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Investing.com — Until late Monday afternoon, it looked as though the optimists were beating the pessimists. Then everything changed.
Stocks tumbled after spending most of the day moving up on good news about possible vaccines to combat Covid-19. The turn came after California’s governor ordered indoor activities, such as bars, restaurants, movie theaters and museums, to close back down amid rising virus outbreaks in the Golden State.
Earlier, two of California’s biggest public school districts announced plans for online-only school starting next month.
Uncertainty about how quickly the economy can rebound from Covid-19 shutdowns has been a dark cloud following stocks, though in the past few weeks, investors took any good news as a chance to push stocks higher, especially technology companies. But on Monday, FAANG stocks came under pressure, with Apple Inc (NASDAQ:AAPL) paring gains after jumping more than 3% earlier.
Still, technology has been the undisputed sector leader this year, repeating a pattern it has set for the last few years. Big bank earnings kick off on Tuesday, and investors will get data on consumer prices.
Here are three things that could affect the market tomorrow:
1. Technology Still the Undisputed Winner, Even in Pandemic
As of the close on Friday, information technology was the best-performing S&P 500sector this year, up 18% while most other sectors were in the red, according to data from Fidelity. Only two others, consumer discretionary (up 14%) and communications services (up 5.9%) were positive.
On the negative side, energy was worst-hit, down 40.7% this year as the shutdowns because of the pandemic eliminated demand for oil and gasoline products. Financials are also badly hit, down 23% this year, while industrials are down 16%.
Investors continue to put faith in technology stocks while staying wary of companies more closely tied to the successful reopening of the economy, and if that is any indication, the signs are bearish. Overall, the S&P is down 1.4%.
2. Big Bank Earnings on Tuesday
Big banks begin reporting second quarter results on Tuesday, and expectations are that they will show weakness along with the broader market because of Covid-19 shutdowns, which dominated much of the quarter.
JPMorgan Chase & Co (NYSE:JPM) reports second quarter results on Tuesday morning before the opening bell. Analysts tracked by Investing.com are looking for EPS to be down more than 50%, to $1.19 on revenue of $30 billion, which would be up about 5% from last year’s second quarter.
Citigroup Inc (NYSE:C) is expected to report EPS of 89 cents on revenue of $18.7 billion, and Wells Fargo & Company (NYSE:WFC) is expected to report a loss of 10 cents a share on revenue of $18.3 billion.
Banks have been forced to hold back on share buybacks over concern that credit quality will weaken and result in eventual losses.
3. Consumer Price Data Expected to Show Rise
Data on consumer prices will come out at 8:30 AM ET (1230 GMT) on Tuesday. Analysts tracked by Investing.com expect CPI to rise 0.5% in June and notch a gain of 0.6% over last year’s June. Core CPI is seen rising 1.1% year-over-year.
While gasoline prices at the pump fell during the lockdown periods, crude oil has regained much of its losses and is now trading near $40 a barrel. Demand continues to be spotty, judging by the rising inventories of U.S. crude reported in recent weeks.
Anecdotally, consumers have seen prices for food products rise, even if they did save some money from lower gas prices and staying home during the lockdowns.
