Investing.com - Here are the top five things you need to know in financial markets on Wednesday, July 18:
1. Powell Back On Capitol Hill
Investors looked ahead to a second appearance from Federal Reserve Chair Jerome Powell, after comments he made Tuesday reinforced views the central bank is on track to steadily hike interest rates.
He is due to testify in front of the House Financial Services Committee at 10:00AM ET.
In his first day of testimony to the Senate Banking Committee on Tuesday, Powell stuck with an upbeat assessment on the U.S. economy, while downplaying the impact of global trade risks on the outlook for rate rises.
Those comments underlined expectations in financial markets that two more rate hikes are coming from the Fed this year.
Besides Powell, the economic calendar will bring investors the June data on housing starts and building permits, due at 8:30AM ET. The Fed also releases its beige book on the economy at 2PM ET.
2. Morgan Stanley , IBM In The Earnings Spotlight
Among the slew of earnings to be reported on Wednesday, market participants will focus on second-quarter numbers from Morgan Stanley (NYSE:MS) slated to be released at 7:00AM ET. Analysts are forecasting earnings per share (EPS) of $1.11 on revenue of $10.05 billion. The same period of last year had $0.87 in EPS and $9.5 billion in revenue.
Results in the morning are also expected from US Bancorp (NYSE:USB), M&T Bank (NYSE:MTB), Northern Trust (NASDAQ:NTRS), Textron (NYSE:TXT), and Abbott Laboratories (NYSE:ABT).
After the closing bell, earnings from IBM (NYSE:IBM) and American Express (NYSE:AXP) will both be in the spotlight, along with eBay (NASDAQ:EBAY).
Investors will also be focused on Brussels and on Google parent Alphabet (NASDAQ:GOOGL) shares. Media reports suggest the U.S. tech giant will be hit with a $5 billion regulatory fine as the European Commission presents the findings of an eight-year probe into the company’s Android operating system for mobile phones.
3. U.S. Stock Futures Point To Slightly Higher Open
U.S. stock futures pointed to a slightly higher open, as investors looked ahead to the latest batch of corporate results and more remarks by Fed Chair Jerome Powell.
At 5:30AM ET, the blue-chip Dow futures were up 23 points, or about 0.1%, while the S&P 500 futures and the tech-heavy Nasdaq 100 futures were both set to open little changed from the previous session.
U.S. stocks closed higher on Tuesday, with the tech-heavy Nasdaq composite notching a record high thanks to strong gains for Amazon (NASDAQ:AMZN) and a rebound in Netflix (NASDAQ:NFLX) shares.
Elsewhere, in Europe, most of the region's major bourses traded higher in mid-morning trade, with almost every sector in positive territory.
Earlier, Asian shares closed mixed, after firmer gains seen earlier slightly faded.
4. Powell's Optimism Fuels Dollar Rally
Away from equities, the U.S. dollar extended its rally following Powell's bullish comments about the strength of the U.S. economy and the outlook for future interest rate hikes.
The dollar index, which measures the greenback’s strength against a basket of six major currencies, was 0.3% higher at 95.00, just below its 12-month high of 95.25 hit in late June.
Against the yen, the dollar climbed to as high as 113.14 (USD/JPY), its strongest since January 9.
The euro dropped to a more than two-week low of 1.1608 (EUR/USD).
The British pound sank to a 10-month low of 1.3011 (GBP/USD), as unexpectedly weak inflation data diminished chances for an August rate hike by the Bank of England.
Meanwhile, in the bond market, U.S. Treasury prices were little changed, with the benchmark 10-year yield holding steady at 2.86%, while the Fed-sensitive 2-year note was at 2.61%.
The rising U.S. dollar coupled with higher U.S. interest rates spelled trouble for gold, which crashed through major chart support to hit a one-year low.
5. Oil Prices Under Pressure Ahead of U.S. Inventory Data
The U.S. Energy Information Administration (EIA) will release its official weekly oil supplies report for the week ended July 13 at 10:30AM ET, amid forecasts for an oil-stock drop of 3.6 million barrels.
After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories rose by 629,000 barrels last week.
U.S. West Texas Intermediate WTI crude was down 50 cents, or 0.7%, at a nearly one-month low of $66.67 a barrel.
Brent crude futures were down 60 cents, or 0.8%, at $71.57 a barrel, after earlier touching a three-month low of $71.23.