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Pre-Market: JPMorgan, Goldman Sachs Earnings Both Beat Estimates; Microsoft Job Cuts Expected


Janet Yellen will deliver her semi-annual testimony to Congress this morning.

Stock futures pointed toward a higher open on Tuesday. Before the opening bell, Dow Jones (INDEXDJX:.DJI) futures rose 0.25% to 17,021. Nasdaq (INDEXNASDAQ:.IXIC) futures moved higher, rising 0.24% to 3,928.75.  Futures on the S&P 500 (INDEXSP:.INX) were up 0.17% to 1,974.30.


Better-than-expected earnings have sent both JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) higher in pre-market trading. JPMorgan
reported a second-quarter EPS of $1.59, a whole $0.29 higher than analysts had projected, while revenue came in at $25.3 billion versus a $23.86 billion consensus. Goldman Sachs reported a smaller drop in fixed income revenue than had been projected. Net income was $2.04 billion, or $4.10 per share, up from $1.93 billion, or $3.70 per share, in the same quarter last year. The firm's bond-trading revenue fell 10%, lower than JPMorgan's 15% drop in fixed income trading. JPMorgan was up 2.59% ahead of the open. Goldman Sachs rose 1.80%

After the closing bell, both Yahoo (NASDAQ:YAHOO) and Intel (NASDAQ:INTC) report earnings. Analysts are expecting a 9% increase in Yahoo's profit and are eager for updates on the company's stake in Alibaba. Intel's earning will give insight into the global PC market.

In a widely anticipated move, Reynolds America (NYSE:RAI) has announced it will buy rival Lorillard (NYSE:LO) for $27.4 billion. British American Tobacco (NYSEMKT:BTI) will retain a 42% stake in Reynolds, while Imperial Tobacco Group (OTCMKTS:ITYBY) will acquire the Kool cigarette brand from Reynolds and the Blu electronic cigarette brand from Lorillard as part of the deal. The consolidation comes amid shrinking demand for cigarettes in the United States; a merger will help the companies better manage declining sales. Reynolds fell 4.16% ahead of the opening bell. Lorillard traded down by 6.80%.

German automaker BMW (ETR:BMW) is planning to ramp up its orders of electric-vehicle battery cells by 20% to 30% by 2016, reports the New York Times. Samsung (OTCMKTS:SSNLF) will remain the exclusive supplier, providing batteries for BMW's current electric-car offering, including the i3 and i8 electric cars, and future hybrid models including the X5 plug-in hybrid. Electric cars still constitute a small share of its total sales. For example, the i3 has been responsible for 0.4% of vehicles sold by the BMW so far this year.

Microsoft (NASDAQ:MSFT) could announce job cuts as early as this week in what might be the company's largest round of cuts ever. The cuts are expected to be in the areas where Microsoft divisions and Nokia's Devices and Services division -- which Microsoft acquired for $7 billion in May -- overlap. Microsoft's largest layoff was in 2009, when the company let go of 5,800 employees. The cuts would come a week after CEO Satya Nadella issued his first company mission statement, which called for Microsoft to become more focused and efficient. Shares of Microsoft rose 0.43% in pre-market trading.


Federal Reserve Chairwoman Janet Yellen is set to deliver her semi-annual monetary policy testimony before Congress at 10:00 a.m. Before that, a slew of economic data will have been reported. ICSC same-store retail sales rose 0.1% in the July 12 week, with a strong year-on-year rate of 4.5%. The US Census Bureau reported retail sales for June rose by 0.2% to $439.9 billion from the previous month and 4.3% year-on-year. The Bureau of Labor Statistics reported import prices rose 0.1% in June after a 0.3% rise in May, and US exports fell 0.4% in after a 0.1% rise the month prior. The New York Federal Reserve released its Empire State Manufacturing Survey for July, which indicated that business conditions have improved significantly for New York manufacturers for a third straight month. At 8:55 a.m., expect the Redbook chain store sales. Business inventories will be reported at 10:00 a.m.

Global Markets

Asian stocks moved higher overnight, posting a second day of gains. In China, direct foreign investment increased only slightly in June to $14.42 billion, a 0.2% increase of June 2013. China will report its second-quarter GDP tomorrow. In Japan, a new survey found that 32% of economists forecast the Bank of Japan will expand monetary stimulus on October 31 -- that's compared to 65% of economists in the same survey taken last month. European stocks declined ahead of Janet Yellen's testimony before Congress. European Central Bank President Mario Draghi has said that the rising euro could hurt growth in the eurozone.

Twitter: @brokawbrokaw
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