Investing.com - Here are the top five things you need to know in financial markets on Friday, July 27:
1. Amazon sends earnings relief as Twitter, Chevron , Exxon and Merck step up
After a 19% plunge in Facebook’s (NASDAQ:FB) stock price on Thursday, investors appeared to breathe a sigh of relief as Amazon’s (NASDAQ:AMZN) own quarterly earnings didn’t disappoint. The online retailer forecast operating income of between $1.4 billion and $2.4 billion for the third quarter, beating analyst estimates of $843 million, and shares rose more than 3% in extended trading.
Friday marks the end of one of the busiest weeks in the earnings season with an additional 55 companies reporting.
The focus will likely be on Twitter’s (NYSE:TWTR) results, scheduled for release at around 7:00 AM ET (11:00 GMT). Analysts, on average, are expecting Twitter to report a profit of 16 cents per share, up from 5 cents per share in the same quarter a year ago. Revenue is forecast to come in a little less than $698 million.
Attention will also be paid to earnings from Dow components Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Merck (NYSE:MRK).
2. U.S. set for best growth in nearly 4 years
Investors will keep an eye on a preliminary reading of second-quarter U.S. growth due at 8:30AM ET (12:30 GMT) Friday for further clues on when and how fast the Federal Reserve will raise interest rates.
The report is expected to show the economy expanded at an annual rate of 4.1% in the April-June period, more than double the first quarter's output. That would be the highest since the third quarter of 2014.
Speaking at a steel mill in Granite City, Illinois, on Thursday, U.S. President Donald Trump doubted the expansion would reach the 5.3% some economists have penciled in, but said that “if it has a four in front of it, we’re happy.”
A strong reading would back Fed chair Jerome Powell’s recent upbeat assessment of the economy as markets currently expect the next rate hike to arrive in September. Fed fund futures currently discount the possibility of an additional increase in December at just above 70%, according to Investing.com’s Fed Rate Monitor Tool.
Also on the economic docket, the University of Michigan will release its revised consumer sentiment for July at 10:00 AM ET (14:00GMT).
3. Trade tensions remain in focus
Trade tensions remained in focus as representatives from the U.S. and China clashed at the World Trade Organization meeting on Thursday.
During the meeting, Washington asked for reforms targeting China’s responsiveness to the market, while Beijing said it would not respond to the U.S.’s tactics.
“Extortion, distortion or demonization does no good to resolve the issues,” Chinese Ambassador Zhang Xiangchen said.
“Holding our feet to the fire has never worked,” he added.
Another Chinese official noted at the event that China will retaliate against any additional U.S. tariffs, regardless of the volume of goods targeted.
“We clearly have a chronic problem with China,” U.S. Trade Representative Robert Lighthizer said in Senate testimony on Thursday, adding that trade problems with Beijing will take years to resolve.
Discussions over the North American Free Trade Agreement (NAFTA) seemed to paint a more optimistic picture.
Mexico and the U.S. agreed on Thursday to step up talks on updating the NAFTA trade deal in hopes of reaching an agreement on major issues by August, Mexican Economy Secretary Ildefonso Guajardo said.
Guajardo said he had "constructive" and "very positive" talks with Lighthizer and Trump's son-in-law and senior adviser, Jared Kushner.
4. Global stocks mostly higher ahead of U.S. earnings, GDP
Global stocks were mostly higher on Friday as strong company earnings reports and an easing of transatlantic trade tensions on an agreement between the U.S. and Europe this week to try to cut trade barriers boosted investor confidence.
U.S. stock futures pointed to a slightly higher open as traders awaited the final deluge of earnings this week and the latest take on growth in the American economy. At 5:50 AM ET (9:50GMT), the blue-chip Dow futures edged forward 23 points, or 0.09%, S&P 500 futures inched up 2 points, or 0.08%, while the Nasdaq 100 futures traded up 29 points, or 0.38%.
European stocks moved higher nearing midday trade on Friday, helped by easing fears over U.S. tariffs and positive company earnings.
Earlier, Asian shares showed mixed signs, as trade tensions between the U.S. and China kept continued to weigh on the Shanghai Composite.
5. Oil prices trade slightly lower ahead of U.S. drilling data
Oil prices traded slightly lower on Friday, breaking three consecutive days of gains despite support from news that Saudi Arabia is suspending oil shipping in the Red Sea, while investors looked ahead to the latest gauge of U.S. shale production.
U.S. crude oil futures lost 0.29% to $69.42 by 5:53 AM ET (9:53 GMT), while Brent oil fell 0.17% to $74.41.
Saudi Arabia, the biggest oil exporter in the world, said it was temporarily halting oil shipments through the Red Sea after an attack by Yemen’s Houthi movement.
The exports through the shipping lane of Bab al-Mandeb links Egypt’s Suez canal and SUMED crude pipeline. An estimated 4.8 million barrels per day flow through the Bab al-Mandeb in 2016, according to the U.S. Energy Information Administration.
Investors looked ahead to weekly rig count data from Baker Hughes at 1:00 PM ET (17:00 GMT).
The U.S. rig count, an early indicator of future output, fell by 5 to 858 last week. The rate of growth has slowed over the past month or so with a decline in crude prices from late May through late June.
The rig count is still up 94 from a year ago, when there were 764 rigs.