Stock futures mixed ahead of the kickoff of earnings season

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Traders on the floor of the New York Stock Exchange.

Source: NYSE

The S&P 500 inched up to a new high on Monday as investors waited for the second-quarter earnings season to kick off this week.

The broad index added 0.32% and hit an intraday record Monday morning. The Nasdaq Composite traded 0.16% higher after also reaching an intraday high Monday. The Dow Jones Industrial average rose about 123 points, or 0.35%. The three major indexes closed at record highs on Friday with the S&P 500’s gain for the year so far now totaling more than 16%.

Investors may be waiting to get some more clarity from this earnings season before making their next move. JPMorgan Chase and Goldman Sachs will be among the first big companies to report Tuesday before the bell. Both were slightly higher on Monday.

“I think investors want to take a wait and see. Most investors are expecting blockbuster earnings results and these will likely be peak earnings results,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors. “The most important element of these reports this week will be the outlook discussion from management and not necessarily the numbers of the last three months.”

Second-quarter earnings are expected to surge more than 64% from levels depleted by the pandemic a year ago, according to estimates collected by FactSet. If companies deliver on those estimates, it will be the largest growth rate since the last quarter of 2009 as the market was coming out of the Great Financial Crisis.

Markets largely churned on Monday. Names linked to economic comeback from the pandemic were slightly weaker with Carnival Corp. and General Electric lower. Technology stocks showed pockets of strength with Tesla and Nvidia higher.

Shares of Walt Disney gained after “Black Widow” earned $80 million at the domestic box office from its debut, the most of any film released in the Covid era. The company also said it garnered an additional $60 million from the movie in Disney+ sales.

Earnings season will largely be the driver of the markets in coming weeks and early signs are looking good. So far, 66 S&P 500 companies issued positive earnings guidance into the second-quarter reports, the highest number of companies since FactSet began tracking the number. All 11 sectors of the market are set to post growth with energy, industrials, consumer discretionary, financials and materials seeing the biggest gains as the economy reopened.

“Continued earnings momentum should refuel investors’ confidence in the recovery amid slowdown concerns and drive a rotation back into Value,” Bank of America’s Savita Subramanian said in a note Sunday.

Along with JPMorgan and Goldman Sachs, Pepsico will also report on Tuesday before the bell. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock report on Wednesday, and Morgan Stanley, Truist and UnitedHealth post results on Thursday.

Investors also anticipate important data to be released this week, including key readings on inflation on Tuesday and Wednesday, and June retail sales on Friday.

Federal Reserve chair Jerome Powell is set to testify before Congress on Wednesday and Thursday.

“The market today is in a rest mode ahead of the CPI number tomorrow and Powell’s testimony,” Peter Boockvar, CNBC contributor and chief investment officer at Bleakley Advisory Group, said. “While earnings of course are going to be important, most of the earnings really don’t come out until next week and the week after.”

“So while we’ll focus on what the banks have to say…right now, it’s all about CPI tomorrow, it’s all about what Powell says and if he hints to the taper sooner rather than later,” Boockvar added.

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