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Hello, I'm Amrith Ramkumar with The Wall Street Journal, walking you through today's pre-market moves.
Kohl's reported earnings for the second quarter Tuesday morning that
beat expectations and raised its full-year guidance, as investors were
waiting to see if the S&P 500 will make a run at a fresh record
close. The index is 0.6% below its January all-time high.
Plus, I look at why airline stocks have begun to rebound.
Markets in a Minute
Global stocks gained on Tuesday as the U.S. dollar ticked lower after
President Donald Trump complained about the Federal Reserve's rate
Analysts say lower projections for capacity have boosted sentiment.
Shares of airline operators are no longer in free fall.
Company projections for the number of passenger seats that are offered have come down—a
development that has helped boost sentiment. Investors tend to worry
about passenger seats offered because airplanes flying with too many
unsold seats are less profitable and quicker-than-expected expansion can
lead to lower ticket prices.
a rise in passenger capacity would lead to emptier planes and fee
competition had hurt airline shares before the most recent earnings
reports. The NYSE Arca Airline Index fell 20% from its January peak
through late June, hitting its lowest level since late 2016.
But airline stocks have clawed back some of those losses lately, with
the group adding 9.9% since hitting its June 28 low. In the past month
alone, Southwest Airlines shares have added 15% and Delta Air Lines is
On Monday, the group continued its recent surge. American Airlines
Group was the S&P 500’s second-best performer, climbing 5.8%, and
every airline stock in the index added at least 3%.
Industry analysts say the drop in capacity projections was enough to
give the stocks a boost, even with fuel expenses continuing to threaten
“Sentiment on U.S. airline stocks has recovered somewhat,” Raymond James analysts said in a note to clients earlier this month.
That could brighten the outlook of analysts who look at shares of
airlines and other transportation companies as an economic indicator
because their performance is typically tied to global growth. Although
continuing trade tensions have dinged growth-sensitive assets recently,
the Dow Jones Transportation Average is at its highest level since
January and has risen in five straight sessions.
Airline companies and other large industrial companies generally
reported favorable second-quarter demand despite worries about
Another potential positive for airline stocks: Energy prices have
started to come down. After a monthslong rally that analysts say caught
airline companies off-guard, U.S. crude has declined 10% from its June
Still, after months of investor jitters over capacity, some analysts
think investors will want to see sustained share performance and future
projections before taking a fresh look at beaten-down airliners.
“While this is an encouraging first step, all eyes will be on 2019 plans,” the Raymond James analysts said.
The Dow Jones Industrial Average on Monday rose to its highest level since Feb. 1, climbing for a third straight session.
The last time hedge funds and other speculators had as many net short
positions in copper as they do now, late in 2015, the red metal rallied
19% in the next three months and 37% over the next year, according to
On this day in 1999, a record price was paid for a membership seat on
the New York Stock Exchange: $2.65 million. That was a substantial rise
from the record low price for a seat, set in 1942, of $17,000.
There are no key events today.
President Donald Trump feared that the Federal Reserve’s moves to raise
interest rates could hurt the economy. PHOTO: MANDEL NGAN/AGENCE
President Trump complained about the Fed’s interest-rate increases. At a fundraiser Friday, Mr. Trump told donors he is unhappy with the Federal Reserve’s recent moves and raised doubts about the man he placed in charge, Jerome Powell. The dollar weakened today after also falling Monday against other major currencies following the report of Mr. Trump’s comments.
The U.S. is moving toward new tariffs on China. The Trump
administration is pursuing levies on $200 billion of Chinese goods at
the same time as it is relaunching talks to scrap tariffs. The twin
initiatives, from the U.S. Treasury Department and the office of the
U.S. trade representative, are both moving ahead with the approval of President Trump.
Total is struggling to exit a natural-gas project in Iran. The company is having difficulty unloading its stake in a $5 billion project in the country to a Chinese partner, after stopping work earlier in the year due to U.S. sanctions.
Some Tesla suppliers are worried about getting paid. The auto
maker’s tumultuous year has fueled concern about its financial strength
after Model 3 production drained some of its cash. In an email to the
Journal, CEO Elon Musk said, “We are definitely not going bankrupt.”
Microsoft found Russian hackers targeting the U.S. Senate. Hackers linked to the 2016 election cyberattacks on the Democratic Party are widening their target for the coming midterms to include the Senate and well-connected conservative groups.
Correction:Yesterday's newsletter included an
incorrect figure for the size of the Fed's balance sheet. The correct
size is $4.5 trillion, not $4.5 billion.
What We've Heard on the Street
"The imperative to grow its exposure to fast-growing, healthier
beverages is so strong that it makes sense for Pepsi to pay up for
SodaStream, even if other strategic benefits fail to materialize."
Tesla—Up 1%: Some Tesla suppliers are worried
about the auto maker’s financial strength after production of the Model
3 car drained some of its cash, The Wall Street Journal reported late
in Monday's session.
Fabrinet—Up 5.1%: The optical equipment specialist exceeded revenue expectations in its most recent quarter.
Snap—Unchanged: The social-media firm fell for the fifth straight session Monday, its longest streak of consecutive declines since early May.
Hertz—Unchanged: Hertz selected Jamere
Jackson, the former finance chief of Nielsen, to lead its finance team
and succeed Thomas Kennedy, who resigned to pursue the next stage of his
Bank of America—Unchanged: Bank of America's brokerage arm Merrill Lynch will pay $8.9 million to settle charges it failed to disclose a conflict of interest, the Securities and Exchange Commission said Monday.