U.S. Stock Futures Near 15-Month Highs

U.S. stock futures held steady close to their 15-month highs on Tuesday morning, as investors eagerly awaited a wave of corporate earnings reports and the release of retail sales data. S&P 500 futures rose slightly by 1 point, while Dow Jones Industrial Average futures gained 10 points. However, Nasdaq 100 futures eased by 3 points. The previous day saw positive gains across the major indices, with the Dow Jones Industrial Average rising by 76 points, the S&P 500 increasing by 17 points, and the Nasdaq Composite gaining 131 points.

The focus of the day lies on the second-quarter earnings season, which is set to intensify over the coming sessions. The financial sector dominates the earnings reports for the day, with notable companies such as Bank of America, Morgan Stanley, BNY Mellon, Interactive Brokers, and Charles Schwab presenting their financial figures. Lockheed Martin stands out as an industrial outlier among the reports. Market participants hope that these earnings reports and management forecasts will justify the current market levels, which have reached their highest since April 2022, with the year-to-date gains of 17.8% for the S&P 500 and 36.1% for the Nasdaq Composite indices.

Investor sentiment has been bolstered by a recent decrease in implied borrowing costs, as the 10-year Treasury yield fell to 3.77% from over 4% just a week ago. This decline in borrowing costs raises hopes that the Federal Reserve may adopt a less aggressive stance in raising interest rates due to cooling inflation. Some analysts believe that monetary policy continues to be the primary driver of the markets, closely monitoring any information that could affect market dynamics. While interest rates are expected to remain the key factor for risk markets, the upcoming retail sales report for June, scheduled for release at 8:30 a.m., will provide insights into how U.S. consumers have responded to the Fed’s rate hike campaign.

In addition to the retail sales report, other economic updates to watch for on Tuesday include June industrial production and capacity utilization at 9:15 a.m. Eastern Time. At 10 a.m., business inventories for May and the home builder confidence index for July will be published, further shedding light on the current state of the U.S. economy. Despite positive retail sales and consumer spending this year, influenced by the Federal Reserve’s rate hikes and inflation, the outlook for the second half of 2023 remains uncertain, according to analysts.