S&P 500 futures slip amid earnings with stocks at all-time highs

Bloomberg

S&P 500 Index futures slipped on Tuesday following a mix of earnings reports, as investors weighed the prospects for further gains after equities closed Monday at fresh records.
Netflix tumbled 13 percent on weaker-than-anticipated subscriber growth, and Philip Morris International Inc. dropped 2.2 percent after its earnings missed forecasts as the strong dollar hurt sales outside of the U.S. Goldman Sachs Group Inc. edged lower, even after its earnings jumped as legal costs fell and fixed-income revenue exceeded forecasts. Johnson & Johnson climbed 2.2 percent after reporting quarterly profit that beat estimates, and IBM Corp. added 0.9 percent after sales increased for the first time in a key unit.
Contracts on the S&P 500 expiring in September dropped 0.2 percent to 2,155 at 9:03 a.m. in New York, after the underlying gauge closed at an an all-time high for the fifth time in six days. Futures on the Dow Jones Industrial Average lost 11 points, or less than 0.1 percent, to 18,440 after the index set a record for a fifth straight session.
“If the U.S. market is at an all-time high and you have a day of waiting for news, investors trim exposure,” said Ben Kumar, investment manager at Seven Investment Management LLP, which oversees 10 billion pounds ($13 billion). Still, “the simple reason that the S&P 500 is at its all-time high is that the fear of a U.S. recession has now vanished, markets are no longer predicting a long period of deflation, they are no longer worried that the jobs recovery is mythical, masking underlying weakness.”
American shares recovered from their losses after the British vote to leave the European Union, with the S&P 500 taking its annual gain to 6 percent amid signs of strength in the economy and speculation that the Federal Reserve will push back the timing on interest-rate increases. While bets for a Fed move have crept up amid improving economic data, traders are still pricing in less than even odds of a move until mid-2017.
A report today showed new-home construction rose more than forecast in June, providing some momentum for residential real estate near the end of its busy selling season.
Even as the earnings season has delivered more positive surprises than negative ones so far, analysts estimate net income at S&P 500 companies will drop 5.8 percent in the second quarter, which would make it a fifth straight decline, the longest streak since 2009. Microsoft Corp. reports results after the market closes.
The International Monetary Fund scrapped its forecast for a pickup in global growth this year, citing the Brexit vote, and warned the damage could worsen if confidence falters among investors and companies. The IMF sees global gross domestic product rising 3.1 percent this year, down from April’s 3.2 percent projection and equal to growth in 2015, according to the fund’s quarterly World Economic Outlook, released today. The 2017 forecast was cut to 3.4 percent from 3.5 percent.