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Stock futures fell Tuesday morning as tensions between the U.S. and China increased ahead of an expected visit to Taiwan by House Speaker Nancy Pelosi.
Futures tied to the Dow Jones Industrial Average were 144 points lower, or 0.5%. S&P 500 futures slid 0.7%, and Nasdaq 100 futures dropped 0.8%.
Pelosi was expected to visit Taiwan and spend Tuesday night there, Reuters reported, citing sources. Leading up to the trip, Chinese officials threatened to take action is Pelosi moved forward with the visit. Pelosi would become the first House Speaker since Newt Gingrich in 1997 to visit Taiwan.
“We would like to tell the United States once again that China is standing by, the Chinese People’s Liberation Army will never sit idly by, and China will take resolute responses and strong countermeasures to defend its sovereignty and territorial integrity,” Chinese foreign ministry spokesman Zhao Lijian said in a daily briefing Monday.
Traders are also awaiting another raft of earnings from companies such as Starbucks, PayPal, Caterpillar and Advanced Micro Devices.
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Tuesday’s moves came after the major averages fell on the first day of August. The S&P 500 shed 0.28% to end at 4,118.63 while the Nasdaq Composite inched 0.18% lower and closed at 12,368.98. The Dow Jones Industrial Average slipped 46.73 points, or 0.14%, to end at 32,798.40. Last month, the major averages posted their biggest one-month gains since 2020.
“I think for sure it remains a bear market bounce,” Kevin Simpson of Capital Wealth Planning told CNBC’s “Closing Bell: Overtime” on Monday. “… I think it was awesome the way the markets traded in July, but I think we’re not through any type of capitulation. The headwinds are just too rampant.
On the economic data front, investors this week are awaiting the July nonfarm payrolls report slated for release Friday for further clues into the state of the economy and the job market. More earnings data is due out Tuesday with reports from Starbucks, PayPal, Caterpillar, Advanced Micro Devices and more.
Oil major BP boosts dividend as quarterly profits jump on high commodity prices
U.K. oil giant BP boosted its dividend on Tuesday as it posted bumper second-quarter profits, benefitting from a surge in commodity prices.
Second-quarter underlying replacement cost profit, used as a proxy for net profit, came in at $8.5 billion. The soaring profits gave BP room for a 10% increase in its quarterly dividend payout to shareholders, raising it to 6.006 cents per ordinary share.
European stocks retreat, tracking global risk-off sentiment
European markets pulled back slightly on Tuesday, tracking risk-off sentiment globally as investors assess whether last month’s rally has further to run.
The pan-European Stoxx 600 dropped 0.6% by mid-morning in London, with tech stocks shedding 2.1% to lead losses as almost all sectors and major bourses slid into the red. Telecoms gained 0.6%.
Earnings remain a key driver of individual share price movement. BP, Ferrari, Maersk and Uniper were among the major European companies reporting before the bell on Tuesday.
Chinese stocks drop as tensions rise over Pelosi visit
Stock futures open flat
Stock futures opened flat in overnight trading on Monday.
Futures tied to the Dow Jones Industrial Average inched 0.06% lower, or 21 points. S&P 500 futures and Nasdaq 100 futures dipped 0.06% and 0.01%, respectively.
— Samantha Subin
The upside from here is limited over the next few months, says Truist’s Lerner
Investors overallocated toward stocks should consider using the current market conditions to trim back their positions as the upside for equities is limited going forward, says Keith Lerner, co-chief investment officer at Truist.
According to Lerner, the upside for the market over the next few months is likely capped in the 3% to 5% range, but the downside could exceed that amount.
“The market’s been very resilient, no doubt, and maybe it stays that way for a little bit, but we don’t see the risk-reward as that compelling here,” he said.
This by no means is an indication of the top of the market and equities could squeeze higher, but it is an opportunity to reallocate exposure after last month’s strong market rally, Lerner added.
–Samantha Subin
Pinterest shares pop 21% as Elliott Management reveals position as largest investor
Pinterest shares popped more than 21% after the company posted stronger-than-expected user numbers and Elliott Management revealed it’s the largest shareholder in the image-sharing company.
Activist investor Elliott said in a statement that it has “conviction in the value-creation opportunity” at Pinterest, calling the social media company a “highly strategic business with significant potential for growth.”
“As the market-leading platform at the intersection of social media, search and commerce, Pinterest occupies a unique position in the advertising and shopping ecosystems, and CEO Bill Ready is the right leader to oversee Pinterest’s next phase of growth,” Elliott wrote.
Despite the stock move, Pinterest missed estimates for the second quarter on the top and bottom lines, Monthly active users for the period came in 2 million above estimates.
— Samantha Subin
