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Day Ahead - Top 3 Things to Watch

Stock MarketsJul 16, 2019 06:08PM ET
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1. Rebound in Housing Market to Continue?

Housing market numbers are on the agenda for Wednesday, with many eager to see whether homebuilder activity will finally get a boost from lower mortgage rates following an unexpected drop in May.

The Commerce Department will report on housing starts and building permits for June at 8:30 AM ET (13:30 GMT).

Economists expect that housing starts slipped to an annual rate of 1.261 million last month.

Building permits, an indication of future demand, are forecast to show a small increase to a rate of 1.3 million.

If there's an abrupt month-to-month change in either estimate, look to see if is occurring in multi-family housing. Starts and permits are more volatile in buildings with five or more units. A gain in single-family starts and permits has a larger impact on the economy.

2. Crude Inventories to Fall for Fifth-Straight Week?

The Energy Information Administration (EIA) petroleum report due Wednesday, comes as oil prices continued their decline for a second-straight day on Tuesday as President Donald Trump toned down his rhetoric on Iran.

Trump insisted his administration was "not looking for regime change" in Iran, and acknowledged the country's foreign minister's willingness to open talks with the U.S. over its missile program.

"They’d like to talk, and we’ll see what happens," Trump said, easing U.S.-Iran tensions and deflating some of the premium that had been baked into oil prices as escalations surged between the two sides in recent weeks.

West Texas Intermediate futures fell 3.3% to settle at $57.62. Brent , the global benchmark, fell 3.2% to $64.35 a barrel. Both may get a boost Wednesday if domestic inventories continue their four-week slide.

Ahead of the EIA report, the American Petroleum Institute released data showing weekly crude stockpiles fell by 1.4 million barrels last week.

The EIA is expected to report a drawdown in crude stockpiles of 2.69 million barrels for the week ended July 14. That would mark the fifth-weekly draw in crude stockpiles.

Netflix, IBM and Bank of America Ready Earnings

With markets ending the day just below all-time highs, quarterly earnings from a host of companies including Netflix, IBM and Bank of America may justify whether the broader market is running too hot or not.

Netflix (NASDAQ:NFLX) reports earnings after the closing bell, and its subscriber numbers will be closely watched, at a time when rivals such as Walt Disney (NYSE:DIS) are pulling content as the streaming wars gather pace. Netflix is off 0.4% in July but is up a whopping 36.7% for the year.

Net new subscribers are expected to come in at 352,000 domestic and 4.8 million international. In April, Netflix (NASDAQ:NFLX) said it expected to add 300,000 new domestic subscribers and 4.7 million international subscribers.

Netflix is expected to report earnings of 56 cents per share on revenue of $4.9 billion, according to analysts polled by

The streaming giant's outlook will also garner attention after Disney, WarnerMedia and NBCUniversal reclaimed the rights to popular titles such as "Friends" and "The Office."

Elsewhere in tech, IBM (NYSE:IBM) will report earnings after the closing bell, with many expecting the tech giant's costly acquisition of Redhat to prove short-term pain but offer long-term gain.

IBM is expected to report earnings of $3.08 a share on revenue of $19.18 billion.

The report comes as the tech company inked a multiyear agreement with AT&T (NYSE:T) on Tuesday to allow the carrier to host its business applications on the IBM Cloud.

Bank of America (NYSE:BAC), meanwhile, will roll out its second-quarter earnings before the bell. The bank's cost-cutting efforts will come under scrutiny, as will its investment banking performance.

Investment banking revenues are expected to take hit from rising trade tensions and a slowing global economy, while borrowing costs and geopolitical concerns likely weighed on M&A deal activity.

The bank is expected to report earnings of 71 cents on revenue of $23.12 billion.

Other notable names reporting performance on Wednesday include eBay, Abbott Labs, US Bancorp(NYSE:USB) and Kinder Morgan.

Day Ahead - Top 3 Things to Watch

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