New York
Wall Street was set to rebound on Friday after the US stock market’s worst two days of losses since February, as bumper results for the country’s largest banks, including JPMorgan, set an upbeat tone for the earnings season.
Index futures pointed to gains of about 1 per cent for each of the three main indexes at opening, after they fell a little over 5 per cent each in the past two days, with the Dow Jones Industrial Average sinking more than 1,300 points.
JPMorgan Chase & Co rose 1.7 per cent before the bell after reporting a better-than-expected quarterly profit as higher interest rates and loan growth helped offset weakness in bond trading revenue.
Citigroup rose 2.7 per cent as its profit also beat estimates on higher bond trading revenue and strength in consumer banking in Mexico. Wells Fargo was up 2.1 per cent despite missing analysts’ estimates.
The bank results launch a quarterly reporting season that will give the clearest picture yet of the impact on profits from President Donald Trump’s trade war with China.
“The focus has now shifted to earnings, which are expected to be strong for this quarter and will offer markets some support,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Earnings at S&P 500 companies are estimated to have risen 21.3 per cent in the third quarter, according to I/B/E/S data from Refinitiv, a slowdown from the previous two quarters.
The earnings season comes with investors fretting over inflation pressures and interest rates, while a surge in Treasury yields to over seven-year highs has made bonds more attractive. That culminated in the sell-off over Wednesday and Thursday.
“Investors should still expect a high level of volatility today, which is just pressure that’s been built up over the last two days,” said Brown.
At 8:49am. ET, Dow e-minis were up 210 points, or 0.83 per cent. S&P 500 e-minis were up 26 points, or 0.95 per cent and Nasdaq 100 e-minis were up 100 points, or 1.42 per cent.
The gainers include the high-growth FAANG group, which has led the three major US indexes to record highs and also contributed heavily to the rout in the past two sessions.
Shares of Facebook, Amazon, Apple, Netflix and Alphabet were higher between Facebook’s 1.6 per cent and Netflix’s 4.3 per cent.
Citigroup recommended buying Netflix’s shares, saying the recent sell-off was overdone. The stock’s 9.7 slide in the past two days is the most among the FAANGs.
Microsoft rose 2.8 per cent after Macquarie upgraded its shares to “outperform”, citing a robust software spending environment.
In economic data, the University of Michigan’s preliminary consumer sentiment index is expected to show a reading of 100.4 in October, compared to 100.1 in September. The report is due at 10am. ET (1400 GMT).
