U.S. stock index futures moved lower ahead of trading on Wednesday after rising trade tensions led to concerns that a global economic slowdown was likely. The immediate trigger for such fears was the People's Bank of China's decision to set the daily yuan reference rate only marginally below the psychological level of 7 per dollar.
As a result, investors grew averse to risky assets and reached for safe havens like government bonds and gold. Treasury yields plunged to their lowest level in nearly three years while gold soared to a more than six-year high. Also, the central banks of India, Thailand and New Zealand announced rate cuts, further dampening investor sentiment.
Ahead of the opening, pharmacy retail giant CVS Health Corporation CVS released second-quarter earnings. In keeping with its stellar track record over the last four quarter, both earnings and revenues beat estimates. Meanwhile, American International Group AIG and Booking Holdings BKNG ) are expected to release second-quarter earnings figures after the market close.
Major indexes closed in the green on Tuesday after China's central bank stepped in to contain the fall of the yuan. On Monday, stocks had taken a sharp drop after China let its currency fall to its lowest level in a decade. The move came as a retaliatory measure after President Trump, on Aug 1, threatened to impose 10% tariffs from Sept 1 on an additional $300 billion of Chinese imports.
The Dow Jones Industrial Average climbed 1.2% to close at 26,029.52 on Aug 6. The broader S&P 500 and tech-laden Nasdaq Composite followed suit, rising 1.3% and 1.4% respectively. The former closed at 2,881.77 while the latter ended the day at 7,833.27. The fear-gauge CBOE Volatility Index (VIX) slumped 18% to close at 20.17. Lastly, advancers outnumbered decliners on the NYSE by a 1.20-to-1 ratio.
Wall Street gained on Aug 6 after the People's Bank of China stepped in to set the yuan's official reference point at a level of 6.9683 versus the dollar. The Asian country's central bank did so to stop the Chinese currency from falling below its 7-to-1 ratio with the greenback.
China allowed the yuan to fall initially likely in a bid to cushion its domestic economy from from the impact of the trade war. In particular, this move came after Trump said he would impose 10% tariffs on the rest of China's imports to U.S., to be applicable from Sept 1.
Coming to earnings, The Walt Disney Company DIS reported quarterly earnings of $1.35 per share, missing the Zacks Consensus Estimate of $1.76. Increased programming costs at ESPN and heavy investments in ESPN+ and upcoming streaming service Disney+ hurt the company's profitability in its fiscal third-quarter.
The media giant's quarterly revenues of $20.25 billion also missed the Zacks Consensus Estimate by 6.61%. Disney carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Second-quarter earnings continue to come through and the overall picture looks good enough. To be specific, Finance and Consumer Staples sectors have yielded better-than-expected quarterly results. ( Read more )
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Walt Disney Company (DIS): Free Stock Analysis Report American International Group, Inc. (AIG): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report Booking Holdings Inc. (BKNG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research