Watch For:

U.S. New Home Sales for June, Tesla 2Q earnings,

Opening Call:

Stock futures dropped Monday, suggesting that the major stock indexes will retreat from last week's all-time highs after markets in China and Hong Kong plummeted.

Futures linked to the Dow Jones Industrial Average retreated. the blue chip index on Friday crossed the 35000 closing milestone for the first time in its history after climbing over 1% last week.

Rising concerns over the Delta variant of Covid-19 and concerns over economic growth are also likely to challenge the pace at which the U.S. stock market will rise in the coming weeks, investors said. Money managers are also awaiting guidance from the Federal Reserve this week, including policy makers' outlook on inflation and any clues on when the central bank may start scaling back its bond purchase program.

"This will be a choppy environment for the rest of the year as markets deal with growth that isn't as strong, and markets turn to the potential withdrawal of policy support," said Hugh Gimber, a strategist at J.P. Morgan Asset Management. "You would expect that the spread of the Delta variant would put restrictions in place longer and some supply bottlenecks may not last just a few months."

Investors are also awaiting earnings from a bevy of American companies including giant technology companies this week that will indicate how large businesses are weathering the pandemic and a recent uptick in inflation. Lockheed Martin is slated to post earnings before the market opens, and electric-car maker Tesla is due to report after the closing bell.

"This week is really where we enter crunchtime for earnings," Mr. Gimber said. "With tech names reporting, the bar is high."

Chinese shares tumbled after Beijing once again took aim at some of the country's fast-growing listed companies, fueling investors' concerns about regulatory risks.

Over the weekend, Chinese state media confirmed the after-school tutoring sector faced a clampdown, while the national antitrust authority levied a symbolic fine on internet giant Tencent Holdings and ordered it to give up some exclusive music-licensing rights.


The dollar could rise if the Federal Reserve signals that its bond buying program won't continue for much longer in a policy decision Wednesday, Commerzbank said.

The Fed could imply this by changing its statement to say that it would continue buying bonds "until further progress has been made" from the current "until substantial progress has been made," Commerzbank currency analyst Ulrich Leuchtmann said.

While the bond-buying program is "pretty irrelevant" for the foreign exchange market, a change in wording would suggest the Fed, unlike the European Central Bank, is "willing to take restrictive steps again," he said.

Cryptocurrencies jumped Monday, with bitcoin rising more than 18% from its 5 p.m. ET level Friday.

Investors pointed to short positions being liquidated and speculation that may be venturing into digital currencies. The price of bitcoin rose to as much as $39,544.29, its highest level since mid June, according to CoinDesk.

EUR/USD, last steady at 1.1773, is likely to "stay sluggish" but stuck within a tight range as both the euro and the dollar are held back, said UniCredit.

Lower U.S. Treasury yields have been "a drag" on the dollar in recent weeks, but lower German bond yields following last week's hints of prolonged stimulus from the European Central Bank aren't helping the euro either, the bank said.

Softer U.S. new homes sales, due later Monday, would likely have a "negligible impact" on the dollar, UniCredit said.

The ongoing clash between the U.K. and EU over post-Brexit trading arrangements for Northern Ireland is likely to limit any sterling gains this week in the absence of market-moving economic data, ING said.

"It appears very little downside risks related to this topic are priced into GBP, and a combination with a USD-positive Fed meeting could make cable [GBP/USD] re-test the 1.3600 support this week."


Morgan Stanley keeps short U.S. Treasuries, seeing the fair value of 10-year U.S. Treasury yields at around 1.60% in the current environment, said strategist Guneet Dhingra.

In assessing the fair value, Morgan Stanley makes assumptions about where it thinks the market can price in the timing of the first rate hike by the Federal Reserve and the subsequent pace.

Taking a conservative approach, Morgan Stanley thinks the market can price the first hike in the first or second quarter of 2023, Dhingra said.

German Bunds are expected to outperform U.S. Treasuries due to the diverging monetary policies of the European Central Bank and the Fed, said Morgan Stanley.

"We think that the increasingly divergent reaction functions between the Fed and the ECB will likely favour Bund outperformance versus USTs over the near term," said strategists Alina Zaytseva and Lorenzo Testa.

They see the risks for the July FOMC meeting as skewed toward an upbeat and hawkish message, while the ECB's position is dovish. The 10-year UST-Bund spread is 168 basis points, according to Tradeweb.

Morgan Stanley thinks a reversal to above 200 basis points may not be attainable in the short run, though.


Oil prices fell, continuing the volatility the market has experienced in recent weeks.

Investors are increasingly worried about rising coronavirus case numbers in several major Asian economies and "any significant reversal of easing in restrictions in parts of Europe and the U.S. would send a fairly bearish signal to the market, particularly when you consider the higher vaccination rates in those regions," said ING's Warren Patterson.

In addition, traders reduced their net bets on rising Brent and WTI prices last week to their lowest since May and November respectively

Base metal prices slipped as China's crackdown on the equity market prompts inventors to flee from risk assets. Three-month copper on the LME was down 0.6% at $9,571.50 a metric ton, while aluminum fell 1% to $2,483.50 a ton and nickel edged down 0.2% to $19,440 a ton.

China on Monday continued efforts to tighten regulations on some companies by placing strict restrictions on the country's booming after-school tutoring industry.

That prompted sharp falls for the country's stocks as investors shunned risk assets.



Tesla Poised for Record Earnings as It Navigates Global Chip Shortage

Tesla Inc. is expected to report a record quarterly profit, largely evading the effects of a global chip shortage that has constricted the global auto industry.

The Silicon Valley electric-car maker produced more than 206,000 vehicles in the second quarter, more than doubling its year-earlier output. Global auto sales have cooled somewhat amid a shortfall of semiconductors. Many auto makers, including Ford Motor Co. and General Motors Co., have been forced to idle assembly plants over supply constraints, squeezing vehicle inventories and pushing up prices.


Credit Suisse Settles Spying Case With Ex-Executive Iqbal Khan

Credit Suisse Group AG said it reached a settlement with a former executive and private investigators over a spying scandal that rocked the bank.

In fall 2019, the Swiss bank hired investigators to spy on Iqbal Khan, a top wealth-management executive who was leaving to join rival UBS Group AG. Mr. Khan spotted one of the investigators and went to the police, setting off international headlines and leading to the ouster of the bank's chief executive over the reputational fallout.


Covid-19 Pill Race Heats Up as Japanese Firm Vies With Pfizer, Merck

A Japanese company has started human trials of the first once-a-day pill for Covid-19 patients, joining Pfizer Inc. and Merck & Co. in the race to find treatments for the disease.

Osaka-based Shionogi & Co., which helped develop the blockbuster cholesterol drug Crestor, said it designed its pill to attack the Covid-19 virus. It said the once-a-day dosing would be more convenient. The company said it is testing the drug and any side effects in trials that began this month and are likely to continue until next year.


A Space Company's Wall Street Launch Misfires

WASHINGTON-A space-transportation company trying to go public didn't tell potential investors that its satellite-hauling technology failed, that it lost contact with a satellite in space and that its Russian founder had been deemed a national-security risk by the U.S. government, the Securities and Exchange Commission said.

Had the company, Momentus Inc., filed for a traditional initial public offering, the bankers working on the deal could be liable for any misleading statements to investors. But it didn't. It is attempting to go public by merging with a special-purpose acquisition company-a route that doesn't require bankers to do full due diligence on the business breaking into public markets.


China's Tutoring Crackdown Slams Stocks

SINGAPORE-China confirmed it would take drastic steps to restrain the country's booming after-school tutoring industry, prompting further selloffs in stocks like New Oriental Education & Technology Group Inc. on Monday.

The restrictions, published over the weekend by state media, are the most recent regulatory assault on a fast-growing part of the Chinese economy. They follow a monthslong crackdown on various parts of China's technology industry that has rattled companies like Alibaba Group Holding Ltd., its unlisted sister company Ant Group Co., and ride-hailing giant Didi Global Inc.


A Key Gauge of Future Inflation Is Easing

One of the most important signals of future inflation has begun to ease in the past month, a development that should reassure the Federal Reserve in its prediction that the recent inflation surge will prove largely temporary.


Hot Used-Car Market Boosts Auto Lenders and Borrowers

Red-hot demand for used cars is turning the auto-lending world upside down.

Prices are so high that some lenders are coming out ahead on defaulted auto debt. And far fewer borrowers are underwater on their car loans, meaning they don't owe more than the car is worth when they trade it in. It is a tricky time to buy a car, but a pretty good time to owe money on one.


Bitcoin Jumps 20% to a Six-Week High

The price of bitcoin jumped to a six-week high on Monday, with some investors attributing the rally to short positions being liquidated and speculation that Inc. may be venturing into digital currencies.

Bitcoin soared to $39,112.05, up more than 20% from its 5 p.m. EDT level Friday, according to CoinDesk, reaching its highest level since mid-June. Ether, its rival currency, jumped more than 16%.


German Business Sentiment Falls in July

German business sentiment worsened in July amid an increase in coronavirus infections and supply woes, missing forecasts for an increase.

The Ifo business-climate index came in at 100.8 points in July compared with the 101.7 points registered in June, according to data from the Ifo Institute released Monday. The reading missed a forecast from economists polled by The Wall Street Journal, who expected the index to increase to 102.5.


Senators Try to Finalize Deal on Infrastructure Package

WASHINGTON-Lawmakers pushed to finalize an infrastructure agreement Sunday, but said they were still struggling to resolve a dispute over how much to increase public-transit funding, a snag that could delay their goal of advancing the bill in a Senate vote early this week.

GOP senators had blocked efforts by Democrats to begin consideration of the roughly $1 trillion infrastructure bill on Wednesday, saying too much of the package remained unresolved. Lawmakers in a bipartisan group crafting the legislation said late last week that they hoped to finish in time to reverse that outcome in a second vote in the next few days.


U.S. Set to Push Global Economy Over the Recovery Line

The U.S. economy likely returned to its late-2019 size during the three months through June, helping to lift global output above its pre-pandemic level for the first time.

Economists surveyed by The Wall Street Journal estimate that figures to be released Thursday will show that the U.S. gross domestic product rose at an 8.5% seasonally adjusted annual rate in the second quarter. That likely left U.S. GDP-the value of all goods and services produced across the economy, adjusted for seasonality and inflation-above the $19.2 trillion level reached in the final quarter of 2019, the last before the spread of Covid-19 pushed large parts of the global economy to shut down and contract, they say.


What's Holding Back China's Recovery? The Kids Aren't Alright

What is holding back China's economic recovery, particularly in services and consumption?


Investors Are Buying American

Investors around the globe are pouring money into U.S. financial assets, a sign of confidence that the world's largest economy remains poised to pull through the Covid-19 pandemic better than many others.


Tokyo's Olympics Were Supposed to Be in 2020. Tokyo's Covid Protocols Are Still There.

TOKYO-Under the lights of the Nippon Budokan arena this weekend, Naohisa Takato elevated all 130 pounds of himself to hero status as he won Japan's first gold of the Olympics.

And when his symbolic moment came atop of the podium, he beamed with the pride of a nation as he waited for his prize. The medal was presented to him on a tray like an airplane lunch.


Covid-19 Immunity Wanes, but Third Shot Still Rarely Needed, BioNTech CEO Says

BERLIN-Immunity against the coronavirus is waning in people who were fully vaccinated with the shot made by BioNTech SE and Pfizer Inc. in January because of the rapidly spreading Delta variant, BioNTech's chief executive said, confirming data that emerged from Israel last week.

But even as antibody levels are dropping seven months after immunization among some vaccine recipients, most of them will remain protected against severe disease and might not yet need a third dose, according to Ugur Sahin, CEO of the German company that invented the vaccine and partnered with Pfizer to develop the product for the global market.


Fires Continue to Rage in Oregon, Northern California

Fire crews made progress Sunday in containing the nation's largest forest fire, named after Bootleg Creek in southern Oregon, as scores of blazes raged in the parched Pacific Northwest, northern Rockies and northern California.

The Bootleg Fire was 46% contained Sunday afternoon, according to Sarah Gracey, a spokeswoman for fire agencies fighting the blaze, which has burned close to 410,000 acres. More than 2,400 people have been evacuated and 67 houses have been destroyed, but there were no new evacuations announced Sunday, she said.


U.S. Intensifies Airstrikes in Afghanistan as Taliban Offensive Nears Kandahar

The U.S. has stepped up airstrikes in southern Afghanistan amid growing apprehension over a Taliban offensive threatening Kandahar, the country's second-largest city and spiritual capital of the Taliban movement.

The fall of Kandahar would deal a heavy blow to the U.S.-backed government in Kabul, which is trying to impart calm to its citizens as the Taliban has seized swaths of the countryside, but so far failed to take a major city.


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Celestica Inc. (CLS.T) 2Q

Copper Mountain Mining (CMMC.T) 2Q

TFI Intl Inc. (TFII.T) 2Q

Economic Indicators (ET):

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Stocks to Watch:

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Expected Major Events for Monday

00:30/JPN: Jul Japan Flash Manufacturing PMI

08:00/GER: Jul Ifo Business Climate Index

10:00/FRA: 1Q OECD Quarterly Employment Situation

14:00/US: Jun New Residential Sales

14:30/US: Jul Texas Manufacturing Outlook Survey

23:01/UK: Jun Zoopla House Price Index

23:50/JPN: Jun Services Producer Price Index

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


Expected Earnings for Monday

AMCON Distributing Co (DIT) is expected to report for 3Q.

ATI Physical Therapy Inc (ATIP) is expected to report for 2Q.

Agree Realty (ADC) is expected to report for 2Q.

Alexandria Real Estate Equities Inc (ARE) is expected to report $0.57 for 2Q.

Alliance Resource Partners LP (ARLP) is expected to report $0.73 for 2Q.

American Campus Communities Inc (ACC) is expected to report $-0.07 for 2Q.

Amrep Corp (AXR) is expected to report for 4Q.

Bank of Hawaii Corp (BOH) is expected to report $1.31 for 2Q.

Brandywine Realty Trust (BDN) is expected to report $0.01 for 2Q.

Cadence Design Systems (CDNS) is expected to report $0.47 for 2Q.

Calix (CALX) is expected to report $0.21 for 2Q.

Chemung Financial (CHMG) is expected to report $1.09 for 2Q.

Coastal Financial Corp (CCB) is expected to report $0.48 for 2Q.

Copper Mountain (CMMC.T,CPPMF) is expected to report $0.15 for 2Q.

Dorman Products (DORM) is expected to report $1.12 for 2Q.

Eco (Atlantic) Oil & Gas Ltd (EOG.V) is expected to report for Full year.

Enterprise Financial Services Corp (EFSC) is expected to report $1.07 for 2Q.

Exagen Inc (XGN) is expected to report for 2Q.

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

First Merchants Corp (FRME) is expected to report $0.92 for 2Q.

HBT Financial Inc (HBT) is expected to report for 2Q.

Hasbro Inc (HAS) is expected to report $0.43 for 2Q.

Helix Energy Solutions (HLX) is expected to report $-0.08 for 2Q.

Lake Shore Bancorp (LSBK) is expected to report for 2Q.

Lakeland Financial (LKFN) is expected to report $0.86 for 2Q.

Ledyard Financial Group (LFGP) is expected to report for 2Q.

Lennox International Inc (LII) is expected to report $4.40 for 2Q.

Lockheed Martin Corp (LMT) is expected to report $6.56 for 2Q.

Medpace Holdings Inc (MEDP) is expected to report $0.99 for 2Q.

National Bank Holdings (NBHC) is expected to report $0.70 for 2Q.

Northwest Bancshares Inc (NWBI) is expected to report $0.30 for 2Q.

Otis Worldwide Corp (OTIS) is expected to report for 2Q.

PetMed Express (PETS) is expected to report $0.36 for 1Q.

PotlatchDeltic Corp (PCH) is expected to report $2.72 for 2Q.

Prudential Bancorp Inc (PBIP) is expected to report $0.23 for 3Q.

RPM International Inc (RPM) is expected to report $1.26 for 4Q.

Sino-Global Shipping Amer (SINO) is expected to report for 3Q.

Sun Communities Inc (SUI) is expected to report for 2Q.

Tesla Inc (TSLA) is expected to report $0.55 for 2Q.

U.S. Gold Corp (USAU) is expected to report for 4Q.

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


(END) Dow Jones Newswires

July 26, 2021 06:12 ET (10:12 GMT)

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