Dow is little changed after 11-day rally as traders assess earnings: Live updates

The pressure on consumers is going to get intense over the next 12 months, UBS analysts said, citing factors like the return of student loan payments and the fallout from the Federal Reserve’s rate hikes as limits to spending power. But analyst Jay Sole says that’s not the consensus view and it will take a while for this narrative to play out.

Most people expect a “soft landing” and so with the back-to-school season ahead apparel retail stocks could benefit from investors’ “fear of missing out.” Sales that are “less bad” will drive stocks higher, he said. His favorite picks include On Holding, Deckers, Ralph Lauren and Skechers.

—Christina Cheddar Berk

Shares of RTX Corporation, known as Raytheon Technologies, plummeted more than 15% after the company revealed an engine issue.

The company revealed Tuesday that it will need to remove certain Pratt & Whitney engines for inspection earlier than expected due to what it described as a “rare condition in powder metal used to manufacture certain engine parts.”

While the issue does not impact engines currently in production, it affects a “significant portion” of the company’s PW1100G-JM engine fleet, powering the Airbus A320neo family. This will require am accelerated inspection timeline, including 200 accelerated removals by mid-September, RTX said.

— Samantha Subin

Consumer sentiment hit its highest level since July 2021, though the reading was a little shy of Wall Street expectations, The Conference Board reported Tuesday.

The board’s Consumer Confidence Index hit 117 in July, up from 110.1 in June and good for a two-year high. However, it was below the 112 estimate from Dow Jones.

Also, the expectations index jumped to 88.3, up from a reading of 80 in June that is also the dividing line for a recession outlook. The “jobs plentiful” index rose, while the current conditions index pulled back slightly.

Even with the improvement in sentiment and outlook, the perceived likelihood of a recession in the next 12 months edged up to 70.6%.

—Jeff Cox

Howmet Aerospace shares are down 1% despite the stock being initiated by Baird at an ouperform. Analyst Peter Arment said shares could hit $61 dollars, which implies 82% upside from where it’s currently trading — and that’s after a 27% year-to-date gain.

According to Baird, the company warrants a premium valuation because it manufactures highly specialized parts for the aerospace and transportation industries that are “best-in-class” and often secured under long-term contracts.

Howmet is a long-term OEM play, according to Arment, who advised his clients to “stay long and add on pullback” as this top supplier benefits from strong demand in the industry.

—Christina Cheddar Berk

The Dow Jones Industrial Average declined Tuesday after an 11-day advance.

The Dow traded 24 points lower, or 0.1%. The S&P 500 was marginally lower, while the Nasdaq Composite advanced 0.3%.

— Sarah Min

Home prices fell by a bit less than expected in May as the real estate market attempts to break a prolonged slump.

The S&P CoreLogic Case-Shiller index indicated that a composite measure of prices in 20 large U.S. cities fell 1.7% on a 12-month basis, compared to the Dow Jones estimate for a 1.9% decline.

However, the 20-city index posted a 1.5% monthly increase, leading an S&P official to say that the sequential decline in prices likely ended in January.

—Jeff Cox

The International Monetary Fund on Tuesday raised its growth forecast for the global economy, turning slightly more positive despite slowing momentum from China.

In the latest update to its World Economic Outlook, the IMF raised its 2023 global growth prediction by 0.2 percentage points to 3%, up from 2.8% at its April assessment. The IMF kept is 2024 growth forecast unchanged at 3%.

In terms of inflation, the Fund also expects an improvement from last year. Headline inflation is projected to reach 6.8% this year, falling from 8.7% in 2022. However, core inflation, which strips out volatile items, is seen declining more slowly to 6% this year, from 6.5% last year.

— Silvia Amaro

It’s a big earnings week for tech companies, and how they perform could tell traders whether the rally can continue, according to Wolfe Research.

The Wall Street firm said the earnings results of the companies that make up the “Big Seven” have an outsized impact on their valuations, making them either “double winners” or “double losers.” The Big Seven are the large tech firms that drove most of the gains in the broader market this year, such as Alphabet, Amazon and Apple.

“These reports should go a long way in determining whether this rally still has legs,” the firm’s Chris Senyek wrote Tuesday. “Our sense is that it does over the near term.”

Google-parent Alphabet and Microsoft report Tuesday after the close. Meta reports Wednesday afternoon.

— Sarah Min

It’s time to hold off on adding exposure as traders watch where the rally will go from here, according to Fairlead Strategies’ Katie Stockton.

“We do see sort of minor signs of upside exhaustion as we get into a lot of earnings flow and what have you, but we’re still recommending that our clients hold on to their equity positions,” the technical strategist told CNBC’s “Squawk Box” on Tuesday. “We’re not any longer recommending that they add exposure.”

“And we say that because we are seeing less in the way of positive technical catalysts. We saw a lot of breakouts between May and just recently, but they’re starting to quiet down a bit. And earnings season, so far it’s fine, but it’s not generating more of those breakouts,” she added.

— Sarah Min

These are some of the stocks making the biggest premarket moves:

• General Motors — Shares of General Motors rose more than 1% before the bell after the automaker raised its full-year guidance and reported second-quarter results that rose on a year-over-year basis.
• 3M – The chemical manufacturer gained about 2% in premarket trading following the company’s latest earnings report. 3M posted $7.99 billion in revenue, beating analysts’ estimates of $7.87 billion, according to Refinitiv. The company also raised its full-year earnings guidance and reaffirmed its revenue guidance.
• Verizon — The telecommunications giant traded 2.6% up after reaffirming its full-year guidance. That came despite a mixed second quarter, with Verizon posting $1.21 in earnings per share, excluding items, on $32.6 billion in revenue. Analysts polled by Refinitiv estimated $1.17 earnings per share and revenue of $33.24 billion.

See the full list here.

— Alex Harring

Citi downgraded Goldman Sachs stock on Tuesday as the firm may have difficulty reaching its long-term targets.

Analyst Keith Horowitz says that Goldman’s target of a 15% to 17% target return on tangible common equity (ROTCE) may be out of reach in the current market environment.

“The uncertainty of executing on its longer-term initiatives leads us to see more balanced risk/reward for the stock at these levels,” Horowitz said.

Shares of Goldman Sachs declined slightly during premarket trading.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Piper Sandler upgraded Walmart stock on Monday thanks to competitive grocery pricing and steep rollbacks.

“While we think intuitive logic dictates that WMT is well positioned during an inflationary period (trade down), we believe that a gradual intensification of promos augurs well for WMT given its sharp focus on price, and we raise our estimates accordingly,” analyst Edward Yruma said.

Walmart stock gained 1% in the Tuesday premarket.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Atlantic Equities downgraded Disney stock on Tuesday as the company contends with lower ad spending and disappointing box office performances.

“Box office performance has also struggled with a clear decline from the 2019 Avengers: Endgame series climax,” analyst Hamilton Faber said. “While the cyclical nature of the MCU films means this should be expected, whether Marvel can build to a second Avengers climax in 2026 is wholly dependent on the performance of current films, and indications are not encouraging.”

Shares declined about 0.7% in premarket trading Tuesday.

CNBC Pro subscribers can read the full story here.

— Brian Evans

GM said it’s raising its 2023 guidance for a second time this year, adding that it’s increasing cost cuts through 2023. The automaker now sees full-year earnings of $12 billion to $14 billion, up from a range of $11 billion to $13 billion.

The company also reported second-quarter earnings that were up sharply from the year-earlier period.

Shares rose 1.5% in the premarket.

— Fred Imbert, Michael Wayland

U.S. Treasury yields were higher on Tuesday as the Federal Reserve’s meeting is due to kick off and investors considered the outlook for interest rate decisions from central banks in major global economies that are expected this week.

At 4:27 a.m. ET, the 10-year Treasury was trading over two basis points higher at 3.8845%. The 2-year Treasury yield was last up more than two basis points to 4.8619%.

— Sophie Kiderlin

Hong Kong’s Hang Seng index surged more than 4% on Tuesday, led by real estate stocks rebounding after China vowed more support for its beleaguered property sector.

Real estate developer Longfor Group jumped almost 20% and was the biggest gainer on the index, while property management firm Country Garden Services Holdings surged 17.54%.

Hong Kong tech names were also part of the top gainers on the index, with the Hang Seng Tech index climbing 4.57% and led by electric vehicle makers. Chinese EV maker Xpeng saw a 12.75% gain, while Nio climbed 9.79%.

— Lim Hui Jie

Earnings were the main driver of individual share price action in Europe on Tuesday.

Unilever shares climbed 5% in early trade to lead the Stoxx 600 after the British consumer goods company beat analyst expectations to report a 7.9% rise in underlying second-quarter sales.

At the bottom of the European blue chip index, Dassault Systemes fell 5% after its second-quarter earnings report, in which the French software company reported a slowdown in growth in its 3D and cloud businesses.

— Elliot Smith

The pan-European Stoxx 600 index hovered around the flatline in early trade, with mining stocks jumping 2.8% while healthcare stocks fell 0.8%.

South Korea’s gross domestic product grew 0.9% year-on-year in the second quarter of 2023, according to advance estimates.

This was unchanged from the 0.9% seen in the first quarter, and beat the 0.8% estimate by economists polled by Reuters.

On a quarter to quarter basis, South Korea’s GDP grew 0.6%, the largest quarterly growth seen since the second quarter of 2022.

— Lim Hui Jie

It’s early in the second quarter earnings reporting season but, so far, the majority of both U.S. and European companies are beating analyst estimates but the performance of their stocks is lagging, according to JPMorgan.

“Out of early reports, with 70 S&P 500 results and 90 in Europe, the majority are beating the consensus projections,” Mislav Matejka, head of global and European equity strategy at JP Morgan, said in a note to clients early Monday. “The sample set is relatively small, but the stock price reaction to the beats is worse than typical.”

Moreover, JPMorgan looked at companies issuing profit warnings ahead of second quarter earnings, and stocks within that group are down 10% or more, the exception being some energy and chemical stocks, probably because of their poor first half performance entering July.

Bottom line, JPMorgan doesn’t expect second quarter earnings to give the market much of a boost compared with the first quarter, for a couple of reasons. “Stock price reactions in general could be more muted this time, or at least any positive momentum might not have legs,” Matejka wrote. “Ahead of Q1, sentiment and positioning were cautious, but the equity market was strong coming into Q2 reporting season, suggesting buyside expectations are more elevated, even as analyst projections are subdued. Also, the question is whether the guidances will be raised on the back of quarterly beats, as there was some loss of momentum as we moved through the quarter, and China dataflow continues to disappoint.”

— Scott Schnipper, Michael Bloom

U.S. stock futures opened little-changed Monday.

Futures tied to the Dow Jones Industrial Average shed just 5 points, or 0.01%. Meanwhile, S&P 500 futures and Nasdaq 100 futures ticked up 0.02% and 0.03%, respectively.

— Hakyung Kim