Earnings Heat Up Amid Conflicting US-Iran Comments: 8 Key Items Shaping the Stock Market Tuesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a mixed market open later on Tuesday morning.  

1. President Donald Trump said on Monday the United States was having “good ‌talks” with Iran and there was a chance of a deal over their conflict, but he warned that U.S. strikes would resume if the negotiations failed to deliver… Iran’s Foreign Ministry spokesman Esmail Baghaei said on Monday that messages were still being passed between the sides through mediators and Iran had not forsaken diplomacy, but reports that it requested negotiations were “fabricated.”  (Reuters)

The conflicting comments raise natural questions over the potential for a near-term resolution and the reopening of the Strait of Hormuz. With the latest Reuters/Ipsos poll finding that just one in three Americans support the war on Iran, and ​most respondents saying that President Donald Trump has failed to explain his goals, with the looming midterm elections, we suspect the White House is looking to end the conflict in a way that saves face. Our focus remains on the flow of oil, traffic through the strait and those implications for the global economy. 

2. Shares of Corning fell Tuesday after the optical networking company reported better-than-expected second-quarter earnings. Guidance, however, was mostly in-line with Wall Street estimates, disappointing investors… For the current quarter, the optical networking and glass maker forecasts adjusted earnings of 85 cents to 89 cents a share on core sales of $4.9 billion to $5 billion. Wall Street expects third-quarter earnings of 85 cents a share with sales totaling $4.99 billion, according to FactSet. (Barron’s)

While the Portfolio does not have a position in Corning (GLW), we do pay close attention to its comments about AI and optical networking. As such, we find its comment that “Optical Communications grew sales 32% to $2.07 billion, including a 65% increase in Enterprise Networks, with Gen AI product sales growing significantly faster” very supportive for our networking chip and equipment plays in the Portfolio. 

But there is another reason we are calling out Corning shares on Tuesday morning. They are a reminder that expectations are high and delivering guidance that only matches the market’s expectations, especially after a substantial move in the shares, isn’t going to cut it. That explains the sharp drop in GLW shares pre-market, and why we will continue to tread carefully near-term, but also look for market over reactions for potential opportunities. 

3. JPMorgan Chase & Co.’s analysts said an in-house indicator is “now flashing a buy-signal” — something that has typically indicated the S&P 500 Index is poised to gain. The bank’s global market intelligence team, lead by Andrew Tyler, said its so-called tactical positioning monitor is pointing to “material upside” for the stock-market benchmark, though they flagged risks stemming from crowded positions in semiconductor stocks and the outlook for the US-Iran war. But the group said they continue to be “tactically bullish” on US stocks, anticipating equities will benefit from lower bond yields, a weaker dollar and strong corporate earnings. (Bloomberg)

Not knowing the innards of JPMorgan’s (JPM) in-house indicator makes it a bit of a challenge to qualify that “flashing a buy signal” but the flagged risks are known ones, and we’d add our next item to that list as well. 

We will continue to update the demand signals and EPS prospects as we move deeper into the current earnings season, we are continuing to watch key support levels for both the S&P 500 and Nasdaq Composite. While our focus is on picking stocks with superior EPS prospects, we have to be mindful of the market mood as we make decisions, noting when it is overly exuberant and overly fearful. At a figure of 41, the current reading for the CNN Fear & Greed Index is flashing “Fear” but not “Extreme Fear”, which it could slip into with a reading below 25. 

If the S&P 500 does not regain support of the 50-day moving average at 7,471.39, it not only becomes a point of resistance, but the next layer of support is also the 100-day moving average near 7,184. That’s roughly 3% lower than where the S&P 500 closed last night. For the Nasdaq Composite, which is well below its 50-day moving average, the level of support to watch is roughly 24,734 — less than 1% away. If the index pierces that level, the next one to watch is near 23,954.

4. Citadel Securities expects the Federal Reserve to raise interest rates this week — a surprise move strengthening Chairman Kevin Warsh’s credibility in the battle with inflation. A quarter-point increase on Wednesday would reinforce Warsh’s repeated pledge to restore price stability while showing policymakers no longer rely on signaling every policy move well in advance, Frank Flight, the firm’s head of macro strategy, wrote in a note. (Bloomberg)

While such a move would underscore Warsh’s seriousness in beating inflation pressures back toward the Fed’s 2% goal as well as the Fed’s independence, it would be one the market is not expecting. The latest snapshot of the CME FedWatch Tool shows the odds of the Fed delivering such a move at just under 36%, well below the more than 64% the central bank will leave the current Fed funds rate intact. 

With oil prices retreating further on Tuesday, that takes some of the pressure off the Fed, but the rebound in oil prices over the last few weeks has the potential for the Fed to deliver an incrementally more hawkish tone. While expected, should Warsh deliver a more forceful than expected message on Wednesday afternoon, given the current market mood, it could be something that weighs further on the market. And with that, please scroll up and re-read the key support levels we’re watching for the S&P 500 and the Nasdaq Composite. 

5. Amazon.com is revamping its AI strategy, winding down many of its in-house AI models and sharpening focus on a new frontier-model effort, ​Business Insider reported on Tuesday citing people familiar with the ‌matter. The company has begun deprecating most of its flagship Nova AI models, including the high-end Premier and Omni models, Reel video-generation model, and Canvas image-generation model, the ​report said. Instead, Amazon is increasingly moving resources toward a frontier-model ​development, led by researcher Pieter Abbeel, with frontier research becoming ⁠a top priority this year at the company, the report added. The ​new flagship model is expected to debut at Amazon’s “re:Invent” annual conference later ​this year, Business Insider said. (Reuters)

Amazon (AMZN) isn’t the first company to pivot its AI strategy, and more than likely it won’t be the last. Still, with the market’s renewed focus on capital spending levels and cash flow, and its Amazon LEO ambitions, it smells like Amazon is once again taking a more focused approach for its overall investment plans. We doubt the usually tight lipped Amazon earnings will shed more on this later this week, but we’ll keep our ears open between now and the company’s re:Invent conference that is set for November 30 to December 4. 

6. The Boeing Company recorded second quarter revenue of $24.6 billion, GAAP loss per share of ($0.67) and core loss per share (non-GAAP)* of ($0.76). The company reported operating cash flow of $1.4 billion and free cash flow (non-GAAP)* of $0.6 billion. Results primarily reflect higher commercial delivery volume and favorable working capital within the year. Total company backlog at quarter end grew to a record $715 billion. (Boeing)

We’ll have more to say after we’ve digested the company’s earnings call on Tuesday morning, but our preliminary view is that our thesis on rising production levels delivering improved margins and free cash flow is proving out. The step up in company backlog to $715 billion, including over 6,200 commercial airplanes from $695 billion and more than 6,100 commercial airplanes exiting Q1 2026 bodes well for further progress. 

Let’s remember too that $715 billion figure does not include recently announced wins at the Farnborough Airshow earlier this month. On the earnings call, we’ll be listening for comments on incremental margin leverage opportunities and aircraft production levels in the coming quarters. 

We’ll also have comments out on quarterly results from Welltower (WELL) and Paccar (PCAR) as we review their respective earnings calls on Tuesday morning and early on Tuesday afternoon. Paccar’s call kicks off at 12 p.m. ET. 

7. Economic data today per TipRanks: ADP Employment Change (Weekly), Advanced Retail & Wholesale Inventories (June), S&P Case-Shiller Home Price Index (May), FHFA House Price Index (May), Consumer Confidence (July).

8. Companies reporting today per TipRanks: Open: American Tower (AMT), Armstrong World (AWI), Boeing (BA), Coca-Cola (KO), Corning (GLW), Herc Holdings (HRI), Hilton (HLT), Illinois Tool Works (ITW), Paccar (PCAR), PayPal (PYPL), Polaris (PII), Sherwin Williams (SHW), UPS (UPS). Close: Avis Budget (CAR), Ford (F), KLA Corp. (KLAC), Mondelez (MDLZ), NXP Semiconductor (NXPI), Rush Enterprises (RUSHA), Skyworks (SWKS), Visa (V), Waste Management (WM)

At the time of publication, TheStreet Pro Portfolio was long AMZN, PCAR and WELL.