US Stock Market Overview – Stocks Slip on Strong Retail Sales

US stocks edged lower on Tuesday, as a rising dollar generated headwinds. Energy shares were the worst performers as crude oil prices tumbled 3.25%. Stronger than expected retail sales buoyed the dollar and yields putting downward pressure on stocks. Most sectors were lower, Industrials bucked the trend. The large financials continued to report earnings with JP Morgan and Wells Fargo both beating on the top and bottom line.

Retail Sales Surge in June

US retail sales surged in June rising more than expected. The Commerce Department reported that US retail sales rose 0.4% last month driven by gains in motor vehicles. Data for May was revised slightly down to show retail sales increasing 0.4%, instead of increasing 0.5% as previously reported. Expectations had forecast retail sales edging up 0.1% in June. Compared to June last year, retail sales advanced 3.4%. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.7% last month after an upwardly revised 0.6% increase in May. Core retail sales, previously reported to have increased 0.4% in May.

Banks Slip Despite Robust Earnings from JPM

J.P. Morgan Chase posted earnings that exceeded expectations, aided by an income tax benefit. The financial giant posted profit of $9.65 billion, 16% higher than a year earlier, or $2.82 a share, beating the $2.50 estimate. The company’s revenue also edged out expectations at $29.57 billion, a 4% increase from a year earlier, compared to the $28.9 billion estimate. J.P. Morgan said that the tax boost lifted per share earnings by $0.23. Net Interest Margin was 2.51. Trading Revenue from the Fixed income division came in at $3.36 billion, Equities $1.84 billion.

Wells Fargo Beats

Wells Fargo reported quarterly earnings of $1.30 per share, beating forecasts of $1.16 per share. This compares to earnings of $1.08 per share a year ago. This quarterly report represents an earnings surprise of 12.07%. The company posted revenues of $21.58 billion for the quarter ended June 2019, surpassing expectations by 3.83%. This compares to year-ago revenues of $21.55 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The Yield Curve is No Longer Inverted

The 3-month to 10-year US curve is back to positive territory, after spending months inverted.  Separately, the Atlanta Fed GDPNow is tracking Q2 growth at 1.4%, up from 1.3% previously.  Elsewhere, NY Fed Nowcast has Q2 growth at 1.5%, steady from last week.  Its Q3 reading rose to 1.75% SAAR from 1.74% previously.