Upbeat Earnings News May Lead To Extended Recovery Rally On Wall Street

The major U.S. index futures are currently pointing to a sharply higher open on Tuesday, with stocks likely to extend the recovery rally seen in the previous session.

The markets may benefit from positive reaction to quarterly results from companies like Goldman Sachs (GS) and Johnson & Johnson (JNJ), which have helped ease concerns about the strength of the earnings season.

Shares of Goldman Sachs are jumping by 3.4 percent in pre-market trading after the financial giant reported third quarter results that beat analyst estimates on both the top and bottom lines.

Johnson & Johnson is also seeing pre-market strength after the healthcare giant reported better than expected third quarter results.

Netflix (NFLX) and United Airlines (UAL) are among the companies due to report their quarterly results after the close of today’s trading.

Big-name companies like Procter & Gamble (PG), IBM Corp. (IBM), Tesla (TSLA), AT&T (T) and American Express (AXP) are also due to report their results in the coming days.

Traders may also continue to hunt for bargains, as the major averages remain at relatively reduced levels even after yesterday’s rally.

Stocks moved sharply higher in early trading on Monday and continued to turn in a strong performance throughout the session. The major averages all posted strong gains on the day, with the tech-heavy Nasdaq leading the way higher.

The major averages moved roughly sideways in afternoon trading, hovering near their best levels of the day. While the Nasdaq surged 354.41 points or 3.4 percent to 10,675.80, the S&P 500 shot up 94.88 points or 2.7 percent to 3,677.95 and the Dow jumped 550.99 points or 1.9 percent to 30,185.82.

The strong move back to the upside extended recent volatility on Wall Street, as stocks showed wild swings to close out the previous week.

Traders may have looked to pick up stocks at reduced levels following the steep drop seen on Friday, which dragged the Nasdaq down to its lowest closing level in over two years.

An early pullback by treasury yields added to the buying interest, although yields regained ground over the course of the session.

The markets also benefitted from a positive reaction to earnings news from financial giant Bank of America (BAC).

Shares of Bank of America soared by 6.1 percent after the company reported third quarter results that beat expectations on both the top and bottom lines.

The strength on Wall Street also came following news the U.K. government is reversing course on previously announced fiscal plans that contributed to turmoil in the global bond markets.

Britain’s new finance minister Jeremy Hunt reversed almost all of the tax measures announced by his predecessor Kwasi Kwarteng in the mini-budget on September 23.

On the U.S. economic front, the Federal Reserve Bank of New York released a report showing regional manufacturing activity has contracted by more than expected in the month of October.
Retail stocks turned in some of the market’s best performances on the day, resulting in a 3.7 percent spike by the Dow Jones U.S. Retail Index.

Substantial strength was also visible among interest rate-sensitive commercial real estate stocks, as reflected by the 3.7 percent surge by the Dow Jones U.S. Real Estate Index.

Networking stocks also showed a significant move to the upside, driving the NYSE Arca Networking Index up by 3.3 percent.

Computer hardware, banking and telecom stocks also saw considerable strength amid broad based buying interest on Wall Street.

Commodity, Currency Markets

Crude oil futures are rising $0.27 to $85.73 a barrel after edging down $0.15 to $85.46 a barrel on Monday. Meanwhile, after climbing $15.10 to $1,664 an ounce in the previous session, gold futures are slipping $3.50 to $1,660.50 an ounce.

On the currency front, the U.S. dollar is trading at 148.98 yen compared to the 149.04 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $0.9847 compared to yesterday’s $0.9841.

Asia

Asian stocks ended broadly higher on Tuesday, although Chinese markets slipped after the country delayed the release of its latest economic growth figures along with other key economic indicators amid the weeklong 20th Communist Party National Congress.

Investors breathed a sigh of relief after Britain’s new finance minister announced a comprehensive retreat on the U.K. government’s tax-and-spending plans on Monday in a bid to calm jittery markets and restore the government’s credibility.

China’s Shanghai Composite Index edged down 0.1 percent to 3,080.96 amid renewed concerns over the zero-COVID policy and a U.S. semiconductor blockade.

BYD jumped 5 percent after the electric vehicle maker said its third-quarter profit may surge up to 365 percent. Hong Kong’s Hang Seng Index rallied 1.8 percent to 16,914.58.

Japanese stocks surged, led by gains among exporters, financials and transport stocks. The Nikkei 225 Index jumped 1.4 percent to 27,156.14, while the broader Topix closed 1.2 percent higher at 1,901.44.

Toshiba Corp. fell over 1 percent following reports that some global banks have turned cautious over backing large buyouts due to rising borrowing costs in the United States and elsewhere.

Seoul stocks posted strong gains ahead of quarterly earnings from major companies, including Hyundai Motor, this week. The Kospi gained 1.4 percent to finish at 2,249.95. Hyundai Motor shares rose 0.6 percent, while SK Telecom added 2.5 percent and Korea Gas Corp surged 4 percent.

Australian markets advanced as minutes from the Reserve Bank of Australia’s last meeting showed the central bank’s decision to reduce the size of the interest rate hikes was “finely balanced.”

Separately, RBA Deputy Governor Michele Bullock said in a speech to a finance industry conference that there is still a path for the country to avoid going into recession and preserve most of the gains in employment.

The benchmark S&P/ASX 200 Index rallied 1.7 percent to 6,779.20, with tech companies, gold miners and financials leading the surge. The broader All Ordinaries Index closed up 1.8 percent at 6,976.20.

Global miner Rio Tinto ended on a flat note after forecasting annual iron ore shipments at the lower end of its guidance. St. Barbara shares plummeted 21.6 percent after the gold miner cut its production guidance and deferred capital expenditures on major projects by a year.

Europe

European stocks are moving higher a fourth straight session on Tuesday after the U.K. government reversed nearly all its planned tax cuts and a survey showed German economic sentiment improved in October.

While the German DAX Index has spiked by 1.8 percent, the French CAC 40 Index is up by 1.5 percent and the U.K.’s FTSE 100 Index is up by 1.3 percent.

Tech stocks have led the surge, with Infineon Technologies, ASML Holdings and BE Semiconductor posting notable gains.

Shares of Lookers Plc have also jumped after the British automotive retail and service group said it now expects underlying profit before tax for 2022 to be ahead of its previous expectations following strong trading in its third quarter.

French spirits giant Pernod Ricard has also moved higher after it struck an agreement to acquire a majority shareholding of Co´digo 1530 Tequila.

Publicis Groupe has also risen. The world’s third-biggest advertising group raised its 2022 guidance once again after posting better-than-expected third quarter organic revenue growth.

Automakers BMW, Volkswagen, Mercedes-Benz Group and Renault have also advanced after industry data showed Europe’s new car registrations increased for the second straight month in September.

New passenger car registrations grew 9.6 percent on a yearly basis, following August’s 4.4 percent increase, according to data published by the European Manufacturer’s Association.

Pfeiffer Vacuum, a German manufacturer of vacuum pumps, has soared after its preliminary group sales for the first nine months of 2022 increased 16.2 percent.

Sweden’s Avanza Bank has also shown a substantial move to the upside after reporting better-than-expected third-quarter earnings.

Credit Suisse has also moved higher on reports that the Swiss banking giant has turned to Middle Eastern sovereign wealth funds for a capital injection.

On the other hand, Swiss drug maker Roche has come under pressure after reporting a 6 percent decline in quarterly sales.

Homebuilders have also moved to the downside, with Bellway leading the way lower after it warned of a potentially shrinking market.

U.S. Economic Reports

The Federal Reserve is scheduled to release its report on industrial production in the month of September at 9:15 am ET. Industrial production is expected to inch up by 0.1 percent in September after edging down by 0.2 percent in August.

At 10 am ET, the National Association of Home Builders is due to release its report on homebuilder confidence in the month of October. The housing market index is expected to dip to 44 in October from 46 in September.

Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in a virtual panel discussion at a WorkRise conference titled Charting a Resilient Future for US Workers: Solutions to Navigate an Uncertain Economy at 2 pm ET.

At 5:30 pm ET, Minneapolis Federal Reserve President Neel Kashkari is due to participate in a panel on the economy and a question-and-answer session before the Women Corporate Directors Minnesota Chapter.

Stocks In Focus

Shares of fuboTV (FUBO) are moving sharply higher in pre-market trading after the sports-focused streaming service said third quarter revenue and subscriber growth for North America are expected to exceed previously issued guidance.

Retail giant Target (TGT) is also likely to see initial strength after Jefferies upgraded its rating on the company’s stock to Buy from Hold.

Meanwhile, shares of Hasbro (HAS) may move to the downside after the toymaker reported third quarter earnings that missed analyst estimates.