- Citi shares retreat on costs concerns, even as earnings beat expectations
- China GDP slows to 27-year low, but retail sales, industrial production data beat expectations
- Anheuser calls off $10 billion Asian IPO
U.S. stocks traded mixed Monday morning, after record finishes last week, as second-quarter earnings season got under way.
How are the major benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.02% rose 6 points to 27,340, the S&P 500 index SPX, +0.00% traded flat at 3013, while The Nasdaq Composite Index COMP, +0.08% rose 2 points to reach 8247. All three major indexes scored intraday records in early activity before turning lower.
On Friday, the Dow gained 244.02 points, or 0.90%, at 27,332.10, while the S&P 500 index added 13.83 points, or 0.5%, at 3,013.75. The Nasdaq Composite Index closed 48.10 points higher at 8,244.14, a gain of 0.6%.
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What’s driving the market?
Citigroup Inc. C, +0.20% said its second-quarter income rose 7% from a year ago, with profit at $4.8 billion, up from $4.49 billion a year ago and earnings come in at a better-than-expected $1.95, compared against consensus analysts’ expectations for $1.81 a share.
The results also showed revenue came in at a hotter-than-estimated $18.76 billion, up 2% from $18.47 billion a year ago and better than the $18.5 billion projected by Refintiv. The results were seen potentially reflecting global economic resilience, with investors keenly watching for signs of the impact of Sino-American tariff wars, a regime of ultralow interest rates and a domestic slowdown buffeting global economies.
“Citigroup’s Q2 earnings are generating somewhat mixed feelings,” wrote Axel Pierron, managing director at capital markets consulting firm Opimas, in an email, adding that while earnings beat expectations based on strong growth in consumer banking revenue, investors were hoping to see the bank more aggressively tackle weak performance in its trading businesses by “reducing its operating costs [more] significantly” than the reported 2% cut in operating expenses for institutional clients suggests. Citigroup shares fell less than 0.1% Monday.
In Asia, Chinese stocks edged higher on a mixed bag of data that showed that the world’s second-largest economy expanded at the slowest pace in 27 years, though measures of industrial production and retail sales came in better than expected, suggesting that government efforts to stimulate growth are finding some success.
China’s gross domestic product, or GDP, in the second quarter slowed to 6.2%, marking its slowest pace since 1992 — though mostly matching expectations — from a reading of 6.4% in the first quarter. Industrial production in the country accelerated to 6.3% from 5.0% in June, ahead of the 5.2% consensus, while retail sales growth accelerated in June to 9.8%, above the 8.5% consensus.
“The GDP figures matched market expectations to the dot,” wrote Carl Weinberg, chief international economist at High Frequency Economics, in a Monday note to clients. “For serious China watchers, the GDP headline is not very important. It is a backward looking indicator…the surge in monthly data for June is what has our attention.”
President Donald Trump on Monday took credit for the China slowdown, saying it would lead to more favorable trading terms with the world’s second-largest economy. Over two tweets, Trump said China wants to make a trade deal and insisted that U.S. taxpayers aren’t paying tariffs.
Markets have been mostly rising on the promise of easy-money policies from the likes of the Federal Reserve and the European Central Bank, with some investors speculating that anticipation a further round of monetary-policy stimulus from Beijing’s central bank has also helped to soften the impact of a relatively weak GDP print.
On the economic data front, the New York Fed’s Empire State manufacturing survey rebounded to 4.3 in July, from minus 8.6 in June, and ahead of the 0.5 rise expected by economists, according to Econoday.
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Which stocks are in focus?
Shares of Symantec Corp. SYMC, -13.10% shares tumbled 12.3% after CNBC reported that it has ceased negotiations to acquire Broadcom Inc. AVGO, +1.79%
Gilead Sciences Inc. GILD, +2.22% said would invest $5.1 billion to raise its stake in Belgian biotechnology company Galapagos NV GLPG, +17.11% Shares of Gilead rose 2.2% Monday morning.
Shares of Anheuser-Busch InBev SA BUD, +1.59% were in focus after the seller of Budweiser called off what would have been the largest initial public offering of the year, saying it wouldn’t proceed with the nearly $10 billion listing of its Asian business. Anheuser’s stock gained 1.6% before the bell.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, -1.40% retreated one basis point to 2.10%
In Asia, stocks finished higher, with the China CSI 300 000300, +0.41% adding 0.4%, Japan’s Nikkei 225 NIK, +0.20% rising 0.2% and Hong Kong’s Hang Seng Index HSI, +0.29% advancing 0.2%. European shares were marginally higher, with the Stoxx Europe 600 SXXP, +0.35% edging 0.3% higher.
In commodities markets, crude-oil prices CLQ19, -0.03% were climbing modestly, up 0.3% at $60.40 a barrel, along with gold prices GCQ19, -0.01% rising 0.1% at $1,416.60 an ounce.
The U.S. dollar DXY, +0.14% edged higher, as measured by the ICE U.S. Dollar Index.