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Stock futures are wobbling after the S&P 500 hit its 42nd record close of the year. I'm James Willhite, and here's what we're watching ahead of Wednesday's opening bell. Strong earnings reports and economic data have kept stocks pushing higher recently, but the spread of the Delta variant and a slowdown in the rate of vaccinations are prompting concerns of potential new lockdowns. Robinhood shares are jumping premarket after surging on Tuesday past their IPO level. A private-sector jobs report and services figures are due this morning. General Motors and CVS Health will report earnings before the open; Uber and Etsy will give updates after the close. Read our full market wrap here. Meanwhile, our David Benoit reports that undrawn lines of credit to businesses are soaring, and could presage a spending spree. |
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Lyft: The ride-hailing company achieved a measure of profitability a quarter earlier than expected, marking a surprising comeback after the pandemic initially crushed demand. Activision Blizzard: The videogame publisher said two executives are leaving the company, as it seeks to stabilize its business after a gender-bias lawsuit and calls to improve its culture. It also said profit climbed 51% in the recent quarter from a year earlier to $876 million. Hyatt Hotels: The hotel company raised its guidance for net rooms growth and reiterated its guidance for capital expenditures. Victoria's Secret: Shares of the lingerie company rose 27% in their trading debut Tuesday after it completed its separation from L Brands. Devon Energy: The shale company said it expects to have the highest dividend yield in the entire S&P 500 index. Avis Budget: The car-rental company's board approved a plan to increase the company's stock buyback program by $1 billion, the second time it has raised its buyback authorization in a few months. Uber, Etsy, CVS Health, Kraft Heinz, New York Times, Fox, Rent-A-Center, Electronic Arts, GoDaddy, Hostess Brands, McKesson and Marathon Oil are among the companies reporting earnings on Wednesday. |
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| Businesses Are Loading Up on Credit. Spending Could Follow. |
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Businesses are sitting on record amounts of unused credit from U.S. banks, another quirk in the economic recovery that bankers say could help unleash pent-up spending in the coming months. Bank executives said their business clients have in recent months ramped up requests for credit lines that can be drawn quickly for spending on inventory, labor or expansions. Companies aren’t actually drawing the money into their bank accounts just yet. Businesses are already stuffed with cash, and supply-chain issues and labor shortages have crimped their ability to spend it. But bankers say the activity in recent months is evidence that businesses are planning to turn on the spending spigot. That could help the economy shoot higher. JPMorgan Chase and Bank of America, the two biggest banks in the U.S., together had nearly $1 trillion in unused corporate credit at the end of June. That is up 20% from a year ago and a quarterly record at both banks. “This virtuous circle of hiring workers and meeting customer spending will help drive the economy, and hopefully will result in more line usage on our loans,” Bank of America Chief Executive Brian Moynihan told analysts last month. For large banks with a bigger concentration on commercial lending, there has been an average 21% increase in unused commercial and industrial credit compared with the prior year, according to a review of available filings by Janney Montgomery Scott analysts. The Federal Reserve’s survey of senior loan officers in July reported banks were getting more inquiries from commercial and industrial borrowers about both new and increased credit lines. The banks also said they had loosened their restrictions on the maximum size of the lines. Bank executives said the demand is coming from companies in healthcare, industrial products, food products and wholesale supply. They said companies appear to be arming up in hopes they can build back inventory quickly if their supply chains can deliver the products they need. For a longer version of this article online, follow this link. Are companies gearing up for a spending spree? Let us know by replying to this email. Your comments may be edited before publication in future newsletters, and please make sure to include your name and location. |
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Natural gas has been in high demand to run air conditioners and make up for parched hydropower markets, and forecasters expect booming exports and more steamy weather to keep supplies down and prices up. |
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💰 Venture-capital investment into Indian education-technology companies last year amounted to nearly $1.5 billion, six times the level in 2019, according to Bain & Co. 📈 U.S. stocks weren't the only ones reaching records in North America on Tuesday. Canada's benchmark S&P/TSX Composite Index also hit a new record close, having added 78.05 points, or 0.4%, to reach 20365.85. 🏛️ On this day in 1790, Congress enacted Alexander Hamilton’s plan to fund the public debt, ending years of turmoil and haggling over the junk bonds issued by the federal and state governments during the Revolution. The shift made government spending possible, and gave birth to the American securities markets. |
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ADP's jobs report, due at 8:15 a.m. ET, is expected to show U.S. private-sector employment increased by 653,000 in July. IHS Markit's U.S. services index for July, due at 9:45 a.m., is expected to hold at 59.8, unchanged from a preliminary reading. The Institute for Supply Management's services index, due at 10 a.m., is expected to tick up to 60.5 in July from 60.1 a month earlier. Federal Reserve Vice Chairman Richard Clarida speaks on monetary policy at a Peterson Institute for International Economics webcast at 10 a.m. |
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| Gary Gensler, chairman of the U.S. Securities and Exchange Commission, at SEC headquarters in Washington last month. PHOTO: MELISSA LYTTLE/BLOOMBERG NEWS |
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The crypto “Wild West” needs stronger investor protection, the SEC chief said. The Securities and Exchange Commission will police cryptocurrency markets to the maximum extent possible, Chairman Gary Gensler said, repeating his call for Congress to grant the agency more authority and resources to regulate the sector. For some, Affordable Care Act health plans could be cheaper—or even free. Questions and answers on who is eligible for premium assistance, how the assistance works and what to consider before switching policies. Deutsche Bank is set to resume sponsoring Hong Kong IPOs after filling a staffing gap. Two hires give the bank the personnel required to sponsor initial public offerings in the city, after a setback with the departure of two staffers. Wolverine bought Sweaty Betty for $410 million. The maker of Wolverine boots and Keds, Saucony and Merrell sneakers is diving deeper into apparel with the acquisition of women’s activewear brand Sweaty Betty. Law school is losing its luster as debts mount and salaries stagnate. With high-paying jobs out of reach for most, graduates of the University of Miami and other well-regarded programs routinely carry six-figure student loans for years. “I thought I would come out making much more than I did,” said a recent graduate who owes nearly $300,000. |
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| What We've Heard on the Street |
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We want to be the first place you go to get ready for the opening bell every day. This newsletter is written and edited by James Willhite (@jimwillhite; james.willhite@wsj.com) in London. |
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