report and Samsung Electronics by 2025.
“Building on Intel’s undisputed leadership in advanced packaging, we are accelerating our innovation roadmap to ensure we are on a clear path to process performance leadership by 2025,” said Intel CEO Pat Gelsinger at the “Intel Accelerated” – event on Monday. “We are leveraging our unparalleled pipeline of innovation to deliver technological advances from the transistor 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 start building chips for Qualcomm (QCOM) – Get Report using 20A process technology. Qualcomm, the largest smartphone chip maker, has used Taiwan Semi and Samsung to build in the past
Intel also said that Amazon.com’s (AMZN) – Get Report AWS cloud computing unit will use the chipmaker to package its internal processors.
Intel shares fell 1.97% to $53.24 in premarket trading.
5. — Lucid Motors Drops After Solid Debut
Shares of Lucid Motors (LCID) – Get Report fell in premarket trading after electric vehicle startups rose nearly 11% on their trading debut.
The stock fell 2.05% to $26.28 on Tuesday. The stock closed Monday at $26.83.
Lucid’s stock listing follows the closing Friday of the merger between the special-purpose company Churchill Capital, a blank check company founded by investment banker Michael Klein.
The startup received approximately $4.4 billion in cash from the transaction, valuing Lucid at approximately $24 billion.