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Monday, July 16, 2018 - 20:23
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Day Ahead: Top 3 Things to Watch - Here’s a preview of the top 3 things that could rock markets tomorrow.

1. J&J, Goldman Sachs {{0|Goldman Sachs}}) Lead Earnings Report

Two Dow components will headline earnings reports ahead of trading Tuesday.

Johnson & Johnson (NYSE:JNJ) is forecast to earn $2.07 per share for the latest quarter on revenue of $20.39 billion. But apart from the numbers, investors will be listening to the conference call for any updates about a recent judgment to pay $4.7 billion to women who said J&J’s talcum powder resulted in ovarian cancer.

Goldman Sachs (NYSE:GS) is expected to earn $4.63 a share on revenue of $8.66 billion. Trading revenue will be in focus given JP Morgan's (NYSE:JPM) outperformance in that area.

Goldman Sachs is also expected to reveal that President David M. Solomon will succeed Lloyd C. Blankfein as the bank's next chief executive officer Tuesday.

Also reporting are Charles Schwab (NYSE:SCHW) and UnitedHealth Group (NYSE:UNH).

2. Fed Chief Powell Heads to Capitol Hill

Federal Reserve Chairman Jerome Powell heads to Capitol Hill Tuesday for the first appearance of his two-day Humprey-Hawkins testimony to Congress.

He will appear at the Senate Banking Committee first before appearing before the House Financial Services Committee.

Based on recent data and comments from Federal Open Market Committee members, the Fed is content with its plan of gradually increasing interest rates, which likely means two more hikes before the end of the year.

There is a more than 90% chance that rates will go up at the September meeting and a more than 60% chance of another rate hike in December, according to’s Fed Rate Monitor Tool.

Congressional testimony from the Fed chief rarely elicits hints on the direction of interest rates beyond what the central bank has already intimated. But there could be interesting comments on the state of the economy and the impact of the new U.S. trade strategy.

According to the latest University of Michigan report on July consumer sentiment, “negative concerns about the potential impact (of tariffs) had risen from 15% in May to currently 38% in July, while 52% of those surveyed in the top third of income distribution - equivalent to half of consumer spending - negatively mentioned the economic impact.”

3. Netflix Tumbles on Weak Subscriber Growth

Tech stocks could face weakness tomorrow after Netflix (NASDAQ:NFLX) reported disappointing earnings after the bell Monday.

The stock fell nearly 13% in after-hours trading.

The company reported subscriber growth – a key metric for the streaming service – well below what analysts predicted.

Netflix added 670,000 U.S. subscribers in the second quarter, far from the 1.19 million Reuters consensus estimate.

Revenue came in at $3.91 billion, lower than the $3.94 billion expected.

© Reuters.