Dow rises, heads for 12th straight day of gains as traders weigh earnings, await Fed decision: Live updates – CNBC

Zscaler shares rose more than 4% after BTIG analyst Gray Powell upgraded the IT security name to buy from neutral. His price target of $185 also implies upside of 24.7% from Monday’s close.

“Our fieldwork leads us to believe that demand in the Secure Service Edge (SSE) has sustainably improved and that large projects which were put on hold in late 2022 / early 2023 are starting to move forward again,” Powell. “In addition, we left our work feeling confident in ZS’s ability to maintain its leadership position in the SSE market despite headlines on increasing competition.”

Zscaler has been on fire this year, rising more than 35%.

— Fred Imbert, Michael Bloom

So far this earnings season about a fourth of companies in the S&P 500 have reported second-quarter results. Of the firms that have reported, 76% have topped earnings expectations while 62% have beaten revenue estimates, according to Refinitiv.

According to the blended growth rate, which includes companies that have reported and have yet to share results, earnings are expected to fall 7.7% from a year ago. The energy sector is expected to see the largest decline.

— Samantha Subin

Big-box retailers Costco and Walmart were among the 22 names in the S&P 500 reaching fresh highs Tuesday.

Oppenheimer hiked its price target for Costco on Tuesday, calling it a top pick even after the stock climbed more than 23% this year. Piper Sandler upgraded Walmart, saying the stock will claim market share on competitive grocery pricing.

Here are some other names reaching 52-week highs.

— Sarah Min, Chris Hayes

Advancers at the New York Stock Exchange held a slight edge over decliners in midday trading. More than 1,300 names traded higher, while 1,292 slipped.

— Sarah Min

Oppenheimer analyst Rupesh Parikh said in a note to clients on Tuesday that Costco is still a top pick even after the retailer’s stock has rallied more than 23% so far this year.

Parikh hiked the firm’s price target on Costco to $630 per share from $575. The new target is about 12% above where the stock closed on Monday.

“We believe COST is well-positioned to drive a comp re-acceleration in coming quarters and gain share in a continued challenged discretionary retail backdrop. Management also has a demonstrated track record of driving healthy levels of grocery comp growth even in low inflationary/deflationary backdrops,” the note said.

Notably, the Oppenheimer estimates still do not include a potential membership fee hike for Costco.

Packaging Corporation of America was the best-performing stock in the S&P 500, as of midday trading.

Shares were last higher by more than 10% after the paper mill company topped earnings per share expectations in its second quarter. The company reported adjusted per-share earnings of $2.31, greater than the consensus estimate of $1.93 per share, according to FactSet.

Revenue came in below estimates, with the company posting $1.95 billion, lower than the FactSet consensus estimate of $1.99 billion.

The pressure on consumers is going to get intense over the next 12 months, UBS analysts said, citing factors like the return of student loan payments and the fallout from the Federal Reserve’s rate hikes as limits to spending power. But analyst Jay Sole says that’s not the consensus view and it will take a while for this narrative to play out.

Most people expect a “soft landing” and so with the back-to-school season ahead apparel retail stocks could benefit from investors’ “fear of missing out.” Sales that are “less bad” will drive stocks higher, he said. His favorite picks include On Holding, Deckers, Ralph Lauren and Skechers.

—Christina Cheddar Berk

Shares of RTX Corporation, known as Raytheon Technologies, plummeted more than 15% after the company revealed an engine issue.

The company revealed Tuesday that it will need to remove certain Pratt & Whitney engines for inspection earlier than expected due to what it described as a “rare condition in powder metal used to manufacture certain engine parts.”

While the issue does not impact engines currently in production, it affects a “significant portion” of the company’s PW1100G-JM engine fleet, powering the Airbus A320neo family. This will require am accelerated inspection timeline, including 200 accelerated removals by mid-September, RTX said.

Consumer sentiment hit its highest level since July 2021, though the reading was a little shy of Wall Street expectations, The Conference Board reported Tuesday.

The board’s Consumer Confidence Index hit 117 in July, up from 110.1 in June and good for a two-year high. However, it was below the 112 estimate from Dow Jones.

Also, the expectations index jumped to 88.3, up from a reading of 80 in June that is also the dividing line for a recession outlook. The “jobs plentiful” index rose, while the current conditions index pulled back slightly.

Even with the improvement in sentiment and outlook, the perceived likelihood of a recession in the next 12 months edged up to 70.6%.

—Jeff Cox

Howmet Aerospace shares are down 1% despite the stock being initiated by Baird at an ouperform. Analyst Peter Arment said shares could hit $61 dollars, which implies 82% upside from where it’s currently trading — and that’s after a 27% year-to-date gain.

According to Baird, the company warrants a premium valuation because it manufactures highly specialized parts for the aerospace and transportation industries that are “best-in-class” and often secured under long-term contracts.

Howmet is a long-term OEM play, according to Arment, who advised his clients to “stay long and add on pullback” as this top supplier benefits from strong demand in the industry.

—Christina Cheddar Berk

The Dow Jones Industrial Average declined Tuesday after an 11-day advance.

The Dow traded 24 points lower, or 0.1%. The S&P 500 was marginally lower, while the Nasdaq Composite advanced 0.3%.

— Sarah Min

Home prices fell by a bit less than expected in May as the real estate market attempts to break a prolonged slump.

The S&P CoreLogic Case-Shiller index indicated that a composite measure of prices in 20 large U.S. cities fell 1.7% on a 12-month basis, compared to the Dow Jones estimate for a 1.9% decline.

However, the 20-city index posted a 1.5% monthly increase, leading an S&P official to say that the sequential decline in prices likely ended in January.

—Jeff Cox

The International Monetary Fund on Tuesday raised its growth forecast for the global economy, turning slightly more positive despite slowing momentum from China.

In the latest update to its World Economic Outlook, the IMF raised its 2023 global growth prediction by 0.2 percentage points to 3%, up from 2.8% at its April assessment. The IMF kept is 2024 growth forecast unchanged at 3%.

In terms of inflation, the Fund also expects an improvement from last year. Headline inflation is projected to reach 6.8% this year, falling from 8.7% in 2022. However, core inflation, which strips out volatile items, is seen declining more slowly to 6% this year, from 6.5% last year.

— Silvia Amaro

It’s a big earnings week for tech companies, and how they perform could tell traders whether the rally can continue, according to Wolfe Research.

The Wall Street firm said the earnings results of the companies that make up the “Big Seven” have an outsized impact on their valuations, making them either “double winners” or “double losers.” The Big Seven are the large tech firms that drove most of the gains in the broader market this year, such as Alphabet, Amazon and Apple.

“These reports should go a long way in determining whether this rally still has legs,” the firm’s Chris Senyek wrote Tuesday. “Our sense is that it does over the near term.”

Google-parent Alphabet and Microsoft report Tuesday after the close. Meta reports Wednesday afternoon.

— Sarah Min

It’s time to hold off on adding exposure as traders watch where the rally will go from here, according to Fairlead Strategies’ Katie Stockton.

“We do see sort of minor signs of upside exhaustion as we get into a lot of earnings flow and what have you, but we’re still recommending that our clients hold on to their equity positions,” the technical strategist told CNBC’s “Squawk Box” on Tuesday. “We’re not any longer recommending that they add exposure.”

“And we say that because we are seeing less in the way of positive technical catalysts. We saw a lot of breakouts between May and just recently, but they’re starting to quiet down a bit. And earnings season, so far it’s fine, but it’s not generating more of those breakouts,” she added.

— Sarah Min

These are some of the stocks making the biggest premarket moves:

• General Motors — Shares of General Motors rose more than 1% before the bell after the automaker raised its full-year guidance and reported second-quarter results that rose on a year-over-year basis.
• 3M – The chemical manufacturer gained about 2% in premarket trading following the company’s latest earnings report. 3M posted $7.99 billion in revenue, beating analysts’ estimates of $7.87 billion, according to Refinitiv. The company also raised its full-year earnings guidance and reaffirmed its revenue guidance.
• Verizon — The telecommunications giant traded 2.6% up after reaffirming its full-year guidance. That came despite a mixed second quarter, with Verizon posting $1.21 in earnings per share, excluding items, on $32.6 billion in revenue. Analysts polled by Refinitiv estimated $1.17 earnings per share and revenue of $33.24 billion.

See the full list here.

— Alex Harring

Citi downgraded Goldman Sachs stock on Tuesday as the firm may have difficulty reaching its long-term targets.

Analyst Keith Horowitz says that Goldman’s target of a 15% to 17% target return on tangible common equity (ROTCE) may be out of reach in the current market environment.

“The uncertainty of executing on its longer-term initiatives leads us to see more balanced risk/reward for the stock at these levels,” Horowitz said.

Shares of Goldman Sachs declined slightly during premarket trading.

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— Brian Evans

Piper Sandler upgraded Walmart stock on Monday thanks to competitive grocery pricing and steep rollbacks.

“While we think intuitive logic dictates that WMT is well positioned during an inflationary period (trade down), we believe that a gradual intensification of promos augurs well for WMT given its sharp focus on price, and we raise our estimates accordingly,” analyst Edward Yruma said.

Walmart stock gained 1% in the Tuesday premarket.

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— Brian Evans

Atlantic Equities downgraded Disney stock on Tuesday as the company contends with lower ad spending and disappointing box office performances.

“Box office performance has also struggled with a clear decline from the 2019 Avengers: Endgame series climax,” analyst Hamilton Faber said. “While the cyclical nature of the MCU films means this should be expected, whether Marvel can build to a second Avengers climax in 2026 is wholly dependent on the performance of current films, and indications are not encouraging.”

Shares declined about 0.7% in premarket trading Tuesday.

CNBC Pro subscribers can read the full story here.

— Brian Evans