A trader works on the floor of the New York Stock Exchange (NYSE) on September 6, 2022 in New York City.
Brendan McDermid | Portal
U.S. stock futures were flat Monday evening as third-quarter earnings season gains momentum.
Futures tied to the Dow Jones Industrial Average rose just 13 points, or 0.04%. S&P 500 futures rose 0.03% while Nasdaq 100 futures traded near the zero line.
The major averages all closed in the green during Monday’s main trading session. Although Treasury yields rose – which typically puts downward pressure on stocks – equities posted gains as investors became more optimistic about corporate earnings. The 10-year U.S. Treasury yield rose 7 basis points to 4.7% on Monday. Still, the 10-year Treasury yield is still more than 10 basis points below its 16-year highs from earlier this month. Small caps also rallied on Monday, with the Russell 2000 gaining 1.6%.
A total of 53 companies in the S&P 500, or about 11% of the index, are expected to report results this week. Five names in the Dow will also release their results. Key reports Tuesday morning include Johnson & Johnson, Bank of America, Goldman Sachs and Lockheed Martin.
“If the economy picks up again, which it does, and if earnings growth accelerates again, which it does, then small caps should take the lead. That’s what history says,” Richard Bernstein, CEO of Richard Bernstein Advisors, said Monday on CNBC’s “Closing Bell: Overtime.” “So I think there’s a little element of rationality that comes with the return to the stock market, and that market is starting to expand a little bit.”
Several financial companies got off to a strong start to earnings season, including Charles Schwab on Monday and JPMorgan Chase on Friday. This has helped improve market sentiment amid concerns over the war between Israel and Hamas. The conflict in the Middle East has raised fears that tensions in the region could escalate to include some of the biggest oil producers, particularly Iran.
The dire geopolitical concerns and inflation worries have added to market negativity, “but they are also the cause for concern that is driving rising stock prices,” said George Ball, chairman of Sanders Morris Harris.
In addition to Tuesday’s earnings reports, Wall Street will also be watching for new economic data. Retail sales and industrial production data for September will be released before the bell. October’s housing market index and business executive survey results are also scheduled to be announced Tuesday morning.