Dow Futures Up 265 Pts; Corporate Earnings Season Hits Top Gear
2022.07.18 14:29
By Peter Nurse
Investing.com — U.S. stocks are seen opening higher Monday, continuing the strong close to last week ahead of a busy week of corporate earnings.
At 7 AM ET (1100 GMT), the Dow Futures contract was up 265 points or 0.9%, S&P 500 Futures traded 36 points or 1% higher, and Nasdaq 100 Futures climbed 135 points, or 1.1%.
The main indices on Wall Street closed firmly higher Friday, with the blue-chip Dow Jones Industrial Average gaining over 650 points, or 2.2%, as investors bet that the Federal Reserve will be less aggressive at its upcoming meeting than previously feared.
That said, the major averages still posted a losing week on fears that the monetary tightening by the U.S. Federal Reserve, in an effort to tame decades-high inflation, will still tip the economy into a recession.
Earnings from JPMorgan (NYSE:JPM) added a note of caution, with the country’s largest bank reporting a 28% fall in quarterly profit and suspending share buybacks in the face of growing risks of a sharp economic slowdown.
This suggests U.S. stocks are likely to face more declines even if the economy manages to avoid a recession, analysts at Morgan Stanley said, in a note.
“Counter-trend rally may continue, but make no mistake, we don’t believe this bear market is over, even if we avoid a recession – the odds of which are increasing,” Morgan Stanley said.
Bank of America (NYSE:BAC) also reported a drop in second quarter profit on Monday, hit by a slump in investment banking revenue, while Goldman Sachs (NYSE:GS) and Charles Schwab (NYSE:SCHW) are on deck to continue the banking sector’s quarterly updates before the market opens, while IBM (NYSE:IBM) will post results after the closing bell.
Away from the banks, a number of the major tech giants are also due to report this week. Expectations have already been lowered, and investors’ questions will be more geared towards whether the worst is past.
Oil prices rose Monday, helped by the continuing tight global supply after U.S. President Joe Biden’s trip to Saudi Arabia failed to yield any pledge from the top OPEC producer to boost oil supply.
Attention this week will be on the scheduled resumption of Russian gas flows to Europe via the Nord Stream 1 pipeline on July 21, when the current maintenance stoppage is due to end, amid fears the shutdown may be extended because of the war in Ukraine.
That said, the prospect of widespread COVID-19 lockdowns in China again reducing fuel demand has limited the gains, with Shanghai rolling out mass-testing in nine districts while the gaming region of Macau extended its lockdown.
By 7 AM ET, U.S. crude futures traded 1.9% higher at $96.40 a barrel, while the Brent contract rose 2.1% to $103.28. The two benchmarks last week posted their biggest weekly drops in about a month on fears of a recession that will hit oil demand.
Additionally, gold futures rose 0.7% to $1,714.70/oz, while EUR/USD traded 0.7% higher at 1.0152.
