Finance

In this articleEBAYARIDESONOeBay headquarters in San Jose, California, U.S., on Monday, Aug. 9, 2021.David Paul Morris | Bloomberg | Getty ImagesCheck out the companies making headlines after the bell Wednesday:eBay — Shares of eBay are down 2.4% after the company reported disappointing revenue for the second quarter. EBay posted $2.67 billion in revenue for the quarter, missing a Refinitiv forecast of $3 billion. Gross merchandise volume also fell 7% on a year-over-year basis to $22.1 billion, and its third-quarter outlook fell light on both earnings and revenue.Sonos — The maker of audio products saw its stock jump 7% following its earnings report, which came in at 12 cents per share. Analysts polled by Refinitiv expected a loss of 17 cents per share. Sonos also recorded strong revenues of $378.7 million, compared with an estimate of $313.6 million. CEO Patrick Spence said in a statement that “with more video content going direct-to-home, consumers are demanding a theater-like audio experience in the home.”Rackspace Technology — Shares of the cloud technology services company fell more than 5% after a disappointing third-quarter forecast overshadowed stronger-than-expected results for the previous quarter. The company said it expects third-quarter revenue to range between $750 million and $760 million. That’s below a StreetAccount estimate of $763.2 million. Rackspace did beat the Street on second-quarter earnings and revenue, which were 24 cents per share and $744 million, respectively.Lordstown Motors — The electric vehicle maker’s stock rose nearly 4.5% despite the company posting a bigger-than-expected loss for the second quarter. Lordstown reported a loss of 61 cents per share. That’s larger than the 49 cents per share analysts polled by Refinitiv expected. Lordstown said it still plans to start production on its electric truck in September, with initial deliveries beginning in the first quarter of 2022.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Dallas Federal Reserve President Robert Kaplan said Wednesday that the central bank should begin to taper its monthly purchases of Treasury bonds and mortgage-backed securities in October.His view that the central bank ought to begin cutting back in two months is perhaps the most ambitious from a Fed president to date.Other high-ranking Fed officials, including Chairman Jerome Powell, have not yet given a forecast for when they want to pull back on the economic stimulus.”It would be my view that if the economy unfolds between now and our September meeting … if it unfolds the way I expect, I would be in favor of announcing a plan at the September meeting and beginning tapering in October,” Kaplan said.The Fed sought to support the U.S. economy in the spring of 2020, when the Covid-19 pandemic began to shut down businesses across the country. As part of that effort, the central bank has each month purchased some $120 billion worth of Treasury bonds and mortgage-backed securities to keep banks and other lender flushed with cash.But with economic activity and employment now healthier, Kaplan told “The Exchange” he feels comfortable pulling back on the stimulus.”The reason I’m saying we ought to begin the tapering soon is I think these purchases are very well equipped to stimulate demand. But we don’t have a demand problem in the economy,” he told CNBC’s Steve Liesman. “My thought is I’d rather take the foot off the accelerator soon and reduce the RPMs.””What I don’t want to do is keeping running at this speed for too long and then we’re going to have to take more aggressive action down the road,” Kaplan said.He added that the Fed’s asset tapering should be separate from its eventual move to raise interest rates. The process of tapering should take about eight months, Kaplan said.The ambitious tone from Kaplan is not wholly surprising.A so-called hawk, Kaplan is among the Fed presidents more often in favor of tighter monetary policy and higher interest rates. Kaplan is not a 2021 voting member on the Federal Open Market Committee, the central bank body in charge of making adjustments to monetary policy.His comments to CNBC came just hours after the Labor Department reported that inflation held at multiyear highs in July. Economists often consider rising prices a symptom of a healthy economy, but too much inflation can suggest that business is overheating.The consumer price index, or CPI, rose 5.4% in July from a year earlier, in line with June’s figure and matching the largest jump since August 2008.Kaplan said the current climb in prices is thanks to a mismatch between pent-up consumer demand, the result of Covid-19 vaccines and overwhelmed supply chains.Chair Powell and other Fed officials have noted the recent acceleration in prices but believe that the inflation is “transitory” and that prices won’t climb at their current hot pace much longer.Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.Sign up to start a free trial today.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

Win McNamee | Getty Images News | Getty ImagesHigher taxes for the rich edged closer to reality on Wednesday morning, after Senate Democrats passed a $3.5 trillion budget plan along party lines.The blueprint would raise taxes on wealthy Americans and corporations and beef up tax enforcement to fund additional spending on education, paid leave, childcare, health care and climate initiatives, according to a framework issued Monday.That outline offers scant detail on specific tax policy relative to the wealthy, saying only that it seeks “tax fairness for high-income individuals.”But it’s likely the richest Americans will face higher taxes on their ordinary income, capital gains from investments and appreciated assets bequeathed to heirs, according to tax experts.More from Personal Finance:Social Security cost-of-living adjustment could be 6.2% in 2022What the federal debt ceiling means to your walletVaccine passports gain traction as delta variant threatens travel reboundThe plan would also “prohibit” new taxes on families making less than $400,000 a year, small businesses and family farms.At the same time, the spending plan — which paves the way for formal legislation that Democrats can pass without Republican votes — may also give a tax break to some wealthy individuals in high-tax states. It suggests Democrats will offer “relief” on the current $10,000 cap on state and local tax deductions.Of course, placating all Democrats, who have razor-thin margins in the Senate and House, may prove tough relative to tax policy and could complicate their agenda.”At this point, we’re dealing with Monopoly money,” said Bill Hoagland, a senior vice president at the Bipartisan Policy Center. “It’s when we actually start putting rubber to road that this’ll become a heck of a lot more difficult.”Taxpayers who earn more than $500,000 paid about 70% of total individual income taxes collected this year, Hoagland said, citing tax-return data.Income taxesRaising the top marginal income-tax rate to 39.6%, from the current 37%, is the most likely way Democrats intend to raise taxes on the wealthy, according to experts.”I think Democrats would say, ‘That’s where we were before the [2017 Tax Cuts and Jobs Act] that we didn’t vote for. That’s not asking too much,'” said Ryan Abraham, a principal at Ernst & Young who sits on the firm’s Washington Council.Democrats would essentially be fast-tracking current policy — the top rate on ordinary income is already set to revert to 39.6% after 2025, per the Tax Cuts and Jobs Act.As a result, the average tax rate paid by those who earn $500,000 to $1 million a year would increase to about 31% (from 27%), according to Hoagland. It would rise to 32.5% (from just over 30%) for those with income of more than $1 million, he said.The change would raise $131 billion in federal revenue through 2026, according to a U.S. Department of the Treasury estimate issued in May.Boosting the capital gains taxThere’s also an expectation that the top tax rate on long-term capital gains will rise.The Biden administration proposed raising that top rate to 39.6% — the same as the proposed top rate on ordinary income — for those who earn more than $1 million a year. (Combined with a 3.8% surtax on net investment income, the top federal rate would be 43.4%.)Wealthy individuals get a big portion of their annual income from investments — meaning raising taxes just on wages may not tax their total income as effectively as Democrats might like, according to experts.Those with annual income of more than $1 million get about 40% of income from investments, compared with just 5% for people who earn less than $50,000 a year, according to the Tax Foundation.However, some experts are skeptical Democrats will be able to raise the rate on long-term capital gains (which are owed on investments held for over a year) to 39.6%.”I’d expect some increase, bringing it closer to the individual rate,” Hoagland said. “But not all the way to the individual rate at all.”Wealthy estatesRubberBall Productions | Brand X Pictures | Getty ImagesDemocrats will likely also try to change how appreciated assets held by the wealthy are passed on to heirs.The White House, for example, proposed imposing a capital-gains tax at death, with some exceptions.”That would be a much bigger change than just changing the capital-gains rate,” Abraham said of the proposed policy.Currently, an asset’s appreciation isn’t taxed upon an owner’s death. The asset gets a step-up in basis, meaning it transfers to heirs at its current market value, erasing the capital gain. Heirs could then sell the asset free of capital-gains tax.(Super-wealthy estates owe a 40% federal estate tax under current law, on values exceeding $11.7 million for individuals and $23.4 million for married couples.)Reforms to capital-gains taxes would raise $322.5 billion over a decade, according to a Treasury estimate.Tax enforcementDemocrats are also eyeing tax compliance to raise revenue from households earning more than $400,000 a year.Underreported income, largely among the wealthy, is the biggest contributor to the so-called tax gap, according to a Treasury report issued in May.The Treasury estimated the gap (the difference between tax paid and tax owed) to be $584 billion in 2019. About 80% of the gap comes from “opaque income sources,” such as partnerships, proprietorships and rental property, that accrue mostly to the rich, Treasury said.The Biden administration has called for more third-party reporting to the IRS to improve tax compliance.TVWATCH LIVEWATCH IN THE APPUP NEXT | More

In this articleUPSTCOINCoinbase employees spray champagne during the company’s initial public offering (IPO) outside the Nasdaq MarketSite in New York, U.S., on Wednesday, April 14, 2021.Michael Nagle | Bloomberg | Getty ImagesIf you had any lingering doubts about the growth of fintech, take a peek at Tuesday night’s earnings reports from two newly-public companies.Cryptocurrency exchange Coinbase reported a 12-fold increase in revenue from a year earlier to $2.23 billion. Not to be outdone, online lender Upstart Holdings said revenue climbed 11-fold from a year ago to $194 million.These numbers are staggering.For companies of this scale to even double annually requires being in the right place at the right time with the right team, and often means a hefty infusion of capital to acquire new customers. The most successful tech companies of all time never saw growth rates in the quadruple digits while public.Amazon’s top growth was around 300% in 1998, shortly after its IPO. Google’s revenue doubled in its first few quarters on the market in 2004 and 2005 before tapering off. Facebook never got into triple-digits growth after going public.Even in the pandemic-fueled year of 2020 — when new users flocked to digital work and exercise products — Zoom’s growth topped out at 369% and Peloton’s at 232%.What’s happening in finance is different, and Coinbase and Upstart represent the public market proxies for some of the biggest shifts happening across the globe.Big banks and investment firms have lost their control over the consumer. Loans are available from a plethora of easy-to-use online services. Start-up banks and credit-card companies are killing the fees. So are app-based brokerages and trading platforms. In the public and private markets, the valuations are astronomical.Square, which went public in 2015 as a payment service for small businesses, is now worth $125 billion and has a portfolio of business, consumer and money-transfer services.Last week, Square said it’s spending $29 billion in stock on Afterpay, an Australian provider of point-of-sale loans for retailers. That’s one of the biggest tech deals ever, and more than Microsoft, Google, Facebook, Amazon, Apple, Oracle, Cisco or Intel have ever spent on a deal.”On the heels of Square’s purchase of Afterpay, there’s no other space in tech that’s as hot as fintech,” said Eric Jackson, a tech investor and president of EMJ Capital.In addition to Square, Upstart (which he owns) and Coinbase, Jackson named Plaid, whose back-end software links bank accounts with fintech apps, and online lender SoFi as some of the companies seeing the greatest momentum.”Of course, I’m biased and think Upstart’s the best of the bunch,” he said.He’s made a lot of money on it. Upstart went public in December at $20 a share, and Jackson said he’s owned it since the IPO. After surging 24% on Wednesday, the stock is now hovering around $170, valuing the company at over $12 billion.Founded in 2012 by former Google executive David Girouard, Upstart uses machine learning to underwrite consumer loans and provides its technology to banking partners who can then better target customers. Girouard said on the earnings call that 25 banks and credit unions are now using its technology and there’s a “growing list of lenders in our pipeline for the second half of 2021.”Online lending boomUpstart said second-quarter revenue jumped 60% from the prior quarter, and that June was its first month to top 100,000 loans and $1 billion in origination volume on its platform.Comparing second-quarter results to the same period a year earlier isn’t entirely fair, because at that point in 2020, the country was in the early stages of the pandemic and much of the economy had shut down. Upstart said in its prospectus that many bank partners halted originations, leading to a drop in revenue.CFO Sanjay Datta made sure to remind investors of that on the call.”We will omit references to year-over-year growth rates for our P&L this quarter as they are all well above 1,000% due to the lapping of last year’s pandemic impact,” Datta said.Still, picking even Upstart’s best quarter from last year, revenue is up over 200%. Net income of $36.3 million was up from $10.1 million the prior quarter, which had been its most profitable quarter.The story for Coinbase is all about the historic growth in crypto investing, even as prices have become more volatile.Trading volume in the second quarter surged to $462 billion from $28 billion a year earlier. Assets on the platform reached $180 billion up from $26 billion. Net profit was $1.6 billion, up nearly 4,900% from a year earlier.”We had amazing growth in terms of users added to the platform, assets on the platform, revenue, just about everything,” Coinbase CEO Brian Armstrong said on the earnings call. Coinbase went public through a direct listing in April. With a fully diluted market cap of about $77 billion, its valuation has climbed by almost 10-fold since 2018.Crypto spreads the wealthCrypto trading has also been one of the biggest drivers for Robinhood, which went public in July and is now worth over $45 billion, up from about $12 billion a year ago. While Robinhood hasn’t yet reported results as a public company, it said in its prospectus that revenue in the first quarter increased 309%.In the private markets, fintech companies are attracting massive valuations as well. According to research and analytics firm CB Insights, eight of 20 most-valuable private tech companies are in financial services.Payments company Stripe was most recently valued at $95 billion. Sweden’s Klarna, a competitor to Afterpay and Affirm in point-of-sale lending, is worth $45.6 billion. Revolut, a money transfer and investing app out of the U.K., is valued at $33 billion, and Brazilian digital banking service company Nubank is worth $30 billion.Further down the list, online banking provider Chime last raised money at a $14.5 billion valuation and Plaid, which Visa had planned to buy before the deal was scrapped, is valued at $13.4 billion.There may be froth. And the hype in some areas has surely gotten well ahead of reality.But as financial results are showing, consumer expectations are changing rapidly as is the flow of money. There’s a reason why JPMorgan Chase CEO Jamie Dimon warned shareholders in his annual letter in April that “banks are playing an increasingly smaller role in the financial system.”Correction: This update fixes a typo that was in a prior version of the story. Upstart did 100,000 loans in June, not $100,000 of loans. WATCH: Buy-now-pay-later firms could be at riskTVWATCH LIVEWATCH IN THE APPUP NEXT | More

In this articleWWCOINLUVPRGOWENGOOS-CACheck out the companies making headlines before the bell:Canada Goose (GOOS) – Canada Goose lost 45 cents per share (Canadian) for its fiscal first quarter, smaller than the 53 cent loss that analysts were anticipating, while the outerwear maker saw better-than-expected revenue as well. However, its loss widened compared to a year ago thanks to rising expenses, and its stock slid 2.1% in premarket trading.Wendy’s (WEN) – Wendy’s rallied 3.3% in the premarket after beating top and bottom-line estimates for the second quarter. The restaurant chain earned an adjusted 27 cents per share, 9 cents above estimates, with same-store sales beating forecasts as more people returned to in-person dining.Perrigo (PRGO) – The consumer health care products maker’s shares slumped 8.8% in premarket action, following a top and bottom-line miss for Perrigo’s latest quarter. Earnings came in 11 cents below estimates at an adjusted 50 cents per share, hurt by a weaker cold-and-cough season among other factors.Southwest Airlines (LUV) – The airline said it is seeing an increase in cancellations this month due to rising concerns over the Covid-19 Delta variant, making it difficult to be profitable for the current quarter. Southwest fell 1.9% in the premarket.Coinbase (COIN) – Coinbase reported an adjusted quarterly profit of $3.45 per share, beating the consensus estimate of $2.33 in its second report as a public company. The cryptocurrency exchange operator also saw better-than-expected revenue of $2 billion, up from $178 million a year earlier. Trading volume during the June quarter jumped 21% from the prior 3 months, and its shares rose 2.3% in premarket trading.WW International (WW) – WW tumbled 22.3% in premarket trading after quarterly profit and revenue fell short of analyst forecasts. The company, formerly known as Weight Watchers, earned an adjusted 48 cents per share for the quarter, 17 cents shy of estimates, with membership levels below WW’s own forecasts. CEO Mindy Grossman said the company did have a comprehensive plan to optimize performance during the second half of the year.FuboTV (FUBO) – FuboTV lost 68 cents per share for its latest quarter, wider than the 51-cent loss that analysts were anticipating. However, the sports-focused streaming service did report better-than-expected revenue and gave an upbeat forecast including a projected doubling of full-year revenue. FuboTV shares surged 13.4% in premarket action.Norton LifeLock (NLOK) – Norton LifeLock is buying rival cybersecurity firm Avast for up to $8.6 billion in cash and stock. The deal will expand Norton LifeLock’s portfolio of consumer cybersecurity software offerings. Shares jumped 4.6% in the premarket.Poshmark (POSH) – Poshmark reported a quarterly loss of 4 cents per share, 2 cents less than Wall Street had forecast, while the online retailer of secondhand goods saw revenue top estimates. However, Poshmark did forecast current-quarter revenue below analyst forecasts and said it would see a hit from Apple’s new privacy controls. Poshmark slumped 8.2% in premarket trading.ThredUp (TDUP) – ThredUp lost 15 cents per share for its latest quarter, a penny less than anticipated, while the online pre-owned fashion retailer reported better-than-expected revenue and gave an upbeat forecast. The upbeat results helped the stock rally by 7.3% in the premarket.Alight (ALIT) – Financial services company Voya Financial (VOYA) is exploring a potential acquisition of the newly public employee benefits administrator, according to people with knowledge of the matter who spoke to Bloomberg. It isn’t clear whether active talks are underway and there is no guarantee a deal will be reached. Alight tacked on 2.6% in premarket trading.CORRECTION: This article has been updated to correct how long Coinbase has been a public company. TVWATCH LIVEWATCH IN THE APPUP NEXT | More

The White House will call on OPEC and its oil-producing allies to boost production in an effort to combat climbing gasoline prices, amid concerns that rising inflation could derail the economic recovery from Covid.Biden administration officials spoke with representatives from OPEC’s de facto leader Saudi Arabia this week, as well as with representatives from the United Arab Emirates and other OPEC+ members.The White House said the group’s July agreement to boost production by 400,000 barrels per day on a monthly basis beginning in August and stretching into 2022 is “simply not enough” during a “critical moment in the global recovery.””We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices,” National Security Advisor Jake Sullivan said in the statement obtained by CNBC. “Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery.”Gas prices jumpGas prices have climbed this year as demand for petroleum products returns. The national average for a gallon of gas stood at $3.186 on Tuesday, according to AAA, up from $3.143 a month ago. Over the last year, prices are up by just over $1.In May, the national average crossed the $3 mark for the first time since 2014.”The president recognizes that gas prices can put a pinch on the family budget,” a senior White House official said. “He’d like his administration to use whatever tools that it has to help address the cost of gas, to help bring those prices down.”The jump in gas prices comes on the heels of a rebound in oil prices. In April 2020, West Texas Intermediate crude futures, the U.S. oil benchmark, dipped into negative territory for the first time on record as the pandemic sapped demand for petroleum products.OPEC+ made the unprecedented decision in April 2020 to remove nearly 10 million barrels per day from the market in an effort to support prices, while U.S. producers also scaled back production.These supply cuts, coupled with a demand recovery, have pushed WTI back above $70 per barrel, although the contract has pulled back slightly from that level in recent sessions.OPEC+ is still withholding about 6 million barrels per day, which it plans to gradually return to the market. The group’s latest meeting ended in disarray after the UAE took issue with its baseline quota, briefly sending the oil market into turmoil. The group eventually came to an agreement later in July.U.S. producers also turned off the taps during the depths of the pandemic, and they’ve been slow to bring production back online. According to the latest data from the Energy Information Administration, U.S. production averaged 11.2 million bpd in May, down from the pre-pandemic high above 13 million.Consumers are feeling the pain at the pump, and it’s not just gas prices that are on the rise.The consumer price index for July will be released Wednesday, and economists are expecting it to show that prices jumped 0.5% last month, according to economists surveyed by Dow Jones. The report follows a 0.9% jump in June, which was the largest monthly increase since August 2008.FTC actionThe Biden administration is also calling on the Federal Trade Commission to “monitor the U.S. gasoline market” and “address any illegal conduct that might be contributing to price increases for consumers at the pump.”The letter from the National Economic Council to the FTC urges the regulatory body to look into the factors contributing to the rise in gas prices in an effort to ensure that consumers aren’t footing an unfair bill. “With its suite of tools to monitor industry prices, review merger-and-acquisition activity, conduct market studies, and investigate market manipulation and anti-competitive practices, the FTC is well placed to lead the effort to evaluate what is happening in the U.S. gasoline market and take any necessary steps to address illegal conduct,” the letter said.The NEC also calls on the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission and state attorneys general to take up the issue.”Knowing the FTC is scrutinizing this market could have an impact relatively quickly,” the senior White House official said. “It’s worth the players in this market recognizing that this agency with enforcement authority is looking carefully at what’s going on.”Zoom In IconArrows pointing outwardsZoom In IconArrows pointing outwardsBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial todayTVWATCH LIVEWATCH IN THE APPUP NEXT | More

THE USED-car salesman occupies a distinctive, if rather unflattering, place in American culture. In “The Grapes of Wrath”, John Steinbeck’s classic novel set in the Depression, sleazy salesmen prey on miserable farmers. “Cadillac Man”, a film from 1990, features a fast-talking merchant with a bevy of mistresses. These depictions, and many others, are unfair to most of the hard-working types on car lots. But in recent months they have occupied a distinctive and unflattering place in America’s economy, as avatars of worryingly rapid inflation.When consumer prices rose by 5.4% in June compared with a year earlier, the fastest pace since 2008, used cars accounted for a third of the pickup. So analysts are paying unusually close attention to the market for used cars (or, as those selling them prefer to say, “pre-owned” vehicles). On August 11th the Bureau of Labour Statistics reported that annual headline inflation in July again hit 5.4%. But when you look under the hood, the gauge for used cars offers reassurance: prices levelled off, suggesting that the inflation scare may prove transitory.The price surge in used cars has been indicative of the pressures building as businesses roar back from the depths of the pandemic, only to run headlong into shortages of everything from critical parts to staff. A dearth of semiconductors in the vehicle industry, itself a product of bunged-up supply chains, has had ripple effects. Without the microchips needed for electronic systems, carmakers have cut back production. Given the lack of new vehicles, would-be buyers have turned to the used market, leading to a spike in demand. But there has been a shortfall in supply at the same time, because existing owners have held on to their cars for longer than normal amid all the pandemic disruptions. The result: a 30% increase in used-car prices between April and June. Similar dynamics have pushed up prices for home furniture, airline tickets and clothing. Alarming as that might sound, the fact that these increases were all tied to the lopsided recovery from the pandemic was taken as evidence by many analysts that the jump in inflation may be a passing phenomenon. Sure enough, the data from July lent credence to that view. Airline fares fell slightly, as did the cost of furniture. Prices for clothing and used cars were basically unchanged. The overall consumer-price index rose by 0.5% month-on-month in July, down from 0.9% in June. The slowdown in core inflation, stripping out food and energy, was even sharper (although, in annualised terms, it was still well above the Federal Reserve’s 2% target).The ebbing of inflation is, for now, a vindication for the Fed. Although it has hinted that it may begin to wind down its ultra-loose monetary policy this year (by reducing its monthly bond purchases), most Fed officials think it will only start raising interest rates in 2023—a patience potentially at odds with high inflation. The Fed, to be sure, is hardly alone. A decline in Treasury yields in recent months in part reflects investors’ falling inflation expectations, in addition to concerns over the continued economic drag from the pandemic.Nevertheless, it is too soon to sound the all-clear. Unlike cars or couches, which are not exactly everyday purchases, some recurring expenditures look a little headier. The price of shelter, which includes rents paid by tenants and “imputed” rents for home-owners, rose by 0.4% in July from June, and could rise further as universities and offices open up. Economists at Citigroup, a bank, pointed to yet another big increase in restaurant prices. This, they said, was a clear sign that a tight labour market is pushing up wages and feeding through to higher prices.Moreover, used cars may yet drive back into the spotlight. At a showroom in Bethesda, Carlos Correa, an affable salesman, explains that his company normally has three lots full of cars. Now, though, they are down to two, which are still mostly empty. The levelling-off in prices is, he thinks, explained by tepid summer demand. “It’s usually quiet this time of year,” he says. Autumn could turn up the heat on prices again. ■ More

In this articleIYGU.S. stock index futures were flat during overnight trading on Tuesday, after the Dow and S&P 500 closed at record highs following the Senate passing the $1 trillion infrastructure bill.Futures contracts tied to the Dow Jones Industrial Average were slightly higher. S&P 500 futures and Nasdaq 100 futures were flat.During regular trading, the Dow gained 162.82 points, or 0.46%, while the S&P 500 advanced 0.1%. Both hit all-time intraday highs while also closing at records. The Nasdaq Composite slid 0.49%, registering its second negative session in the last three. The dip came as treasury yields advanced, weighing on growth-oriented areas of the market.The Senate passed the infrastructure bill Tuesday, which earmarks $550 billion in new spending for areas including transportation and the electric grid. The bill now heads to the House, although Speaker Nancy Pelosi, D-Calif., has said she will not bring it to the floor until the Senate also passes a budgetary proposal.Cyclical areas of the market got a boost during trading, helped by both the bill’s passage and the rise in rates. The energy, materials, industrials and financials sectors all advanced more than 1%.The march to record highs for stocks comes despite Covid case numbers rising in the U.S. and around the world.”Widespread vaccine distribution and distancing measures have helped limit the variant’s impact, but we could still see some drag on economic growth as some restrictions are reintroduced and consumers potentially become more cautious,” said Barry Gilbert, asset allocation strategist at LPL Financial. “While we may see an increase in market volatility due to the Delta variant, we believe the S&P 500 is still likely to see more gains through the end of the year,” he added.On the economic data front, July’s Consumer Price Index reading will be released on Wednesday. Economists surveyed by Dow Jones expect the index to have risen 0.5% last month, or 5.3% year over year. In June prices jumped 0.9%, which was the biggest monthly increase since August 2008.Earnings season continues on Wednesday with Wendy’s and Canada Goose among the names set to report prior to the opening bell. Lordstown Motors, eBay and Bumble are on deck for after-hour closes.Through Friday, 87% of the S&P 500 companies that reported quarterly results have beat earnings estimates. The same percentage of companies beat revenue estimates during that timeframe.”There’s been a lot to take in these last few weeks; major earnings, a hawkish Fed and some knockout economic readings,” said Craig Erlam, senior market analyst at Oanda. “Everything it seems is now pointing towards the Fed tapering its asset purchases in the coming months, with delta the only things potentially standing in its way as it spreads across the US (and many other countries).”Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial todayTVWATCH LIVEWATCH IN THE APPUP NEXT | More