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Here are the key events taking place on Tuesday that could impact trading.
ENERGY POLICY: JPMorgan CEO Jamie Dimon, in a recent client call, insisted that boosting natural gas production in the United States was not at odds with the goal of reducing greenhouse gas emissions.
“We should focus on climate. The problem with that is because of high oil and gas prices, the world is turning back on their coal plants. It is dirtier,” Yahoo Finance reported of Dimon’s call last week.
“Why can‘t we get it through our thick skulls, that if you want to solve climate [change], it is not against climate [change] for America to boost more oil and gas?” Dimon reportedly said.
JPMorgan CEO Jamie Dimon recently insisted boosting natural gas production in the U.S. was not contrary to the goal of reducing greenhouse gas emissions. (REUTERS/Jeenah Moon/File Photo / Reuters Photos / Reuters Photos)
JPMorgan has pledged to achieve net-zero emissions by 2050 in accordance with the Paris Agreement. The bank said its commitment ensures that it is measuring the emissions of its clients in key sectors of its financing portfolio.
In a letter to shareholders last year, Dimon said “national security demands energy security for ourselves and our allies overseas,” adding that “using gas to diminish coal consumption is an actionable way to reduce CO2 emissions expeditiously.”
The matter of domestic energy production has taken on greater urgency this year amid skyrocketing gas prices and Russia’s ongoing invasion of Ukraine that has walloped Europe’s energy needs.
Dimon has called for a “Marshall Plan” to ensure energy security for the United States and its European allies. He said that European nations who are highly dependent on Russian energy require help from the U.S.
REAL AUDIT TARGETS: William Henck, a former Internal Revenue Service (IRS) lawyer who was forced out after making allegations of internal malfeasance, said the government will target middle-income Americans with new audits under the Inflation Reduction Act.
Henck, who worked at the IRS for 30 years until departing in 2017, slammed the IRS and others who have argued additional funding would only result in increased audits for billionaires and corporations. The Inflation Reduction Act, which President Biden is slated to sign into law on Tuesday, would nearly double the IRS’ budget, appropriating an additional $79 billion to the agency over the next decade.
“The idea that they’re going to open things up and go after these big billionaires and large corporations is quite frankly bulls–t,” Henck told FOX Business in an interview. “It’s not going to happen. They’re going to give themselves bonuses and promotions and really nice conferences.”
“The big corporations and the billionaires are probably sitting back laughing right now,” he continued.
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President Joe Biden is scheduled to sign the Inflation Reduction Act on Tuesday, August 16, 2022. (Doug Mills/Pool/Sipa | Samuel Corum/Bloomberg/Getty Images / Getty Images)
Henck added he thought it was “insane” to double the agency’s budget. He said the IRS will target businesses who don’t have enough money to hire Washington lobbyists.
Americans with an annual income of less than $75,000 would be subject to nearly 711,000 new IRS audits under the legislation, according to a House GOP analysis that used historic audit rates. By comparison, individuals making more than $500,000 will receive about 95,000 additional audits as a result of the Inflation Reduction Act.
EARNINGS REPORTS: Dow members Walmart and Home Depot are in the earnings spotlight Tuesday morning when the two retailing giants post their 2nd quarter results.
Also watch for numbers from optical networking products maker Lumentum Holdings.
In addition, their smaller rivals, Target and Lowe’s, will report on Wednesday.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 132.60 | +0.38 | +0.29% |
| HD | THE HOME DEPOT INC. | 314.61 | -0.28 | -0.09% |
| LITE | LUMENTUM HOLDINGS INC. | 96.19 | +1.92 | +2.04% |
| TGT | TARGET CORP. | 173.39 | +0.91 | +0.53% |
| LOW | LOWE’S COS. INC. | 208.04 | +1.57 | +0.76% |
| KSS | KOHL’S CORP. | 33.06 | -0.12 | -0.36% |
| TJX | THE TJX COS. INC. | 65.37 | -0.10 | -0.15% |
| ROST | ROSS STORES INC. | 90.16 | +0.04 | +0.04% |
| BJ | BJS WHSL CLUB HLDGS INC | 69.11 | +0.82 | +1.20% |
| FL | FOOT LOCKER INC. | 31.43 | -0.09 | -0.29% |
Also watch for results from department stores Kohl’s, TJX Cos. (parent of TJ Maxx), and Ross Stores, warehouse club chain BJ’s Wholesale Club, and sportswear retailer Foot Locker among others.
More than 90% of the companies in the S&P 500 have reported April-through-June results, with earnings and revenue numbers coming in far ahead of lowered expectations.
HOUSING DATA: Reports on housing and factory activity are on deck Tuesday morning, beginning at 8:30 a.m. ET when the Commerce Department is expected to say that the number of new homes under construction in July fell 1.2% to a seasonally adjusted annual rate of 1.540 million.
That’s almost 20,000 fewer than in June and would be the lowest since April 2021.
Housing starts are down almost 14% from a near 16-year high of 1.810 million in April (the highest since June 2006) as increased borrowing costs reduce affordability.
Permits for future construction, a good gauge of future housing activity, are anticipated to fall 2.7%, the fourth straight monthly decline, to 1.650 million in July, the lowest since September (January’s print of 1.899 million was the highest since May 2006).
Houses under construction at the Norton Commons subdivision in Louisville, Kentucky, on Friday, July 1, 2022. (Luke Sharrett/Bloomberg via Getty Images / Getty Images)
The report follows the NAHB’s housing market index, out Monday morning, which fell unexpectedly this month to the lowest levels since May 2020 as high mortgage rates and construction costs weighed on the mood of homebuilders.
Then, at 9:15 a.m. ET, the Federal Reserve will post industrial production data for July.
Factory output is expected to increase 0.3% for the month, following a 0.2% slide in June (the report measures the change in the volume of goods produced in the U.S. regardless of price, so there is no distortion from inflation).
The plant-use rate is seen edging up to 80.1%, not far below April’s reading of 80.4% which was the highest since February 2008.
STOCKS RALLY: U.S. stocks climbed Monday, extending their recent winning streak, while commodity prices fell on worries about slowing growth in China.
The S&P 500 added 16.99 points, or 0.4%, to 4,297.14 after capping a fourth consecutive week of gains on Friday.
The Dow Jones Industrial Average added 151.39 points, or 0.4%, to 33,912.44 and the Nasdaq Composite advanced 80.87 points, or 0.6%, to 13,128.05.
Nine of the S&P 500’s 11 sectors rose, with consumer staples and utilities leading the gains. Energy and materials stocks declined with commodity prices. Stocks have generally rallied since mid-June.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 33912.44 | +151.39 | +0.45% |
| SP500 | S&P 500 | 4297.14 | +16.99 | +0.40% |
| I:COMP | NASDAQ COMPOSITE INDEX | 13128.053131 | +80.87 | +0.62% |
Signs inflation in the U.S. peaked earlier this summer have investors hoping the Federal Reserve will raise rates at a slower pace starting in September. That in turn has dragged yields on government bonds down from their highs of the year and given a boost to the stock market.
The yield on 10-year U.S. Treasuries slipped to 2.790% from 2.848% Friday.
Some investors say stocks have fallen far enough this year to become attractive buying opportunities again.
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The S&P 500 has climbed 17% since June 16 but remains down 9.8% in 2022.
Major stock indexes opened Monday’s session lower after data on factory output, investment, consumer spending and real estate showed China’s economy stumbled in July, prompting the central bank to cut interest rates.
The slowdown adds to pressure on the world economy stemming from the war in Ukraine, high energy prices in Europe, financial strains on several emerging-market economies and rising interest rates in the U.S.
