Before the bell: S&P futures -0.75%, NASDAQ futures -0.35%

U.S. stock-index futures fell on Tuesday, as investors took some profits following a five-day rally, while weighing the risks to the economy from the recent surge in coronavirus cases. 

Global Stocks:

FXStreet notes that Shanghai Composite finally paused on Tuesday as the market closed only marginally higher. Nevertheless, economists at Credit Suisse maintain a bullish outlook with next resistance at 3400/07 before the important medium-term resistance at 3587.

“The market holds a long list of supportive technical factors which keeps us biased higher, including very strong momentum, with the daily RSI at the highest level since 2014, suggesting a real possibility that we are moving into a ‘bubble’ phase similar to that 2014 blowup, as well as the surge in volume, which is also at the highest levels since 2014/15.”

“Next minor resistance is seen at the 3400/07 psychological barrier which stalled the market on Tuesday, then the 38.2% retracement of the 2015/2019 fall at 3485/87. Given the size of the base though, a test of the 3587 high and eventually beyond here seems likely.”

“Near-term support moves higher to 3337/33 gap and the risks stay directly higher whilst above here. Below here would suggest a correction back to the 3188 gap, which we would look to floor the market if reached.”

(company / ticker / price / change ($/%) / volume)

Target price changes before the market open

Amazon (AMZN) target raised to $3300 from $2750 at Robert W. Baird 

Apple (AAPL) target raised to $400 from $340 at Raymond James

Tesla (TSLA) target raised to $740 from $650 at Morgan Stanley 

Netflix (NFLX) target raised to $550 from $465 at Credit Suisse

NVIDIA (NVDA) target raised to $460 from $420 at BofA Securities 

FXStreet reports that analysts at Credit Suisse note that S&P 500 strength has extended to next flagged resistance at 3190/82 which is expected to cap near-term to maintain a high-level consolidation range with support seen at 3155.

“The S&P 500 has extended its recovery to just shy of our next flagged resistance from the top of the price gap from early June and potential downtrend from March at 3190/92 and we continue to look for this to cap for now for a fresh move lower in the broader high-level consolidation range.”

“Support is seen at 3165 initially, then 3155, below which is needed to ease the immediate upside bias for a fall back to the lower end of the price gap from yesterday at 3130/25, with fresh buyers expected here. A break can see a retest of the 13-day average, currently at 3105.” 

“Above 3192 can see the risk stay directly higher with resistance seen next at the 3223/33 June highs. Above here can open the door to a challenge on what we see as more important and tougher resistance from the February ‘pandemic’ gap, seen starting at 3260.”

FXStreet reports that economists at Charles Schwab have been able to make some sense of global earnings and stock market performance, re-openings and relative stock market performance across countries and they expect to make sense of the dividend divide fairly soon.

“Although the dollar amount of analysts’ estimates of the next 12 months earnings per share for MSCI World Index companies has been slowly rising over the past month, it’s hard to have a high degree of confidence in the magnitude of earnings, given all the uncertainty. Instead, it is the direction of analysts’ changes which becomes important to the direction of the stock market. A worsening outlook on the pace or sustainability of the global recovery from COVID-19 would likely affect both the outlook for earnings and the stock market.”

“Restaurants in Ireland finally reopened to seated dinners on June 29, accounting for the rise in diners in the chart above. Meanwhile, in Australia, restaurants in the state of Victoria (home to the city of Melbourne) were re-closed on July 1 until July 29, after an outbreak of COVID-19. We will be watching to see if this begins to be reflected in the performance of the Irish and Australian stock markets this month.”

“Stock prices in the major indices have recovered most of their losses so far this year, but dividends have not. On this issue, market and analysts are seeing things very differently. While not expecting a complete recovery for dividends per share next year, the analysts’ consensus forecast for dividends per share in 2021 for these indexes are even higher than the current market forecast. It makes little sense to see such a big gap between the market and analyst estimates for the return of dividends. [...] The European Central Bank’s Single Supervisory Mechanism has said it may provide clarity on its dividend ban in July, which could offer more visibility on the outlook for dividends.”