Monday, July 15, 2019
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Market Digest Online TUESDAY, JULY 16, 2019: Stocks rose to notch a fresh record close on Monday, but the gains were muted as Wall Street remained cautious to start off the corporate earnings season. The Dow Jones Industrial Average closed 27.13 points higher, or 0.1%, at 27,359.16. The S&P 500 ended the day just above the flatline at 3,014.30. The Nasdaq Composite advanced 0.2% to 8,258.19. The major indexes also posted intraday all-time highs earlier in the session.

Citigroup kicked off the earnings season by reporting second-quarter numbers that topped analyst expectations. Gains from the initial public offering of Tradeweb, an electronic bond trading platform, drove the bank’s results past Wall Street estimates. Citigroup shares traded higher in the premarket after the results were released, but quickly fell after the open to close less than 0.1% lower.

Other big banks like J.P. Morgan Chase, Morgan Stanley, Bank of America and Goldman Sachs are expected to report quarterly earnings later this week.

The outlook for this earnings season is bleak. Analysts expect S&P 500 earnings to have fallen by 3% in the second quarter, according to FactSet data.

"Low earnings expectations set up the possibility that announcements may surprise on the upside and provide a bounce in the stock market," Bruce Bittles, chief investment strategist at Baird, said in a note. "However, investors will be weighing the good economic news and low interest rates against the earnings announcements, global slowdown and trade tensions."

Monday's moves come after the major indexes had a record-setting week. The Dow closed above 27,000 for the first time last week while the S&P 500 broke above 3,000. The Nasdaq also reached record levels.

"Trends have continued to show little to no signs of weakness and most stallouts have lasted a few days maximum before pushing back to new highs," said Mark Newton, managing member at Newton Advisors. "Overall, ‘Risk-On’ looks still to be the most likely outcome between now and August when the possibility of a market top grows stronger."

Stocks got a lift last week after Federal Reserve Chair Jerome Powell indicated during congressional testimony that an interest-rate cut could be on the horizon. His testimony largely confirmed what traders had been pricing in since the Fed’s June meeting. Market expectations for a July rate cut of at least 25 basis points are at 100%, according to the CME Group’s FedWatch tool. Some traders are even betting on a 50 basis-point rate cut, the tool shows.

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