Largest U.S. single stock ETF nears $1 bln in assets

Main U.S. indexes gain: DJI out front, up ~0.6%

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Industrials lead S&P 500 sector gainers; utilities weakest group

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Euro STOXX 600 index up ~0.4%

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Dollar, gold, crude modestly red; bitcoin edges green

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U.S. 10-Year Treasury yield edges down to ~4.03%

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LARGEST U.S. SINGLE STOCK ETF NEARS $1 BLN IN ASSETS (1015 EDT/1415 GMT)

The largest U.S. single stock tracking exchanged traded fund (ETF) Direxion Daily TSLA Bull 1.5X Shares, according to Morningstar, is inching closer to $1 billion in assets under management for the first time.

Launched in August 2022, the leveraged ETF seeks to track 150% of Tesla's daily share performance.

The fund had about $962.7 million in total assets as of July 5, up from $169.3 million at the end of 2022, according to Refinitiv Lipper data.

TSLL attracted $63.7 million inflows in the week ended July 5, by far the largest, Lipper data showed, as investors flocked to the leveraged ETF following Tesla's record vehicle deliveries.

TSLL has tripled so far in 2023, compared to 120% surge in Tesla shares.

The next largest single stock ETFs are lagging far behind: GraniteShares 1.5x Long NVDA Daily ETF, AXS TSLA Bear Daily ETF, AXS 1.25X NVDA Bear Daily ETF manage roughly $100 million in assets each, according to Lipper.

The first ETF tracking bitcoin futures, ProShares Bitcoin Strategy's ETF amassed over $1 billion of assets in a record-breaking two days in 2021.

(Medha Singh)

U.S. STOCKS BRACE FOR INFLATION DATA, EARNINGS (1000 EDT/1400 GMT)

Wall Street's main indexes are mixed early on Monday as investors stay cautious ahead of a key inflation report, while weak data out of China fanned worries of a looming economic slowdown.

China's producer prices for June fell at their fastest pace in over seven years, while consumer prices teetered on the edge of deflation, adding to concerns about the health of the world's second-largest economy.

Markets await U.S. CPI and PPI data due this Wednesday and Thursday, as well as the start of the Q2 reporting season.

Overall, earnings for the S&P 500 constituents are expected to fall 5.7% in the second quarter, Refinitiv data showed.

In any event, early on Monday, a majority of S&P 500 sectors are higher with industrials posting the biggest rise. Communication services is among weak groups.

The FANG index is off around 1.5%.

Here is a snapshot of where markets stood just before 1000 EDT:

(Terence Gabriel)

EUROPE INC: 73% SEEN BEATING PROFIT EXPECTATIONS (0936 EDT/1336 GMT)

Investors looking to benefit from possible surprises during the upcoming reporting season in Europe might find useful data in Citi's preview of corporate results in the region.

The U.S. bank predicts that 73% of companies will beat Q2 expectations but says crowding data suggests that to some extent the market is already pricing in the profit surprises.

Citi, for example, expects a "notable high proportion" of beats across Industrials and sees above-average beats also in Energy, but crowding in stocks there is relatively higher.

"...the market to some extent may be more positive than the analysts already," it says.

On the other hand, there is less crowding in companies that are predicted to top consensus in Communication Services, which means "the market reaction to the beat could be larger".

"Reprinted with permission of Citi Research. Not to be reproduced."

In other findings, Citi says Consumer Discretionary stands out for the recent upgrades but where the positive surprises will likely be concentrated in a few names.

Health Care, finally, has had upgrades to the modestly positive growth outlook but are predicted now to have an above-average number of misses to these consensus expectations.

Overall, MSCI Europe ex-financials is expected to see a 9.5% profit contraction in the quarter.

(Danilo Masoni)

DOW INDUSTRIALS: ISLAND HOPPING (0900 EDT/1300 GMT)

The Dow Jones Industrial Average ended June with its third-straight quarterly gain. However, so far in July, it's been anything but smooth sailing.

The DJI ended the last trading day in June with a gap up, forming a bullish island reversal, suggesting an imminent upside breakout to what has been a more than six-month trading range.

However, instead, last Thursday, the DJI gapped down, forming a bearish island reversal:

Of note, since its late-November, mid-December highs of last year, the Dow has chopped in a wide range, while retracement levels of its January 2022-October 2022 decline have been acting as sticky support and resistance.

That action has the look of an inverse head & shoulders acting as a continuation pattern. The pattern is well defined and rather symmetrical. After falling around 9% from its November 30, 2022 closing high into its March 15, 2023 intraday low over 71 tds (trading days), the DJI rallied around 9.5% over 75 tds into its July 3 closing high.

Meanwhile, the depths of its December 2022 and May 2023 troughs, at 32,573 and 32,586, are nearly identical.

With last week's downside reversal, the Dow, which ended Friday at 33,734.88, dipped back below the 61.8% Fibonacci retracement of the January 2022-October 2022 decline at 33,785, and neared its 50-day moving average (DMA), which ended Friday at 33,651.

Thus, with key inflation data due this week, as well as the kickoff to Q2 earnings season, traders will be keenly focused to see in what direction DJI momentum now takes hold.

A thrust above the June 16 high at 34,588.68 will clear neckline resistance and suggest the potential for a strong rally.

Closing below the June 26 low at 33,610, however, can suggest greater downside pressure.

Breaking the May 25 low, at 32,586, would suggest pattern failure, while also putting the DJI back below its 200-DMA as well as the 50% retracement of the January 2022-October 2022 decline. (Terence Gabriel)

FOR MONDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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