US stocks mixed before SK Hynix’s debut as oil swings

New business data points to the fact that A surge that drove stocks to a striking distance of their record highs wavered ahead of the earnings season, with traders additionally parsing geopolitical developments as they get ready for SK Hynix Inc.’s debut.

In the final stretch of a week of upside for equities, the S&P 500 fluctuated. While most of its firms rose, the semiconductor industry lost steam after a solid run. American depositary receipts of the giant South Korean memory chipmaker are indicated to open 21% above their offering price after raising $26.5 billion in the largest-ever US stock-exchange debut by a foreign firm.

Crude prices briefly rose when President Donald Trump stated the US considers the ceasefire with Iran to be over. But crude resumed its dip as he further noted that talks with Tehran would continue, easing fears of a return to all-out war.

“The muted equity market reaction to the re-escalation of Iran tensions the current week is prime evidence that the market is looking past geopolitical tensions,” stated Clark Bellin at Bellwether Wealth. “While the equity market is gearing up for another firm earnings season, expectations are elevated.”

The upcoming second-quarter results will be around justifying the premium valuations market participants have already assigned to the firms, according to Kenny Polcari at SlateStone Wealth.

“The street has priced in exceptional earnings expansion, and now management teams have to prove those expectations were warranted,” he stated.

What’s really interesting this quarter, Polcari noted, is that we haven’t noted the usual wave of warnings. In fact, more S&P 500 firms have issued positive than negative guidance, which is a sharp departure from the historical pattern.

“That tells me management teams are either genuinely confident or confident enough not to reset expectations ahead of reporting,” he stated.

Another aspect of the upcoming earnings season is that expectations are elevated, but “concentrated,” according to Nicole Inui at HSBC. Most of the anticipated earnings expansion comes from a handful of sectors where earnings visibility is high, she stated.

“Despite lofty expectations, we are not worried,” Inui further noted.