Article published at 9:10 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Crude oil prices jump amid intensifying Middle East conflict
- Bank earnings will grab headlines
- Apple sues OpenAI, claiming theft of trade secrets
There’s a lot on tap this week that could steer the markets down a number of paths, starting with the latest turn of events in the Middle East coupled with the official start to the earnings season and a handful of economic reports on the calendar.
The U.S. and Iran conflict took a menacing turn this past weekend, with the two carrying out military airstrikes against each other. It’s still unclear whether the Strait of Hormuz is open for commercial traffic. The U.S. says it is and Iran says it is not. Whatever the case, WTI crude oil prices that were mostly falling last week, climbed more than 3%, pushing over $74 a barrel in early trading.
In early trading today, all three major indices were treading close to the flatline with the S&P 500 falling 0.02% and the Nasdaq Composite backtracking by 0.87%. The Dow Jones Industrial Average was inching up by 0.21%.
Earnings and the comments that go with them will be the big story for the markets this week. The official kickoff of the earnings season starts this week when major U.S. banks begin to open their books on Tuesday. For the most part, Wall Street is looking for strong second-quarter earnings growth from the big banks, as well as many major companies that have raised their earnings guidance.
Investors will be listening for how healthy bank revenues have been and what’s happening with write offs for bad loans, which offers insight into the direction of consumer spending and overall financial health. On tap, too, are comments from JP Morgan’s Jamie Dimon, whose perspective often has more impact on investor sentiment than others.
On tap for Tuesday are results from JP Morgan, Goldman Sachs, Citigroup, Wells Fargo and Bank of America – all ahead of the opening bell. Morgan Stanley will report its results Wednesday morning. Johnson & Johnson is also on deck on Wednesday. Thursday’s lineup includes Taiwan Semiconductor, United Healthcare and Netflix.
Taiwan Semi reported record early results today, ahead of the official numbers later this week. The world’s largest chip maker and a major supplier for Nvidia, Apple and Advanced Micro Devices, reported a 35.5% surge in revenue equal to $74.99 billion, underscoring the robust demand for AI.
We’ll get a fresh look at inflation from the Consumer Price Index and the Producer Price Index on the economic calendar Tuesday and Wednesday, respectively. Weekly jobless claims are out on Thursday.
Also worth watching is the lawsuit Apple is pursuing against OpenAI and one of its top executives, claiming the ChatGPT creator “has been stealing Apple’s trade secrets and confidential information,” according to the Wall Street Journal. Shares of Apple were edging higher early on, and analysts believe they may hit a new fresh peak aside from the lawsuit.
Trading was mixed last week but all three major indices managed to end Friday’s session higher, though the Dow lost its four-week streak of advances. Last week, the S&P finished the session 1.2% higher, the Nasdaq added 0.29% and the Dow, which touched record highs throughout the week but couldn’t retain them, managed to close up 0.29% as well on the day, but off 0.05% on the week.
SK Hynix shares had a strong debut in the U.S. markets last week, gaining 13% above its $26.5 billion offering and taking the crown as the largest foreign initial public offering in history. But shares tumbled 10% in Seoul, which is likely tied to profit-taking, and were falling nearly 10% in the U.S. markets in early trading.
Major chips stocks were also under pressure in the early going. Sandisk was giving back 6.3%, Western Digital, 6.01%, Micron, 5.54%, Intel by 2.8% and Qualcomm off 2.2%.
Happy trading!
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