Here are the most important news items that investors need to start their trading day:
1. Stock futures rise
Equities markets pointed to a comeback Tuesday morning. Stocks had ended Monday in the red, weighed down by Apple, after Bloomberg reported the tech giant would slow hiring and spending next year for some of its teams. Investors are also looking forward to a new round of earnings reports this week. Hasbro and Johnson & Johnson announced results before the bell Tuesday, while Netflix is on deck after the market close. And there are many more to go: Only about 8% of the companies in the S&P 500 have reported so far this earnings season.
2. Netflix earnings preview
With the big banks and their earnings reports out of the way, investors' eyes are turned toward Netflix – especially its subscriber numbers. The streaming giant warned last quarter that it expected to lose 2 million subscribers in the period ended June 30. That seems like a mighty low bar, but there is a chance it could even be worse than that, writes CNBC's Alex Sherman. Whatever the number, though, Netflix is moving ahead with plans to beef up its franchise offerings (see the "Stranger Things" spinoff plan), crack down on password sharing, and lure value-hunting subscribers with a lower-priced tier backed by ad revenue. The company recently partnered with Microsoft to work on the latter.
3. Feds probe Amazon
Federal officials on Monday inspected Amazon warehouses in the New York City, Chicago and Orlando, Florida, areas as part of a civil probe by the Labor and Justice departments into conditions at the buildings. The inspections came days after Amazon's Prime Day online shopping bonanza and as the company faces a growing effort among employees to unionize at its warehouses. Labor organizers have pointed to workplace safety as one of their key reasons for pushing union efforts. A recent Reuters report said Amazon issued 13,000 disciplinary notices at a single warehouse during the year ended April 2020, even for employees who slightly missed expectations.
4. IBM slumps after cash warning
IBM's revenue and profit for its most recent quarter beat Wall Street's expectations Monday, but that wasn't enough to buoy the stock. Shares of the company fell in the premarket session Tuesday after it trimmed its outlook for free cash flow this year to $10 billion, down from its previous guidance of up to $10.5 billion. IBM Chief Financial Officer Jim Kavanaugh blamed foreign exchange, notably the strong dollar, and the company's suspension of its "highly profitable" business in Russia over that country's unprovoked war on Ukraine.
5. China's U.S. debt holdings slip under $1 trillion
For the first time in 12 years, Chinese holdings of U.S. debt fell under the $1 trillion benchmark. That means Japan is now the biggest international holder of American notes, at $1.2 trillion. The new Treasury Department data, which reflects debt holdings as of May, comes as the Federal Reserve battles four-decade-high inflation with aggressive interest rate hikes. China has also sought to diversify its holdings of foreign debt. Treasury yields were slightly higher as of early Tuesday morning, as traders and investors await the Fed's next rate rise, expected later this month.
– CNBC's Carmen Reinicke, Alex Sherman, Annie Palmer, Jordan Novet, Jeff Cox and Elliot Smith contributed to this report.
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