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Q2 Earnings Season Has Started
www.oneoption.com
This morning JPM, C and WFC reported results before the open.
PRE-OPEN MARKET COMMENTS TUESDAY – The market rally has been unaffected by tariffs, wars, elevated interest rates or soft economic releases. Earnings season will provide us with another data point and we will see if companies are able to clear a low bar. Over the last few months, analysts have lowered expectations.
In pre-open trading, WFC is down, JPM is unchanged and C is up slightly. Bank stocks do not typically move much after the earnings announcements and if often takes a few days to get a sense of direction. These companies are established and the fundamentals/performance doesn’t change dramatically. They do provide us with insight on credit and that is what I will be watching closely. WFC has the greatest exposure to the housing market. Both Moody’s and Goldman Sachs are forecasting the slowest growth in home prices in 14 years.
The CPI came in at .3% which was inline with expectations, but it is a touch higher than the .2% we’ve seen recently. Empire Manufacturing improved to 5.5 and expectations were for a -8.3 reading.
Nvdia said that it is going to start sending H20 GPUs to China. This could be a sign that rare earth mineral shipments have been received in the US. I know that was a condition. Car makers have had to stop production because they don’t have the magnets they need. This could still lead to future supply disruptions, but at least they will be temporary. Rare earth minerals expose a vulnerability and China will use this for leverage since they control 90% of the world’s production.
Every market dip the last week has been gobbled up like candy. The market wants to float higher and it will continue to do so in the absence of really bad news. That would have to come in the form of many negative earnings releases or a series (not “one offs”) of weak economic data points. The tariffs are not currently having an impact.
The best set-up is to buy any early weakness. Global markets were up marginally. The S&P 500 is up 25 points before the open and this represents a new all-time high. I never chase gaps up to a new high and I will wait for a dip. The overnight news was not material enough for me to chase. If the market gaps up and it holds the gains for 30 minutes, I would have confirmation that the gains are going to hold and then I might consider buying.
Support is the high from Monday and I do not see any resistance until $640.
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