MARKET WRAPS

Watch For:

Canada Retail Sales for May; American Express Co. 2Q earnings.

Opening Call:

Stock futures rose Friday, putting major indexes on track for weekly gains with large technology stocks driving the rally.

The monthslong rally in stocks has resumed after markets skidded at the start of the week in response to concerns about the fast-spreading Delta variant.

Investors have drawn comfort from rapid earnings growth at the biggest American companies. Money managers also say governments in the U.S. and Europe are unlikely to bring in lockdowns that restrict growth, even if rising cases take the shine off the economic recovery.

"You have an earnings season that is going tremendously well," said Seema Shah, chief strategist at Principal Global Investors. The economic outlook isn't as strong as it was three months ago, but "the path ahead is not that negative and certainly there is a lot of buying the dip," she added.

Ms. Shah is keeping a close eye on what executives are saying about their ability to pass higher input costs to customers instead of taking the hit in profit margins. The flip side: If many companies succeed in feeding costs through, inflation will take longer to subside, which could prompt concerns about higher interest rates and knock the market.

American Express, oil-field services firm Schlumberger, NextEra Energy and industrial conglomerate Honeywell International are among the companies due to report earnings before the bell in New York. Of the roughly 110 companies in the S&P 500 that have posted results for the second quarter, 85% have topped analysts' profit forecasts, according to FactSet.

Snap's stock leapt 17% in premarket trading on revenue that more than doubled in the second quarter and the fastest user growth in four years.

Twitter shares rose over 5% in premarket trading after the social-media company reported a 74% increase in revenue in the second quarter compared with a year before. Intel's stock fell 1.8% after Chief Executive Pat Gelsinger said he sees the global semiconductor shortage potentially stretching into 2023.

Survey data on the manufacturing and service sectors, due at 9:45 a.m. ET, will offer fresh cues on the outlook for the economy. Economists say the U.S.'s growth spurt likely peaked in the spring, but still expect a strong expansion to continue into 2022.

Forex:

Any declines in the dollar will be limited in the near-term as global coronavirus concerns boost demand for safe havens and U.S. business and consumer confidence remain strong, ING said.

"The immediate focus remains on the breakout of the Delta variant particularly in those countries where vaccination rates are low and the only recourse to policymakers is fresh lockdowns," ING analysts said.

This issue is acute in emerging markets so it's no wonder portfolio flows into those regions have gone into reverse and provided support to the dollar, they said.

The European Central Bank's new forward guidance released on Thursday means interest rates will stay lower for longer and the euro will be seen as one of the preferred funding currencies, ING said.

"Certainly there was nothing bullish for the EUR in yesterday's ECB meeting," ING analysts said. The ECB will be pleased that its trade-weighted euro has fallen to lows seen last July, they said.

The ECB on Thursday said interest rates would remain on hold until inflation reaches its 2% target ahead of the end of its projection horizon.

Bonds:

In the bond market, the yield on 10-year Treasury notes ticked up to 1.279% from 1.264% Thursday.

Inflation-linked bonds could become more attractive with anticipated inflation-target overshoot in the eurozone in the second half of the year, said Patrick Barbe, head of European investment-grade fixed income at Neuberger Berman.

"We conclude the quarterly ECB forecasts are becoming the key driver of the negative rate policy, which raises some uncertainties as we expect inflation rate to overshoot the ECB's 2% target in 2H," he said.

This reinforces the attractiveness of inflation-linked bonds and should lead to being cautious on long-term bonds, he said. He added that the ECB's policy stability for a longer period should lead to an outperformance of short- to medium-term bonds.

Commodities:

Oil prices were lower, with both benchmarks having now erased their precipitous drops from earlier in the week.

With reports suggesting that the next OPEC policy meeting will not be until September and the market now appearing to have priced in concerns about the Delta variant, investors will likely return to taking their cues from demand data next week.

Despite worries over Covid-19, DNB Markets's Helge Andre Martinsen points to broader signs of recovery, with scheduled commercial flights continuing to rise and global petroleum inventories continuing to drop.

LME three-month copper prices rose 0.5% to $9,511 a metric ton, rising for a fourth straight day as inventories in LME warehouses continue to drop and the premium paid for the red metal at warehouses in Yangshan continue to rise, according to Marex Spectron's Anna Stablum.

Meanwhile, tin continued its climb, up 1.8% $34,650 a metric ton with "falling inventories, strong regional premiums and tight forward curves all point to a fast uptick in demand in the U.S. and Europe," Ms. Stablum added.

In the precious metals complex, London gold was up, with the U.S. dollar having softened in recent sessions.

   
 
 

TODAY'S TOP HEADLINES

Electric-Vehicle Sales Growth Outpaces Broader Auto Industry

The auto industry's push into electric vehicles has gained traction this year with sales of these models growing at a faster clip than the broader U.S. car business.

While still a sliver of the overall market, sales of plug-in vehicles more than doubled in the first half of 2021 compared with last year, when the pandemic sapped sales. That far outpaced the 29% rise for total vehicle sales, according to research firm Wards Intelligence.

Read More ->

Snap, Twitter Show Where the Party Is

Social media made a splash on Thursday as its second-quarter earnings kicked off.

Both Twitter Inc. and Snap, Inc. reported better-than-expected quarters, beating Wall Street's estimates on both their top and bottom lines. Twitter's sales growth shows it might be gaining more traction incrementally, at least among advertisers, but Snap's record usage and revenue growth show its Snapchat platform remains the life of the party. Taken together, the reports shed a positive light on what investors can expect next week from Facebook and Pinterest, which are set to report earnings on Wednesday and Thursday, respectively.

Read More ->

Snap Sees Strong User Growth as Pandemic Restrictions Ease

Snap Inc.'s revenue more than doubled in the second quarter and user growth jumped the most in four years, as people continued to flock to the social-media app despite a return to more normal daily routines.

The company projects revenue in the current quarter will climb as much as 60% as its pandemic-era popularity continues, even as the health crisis wanes.

Read More ->

Kaseya Gets Tool to Unlock Data After Ransomware Attack

The technology provider at the center of a ransomware attack this month said it obtained a tool to unlock data targeted by hackers in an incident that disrupted hundreds of firms in several countries.

Miami-based Kaseya Ltd. on Thursday said it received a universal decryptor that would help restore all the computer systems affected by the July 2 hack of one of its products, which acted as a springboard for hackers to reach New Zealand schools, a Dutch information-technology company and other organizations. The ransomware group behind the attack initially demanded $70 million for such a tool.

Read More ->

Amazon-Backed Rivian Automotive Plans Second U.S. Electric-Vehicle Factory

Electric-vehicle startup Rivian Automotive plans to open a second manufacturing plant in the U.S., a move that comes as other car companies also are accelerating in the shift to battery-powered vehicles.

A Rivian spokeswoman said Thursday the company is early in the process of scouting out locations. Rivian already has one plant in Normal, Ill., where it plans to start production on its debut models this year.

Read More ->

Grills Are the Latest Fad in a Scorching IPO Market

The searing market for newly public companies has a new obsession: grills.

Two leading sellers of outdoor grills and grilling accessories, Weber and Traeger, both filed paperwork for initial public offerings earlier this month, while online grilling-and-outdoor-products retailer BBQGuys on Tuesday agreed to go public by combining with a special-purpose acquisition company. The merger values BBQGuys at about $960 million.

Read More ->

Property Investors Bed Down in the Family Home

Wall Street firms are more eager than ever to buy family homes. If they snap up existing supply rather than help build new dwellings, they risk killing their latest golden goose.

Last week, Blackstone's real-estate investment trust bought a portfolio of apartments for $5.1 billion from insurer American International Group. In June, the investment firm spent $6 billion on Home Partners of America, a company that owns more than 17,000 houses across the U.S. and offers renters an option to buy. Private-equity giant KKR launched a new division that will buy homes to rent them out, Bloomberg reported.

Read More ->

GOP Senators Resist Raising Debt Ceiling as Democrats Push Biden Spending Plans

WASHINGTON-Top Senate Republicans said the GOP may line up against any effort to raise the government's borrowing limit this year, adding to the uncertainty surrounding how Congress will address the issue after the limit is reinstated next month.

Senate Minority Whip John Thune (R., S.D.) said at a press conference Wednesday that Democratic plans to advance President Biden's $4 trillion agenda could prompt Republicans to oppose a debt-limit increase, echoing comments Senate Minority Leader Mitch McConnell (R., Ky.) made earlier to the media outlet Punchbowl News.

Read More ->

Singapore's GIC Sees Green Shoots in Uncertain Global Environment

Singapore's sovereign-wealth fund GIC Private Ltd. remains cautious on uncertainty related to the pandemic and inflation concerns, but sees new growth opportunities emerging in areas including technology, sustainability and the reconfiguration of global supply chains.

GIC said in its annual report Friday that it expects global economic recovery to continue amid fiscal stimulus and monetary-policy support, albeit at different rates and with a wide range of potential outcomes over the medium- and long-term.

Read More ->

Western Wildfires Lift Lumber Prices

Lumber prices finally cooled off. Now come the fires.

Forest fires raging in the West are threatening an important swath of the U.S.'s wood supply, pinching output that has been under pressure since the Covid-19 pandemic touched off home buying and remodeling booms and sent lumber prices soaring.

Read More ->

China Rejects WHO Proposal for Second Phase of Covid-19 Origins Probe

TAIPEI-China rejects the World Health Organization's proposal for a second phase of investigation into Covid-19's origins, including a potential laboratory leak, and has put forward its own proposal to seek evidence in other countries, a top Chinese official said.

WHO chief Tedros Adhanom Ghebreyesus presented member states last week with a plan for further study that would include audits of laboratories and markets in Wuhan, the Chinese city where the first cases were identified. He also called for greater transparency from Beijing.

Read More ->

New Aid Planned for Mortgage Borrowers at Risk of Foreclosure

The Biden administration on Friday plans to expand assistance programs for borrowers who fell behind on their mortgages during the Covid-19 pandemic and continue to face economic hardship, a bid to prevent a sharp rise in foreclosures over the coming months.

New modification options will be offered for borrowers with Federal Housing Administration loans and other federally guaranteed mortgages, administration officials said. The changes would aim to extend the length of their mortgages and lock in lower monthly principal and interest payments to keep more borrowers in their homes.

Read More ->

Democrats Unify Behind Climate Corps, Vague on Details

A NEW CIVILIAN CLIMATE CORPS has become a central progressive demand for the Democrats' budget reconciliation package, and party leaders seem poised to go along. Climate groups and elected officials alike see it as a combination of several top priorities: a tangible response to climate change, a broad-based jobs program aimed especially at young people and people of color, and a test case for Franklin Delano Roosevelt-style populism that President Biden is so eagerly trying to emulate. Like the Depression-era Civilian Conservation Corps, it would employ Americans on climate-focused public-works projects like reforestation.

Read More ->

North Miami Beach's Crestview Evacuees Struggle With Weeks of Displacement

NORTH MIAMI BEACH, Fla.-The city's closure of the 156-unit Crestview Towers Condominium on July 2 displaced dozens of families overnight. Three weeks later, they remain in a housing limbo made worse by financial struggles and complicated medical conditions.

Ligia Mora is staying at a Motel 6 near Miami International Airport while caring for her two sons, one of whom is autistic, and an elderly aunt with diabetes. She doesn't have a kitchen to cook meals, and her aunt needs help bathing. Her autistic son is missing his therapy sessions. On the weekends, the hallways smell of marijuana, she says.

Read More ->

Tokyo Olympics Opening Ceremony to Skip Usual Razzle-Dazzle

TOKYO-The opening ceremony of the Olympics on Friday is set to look and feel very different from the bustling celebrations that opened previous Games, with no crowd, no special effects and no stadium-wide synchronized dancing.

Only about half the athletes competing at the Games will be there.

Read More ->

Companies Face Growing Legal Risks Over Ransomware Data Leaks

A cancer patient in Ireland is suing a hospital in Cork after his data was exposed online following a ransomware attack on the country's healthcare system. The suit reflects the legal and financial risks for organizations hit in such cyberattacks.

Legal fallout from ransomware attacks heightens the pain that victim organizations experience after potentially suffering interruptions to business, losing access to data and taking a reputational hit, according to experts. In addition, some companies suffer financial losses and might pay hackers a ransom fee and face regulatory fines for privacy and security violations.

Read More ->

U.S. Vaccine Panel Signals Preliminary Support for Covid-19 Booster Shots

A panel of health experts advising the U.S. government on vaccines expressed preliminary support for giving Covid-19 boosters to immunocompromised people, but said they were waiting for regulatory action before making a formal recommendation.

A work group of the Advisory Committee on Immunization Practices panel also on Thursday endorsed the continued use of J&J's vaccine, despite a recent warning about a low risk of a rare neurological disorder among people taking the shot.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Air Canada (AC.T) 2Q

Economic Indicators (ET):

0830 May Retail trade

Stocks to Watch:

Magna to Acquire Veoneer in Bid to Strengthen Driver Assistance Tech Business

Magna International Inc. is planning to acquire automotive-safety-technology company Veoneer Inc. at an enterprise value of $3.3 billion, in a bid to expand its advanced driver assistance systems business, including in Asia.

As part of the agreement, Magna will acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash, Magna said Thursday.

This represents an equity value of $3.8 billion.

"Veoneer's complementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business, and the acquisition strengthens our global engineering and software development talent base," Magna Chief Executive Swamy Kotagiri said.

The transaction has been unanimously approved by the boards of Magna and Veoneer. The deal is expected to close near the end of 2021, subject to approval by Veoneer stockholders and certain regulatory approvals.

"This is a compelling transaction for all stakeholders," said Jan Carlso, Veoneer's chairman, president and chief executive.

Aecon Outlook for 2021 Remains 'Positive

"Aecon's overall outlook for 2021 remains positive as construction continues on a number of projects that ramped up in 2019 and 2020, backed by the level of backlog and new awards achieved during the first half of 2021 and the strong demand environment for Aecon's services going forward, including recurring revenue programs."

During the second quarter, new awards resulted from strong demand for Aecon's services across Canada in smaller and medium-sized projects, it said, and also incorporated a number of multiyear projects in the nuclear, civil operations and urban transportation systems, and industrial sectors.

Aecon said it is also pre-qualified on a number of large project bids due to be awarded over the next 12 to 18 months.

Recurring revenue is expected to continue to grow in both the utilities sector, the company said, "based on the capital investment plans of a number of key clients, particularly in telecommunications and power-related work, and the

Concessions segment as airport traffic in Bermuda continues its recovery from the impact of the COVID-19 pandemic."

Other News:

No items published

Market Talk:

No items published

   
 
 

Expected Major Events for Friday

06:00/UK: Jun UK monthly retail sales figures

07:15/FRA: Jul France Flash PMI

07:30/GER: Jul Germany Flash PMI

08:30/UK: Jul Flash UK PMI

12:30/CAN: May Retail trade

13:45/US: Jul US Flash Manufacturing PMI

13:45/US: Jul US Flash Services PMI

All times in GMT. Powered by Kantar Media and Dow Jones.

   
 
 

Expected Earnings for Friday

1st Constitution Bancorp (FCCY) is expected to report $0.50 for 2Q.

ASA Gold & Precious Metals Ltd (ASA) is expected to report for 2Q.

Air Canada (AC.T) is expected to report $-2.72 for 2Q.

Altra Industrial Motion Corp (AIMC) is expected to report $0.56 for 2Q.

American Express Co (AXP) is expected to report $1.63 for 2Q.

Ames National (ATLO) is expected to report for 2Q.

Atlantic Capital Bancshares Inc (ACBI) is expected to report $0.52 for 2Q.

Bank of Commerce Holdings (BOCH) is expected to report $0.31 for 2Q.

Bank of the James Financial Group Inc (BOTJ) is expected to report for 2Q.

Camber Energy Inc (CEI) is expected to report for 4Q.

Camber Energy Inc (CEI) is expected to report for 1Q.

Carter's Inc (CRI) is expected to report $0.86 for 2Q.

Civista Bancshares (CIVB) is expected to report $0.55 for 2Q.

Esquire Financial Holdings Inc (ESQ) is expected to report $0.56 for 2Q.

First Hawaiian Inc (FHB) is expected to report $0.47 for 2Q.

Gentex Corp (GNTX) is expected to report $0.43 for 2Q.

Greene County Bancorp (GCBC) is expected to report for 4Q.

Honeywell International Inc (HON) is expected to report $1.93 for 2Q.

InnovAge Holding Corp (INNV) is expected to report for 4Q.

KS Bancorp Inc (KSBI) is expected to report for 2Q.

Kimberly-Clark Corp (KMB) is expected to report $1.71 for 2Q.

Mission Produce Inc (AVO) is expected to report for 2Q.

NextEra Energy (NEE) is expected to report $0.69 for 2Q.

Provident Bancorp Inc (PVBC) is expected to report for 2Q.

Regions Financial Corp (RF) is expected to report $0.52 for 2Q.

Republic Bancorp Inc (RBCAA) is expected to report $1.11 for 2Q.

Republic First Bancorp (FRBK) is expected to report $0.07 for 2Q.

Roper Technologies Inc (ROP) is expected to report $2.59 for 2Q.

Schlumberger (SLB) is expected to report $0.26 for 2Q.

Second Sight Medical Products Inc (EYES) is expected to report for 1Q.

Sensient Technologies Corp (SXT) is expected to report $0.78 for 2Q.

Severn Bancorp (SVBI) is expected to report for 2Q.

Sound Financial Bancorp (SFBC) is expected to report for 2Q.

Southside Bancshares (SBSI) is expected to report $0.69 for 2Q.

Tompkins Financial (TMP) is expected to report $1.44 for 2Q.

United Bankshares (UBSI) is expected to report $0.71 for 2Q.

Powered by Kantar Media and Dow Jones.

   
 
 

ANALYST RATINGS ACTIONS

Airbnb Raised to Buy From Neutral by BTIG

AMC Networks Cut to Sell From Hold by Deutsche Bank

Chevron Cut to Hold From Buy by HSBC

Chevron Raised to Buy From Neutral by Redburn Partners

Cognizant Tech Solutions Raised to Buy From Hold by HSBC

CSX Corp Raised to Buy From Hold by TD Securities

CSX Corp. Raised to Buy From Hold by TD Securities

Envestnet Cut to Underperform From Buy by Jefferies

Interpublic Raised to Neutral From Underperform by B of A Securities

Monmouth Real Estate Raised to Buy From Neutral by Compass Point

Northern Oil Raised to Overweight From Neutral by Piper Sandler

SW Energy Raised to Outperform From Peer Perform by Wolfe Research

Texas Capital Bancshares Raised to Overweight From Neutral by Piper Sandler

Texas Instruments Cut to Hold From Buy by Summit Insights Group

Travelers Cut to Underperform From Buy by B of A Securities

Valmont Industries Raised to Outperform From Neutral by Boenning & Scattergood

Vistra Raised to Buy From Neutral by Guggenheim

Williams-Sonoma Cut to Sell From Neutral by Goldman Sachs

World Acceptance Raised to Equal-Weight From Underweight by Stephens & Co.

This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

July 23, 2021 06:10 ET (10:10 GMT)

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