Upbeat Earnings News May Lead To Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to add to the modest gains posted in the previous session.

The upward momentum on Wall Street partly reflects a positive reaction to the latest batch of corporate earnings news.

Shares of Bank of America (BAC) are moving notably higher in pre-market trading after the financial giant reported first quarter results that beat analyst estimates on both the top and bottom lines.

Healthcare giant Johnson & Johnson (JNJ) is also likely to see initial strength after reporting better than expected first quarter results and raising its full-year guidance.

Meanwhile, shares of Goldman Sachs (GS) may move to the upside after the investment bank reported first quarter revenues below analyst estimates.

U.S. stocks closed modestly higher on Monday thanks to some hectic buying at several counters in the final hour of the day’s session amid hopes major banks and top ranking companies will come out with fairly encouraging earnings updates this week.

Stocks were largely subdued for most of the session until the final hour amid concerns about an economic slowdown and uncertainty about the outlook for interest rates.

The major averages all ended in positive territory after spending much of the day’s session in the red.

The Dow ended up by 100.71 points or 0.3 percent at 33,987.18. The S&P 500 climbed 13.68 points or 0.3 percent to 4,151.32, while the Nasdaq ended higher by 34.26 points or 0.3 percent at 12,157.72.

Concerns about a potential recession later this year and uncertainty about interest rates weighed on sentiment.

The President and CEO of the Federal Reserve Bank of Richmond Thomas Barkin said today that he wants to see more evidence of inflation settling back to target.

Barkin also said that he feels reassured by what he is seeing in the banking sector.

In economic news, a report from the National Association of Home Builders said the NAHB/Wells Fargo Housing Market Index increased to 45 in April of 2023, rising for a fourth month in a row. This is a fresh high since September of 2022.

Shares of Charles Schwab Corporation surged about 4 percent after the company reported stronger than expected first-quarter earnings.

Prometheus Biosciences soared 70 percent after Merck announced that it would acquire the biosciences company for approximately $10.8 billion.

Alphabet shares ended down 2.6 percent on reports Samsung is considering replacing Google with Microsoft’s Bing as the default search engine on its devices.

Commodity, Currency Markets

Crude oil futures are falling $0.33 to $80.50 a barrel after tumbling $1.69 to $80.83 a barrel on Monday. Meanwhile, after slipping $8.80 to $2,007 an ounce in the previous session, gold futures are climbing $10.30 to $2,017.30 an ounce.

On the currency front, the U.S. dollar is trading at 134.05 yen compared to the 134.47 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0964 compared to yesterday’s $1.0926.

Asia

Asian markets moved mixed on Tuesday despite China’s GDP data surprising with a more than expected growth in the first quarter. The Chinese economy grew 4.5 percent in the first quarter versus 2.9 percent in the previous period and expectations of a growth of 4 percent. Anxieties about global growth and monetary tightening dampened sentiment.

China’s Shanghai Composite Index rose 0.23 percent to 3,393.33. The day’s trading ranged between 3,375.78 and 3,396.17. The Shenzhen Component Index gained 5 points or 0.04 percent to close at 11,860.40.

The Japanese benchmark Nikkei 225 gained 144 points or 0.51 percent to end trading at 28,658.83. The day’s trading range was between 28,520.76 and 28,698.22.

Chiba Bank topped with gains of 3.4 percent. Terumo Corp, Nissui Corp, Takashimaya Co and Trend Micro, all gained more than 2 percent.

Advantest Corp was the biggest laggard with an overnight decline of more than 3 percent. Tokyo Electron, Impex Corp, Dainippon Screen Mfg Co, all declined more than 2 percent.

The Hang Seng Index of the Hong Kong Stock Exchange dropped 132 points or 0.63 percent from the previous close to finish trading at 20,650.51. The day’s trading range was between a high of 20,742.39 and a low of 20,559.08.

Korean Stock Exchange’s Kospi Index lost 5 points or 0.19 percent to close trading at 2,571.09. The day’s trading range was between 2,557.19 and 2,582.23.

Australia’s S&P/ASX200 closed trading at 7,360.20 after dropping 21 points or 0.29 percent.

Telix Pharmaceuticals surged 12.7 percent after reporting strong revenue growth. Core Lithium rallied 6.5 percent after it reported a significant increase in the mineral resource estimate for the Finniss lithium operation. Pilbara Minerals gained 4.2 percent. Allkem also added close to 4 percent. A2 Milk Company gained 2.8 percent.

Lithium producers Sayona Mining and Lake Resources both dropped more than 9 percent. Lendlease Group, Capricorn Metals and Domain Holdings Australia, all declined more than 2 percent.

Europe

uropean stocks are up in positive territory on Tuesday as strong economic data from China, and some upbeat earnings updates from top U.S. companies Bank of America and Johnson & Johnson help outweigh concerns about interest rates.

China’s gross domestic product was up 4.5% on year in the first quarter of 2023, the National Bureau of Statistics said today. That beat expectations for an increase of 4% and was up from 2.9% in the three months prior.

On a seasonally adjusted quarterly basis, GDP gained 2.2% – matching forecasts following the flat reading in the previous quarter.

The bureau also said that industrial production was up 3.9% on year in March, missing expectations for 4% but still up from 2.4% in February.

Investors are shrugging off data showing a drop in the ZEW economic sentiment index in the Euro area as well as Germany in the month of April.

The pan European Stoxx 600 is up nearly 0.5%. The U.K.’s FTSE 100 is advancing 0.2%, Germany’s DAX is surging 0.61% and France’s CAC 40 is climbing up 0.64%, while Switzerland’s SMI is up 0.54%.

In the UK market, Polymetal International is surging more than 7.5%. Entain is climbing nearly 5%, while Fresenillo and Anglo American are rising 3.8% and 3.7%, respectively.

Antofagasta, Glencore, Barclays, Melrose Industries, Just Eat Takeaway.com, BHP Group and Burberry Group are gaining 1.5 to 2.3%.

EasyJet is gaining more than 2% on optimism about earnings.

TUI, Centrica, Compass Group and GlaxoSmithKline are notably lower.

In Paris, Societe Generale is up 2.7%. BNP Paribas, Capgemini, Kering, AXA, Carrefour, Hermes International, Renault, Legrand LVMH are gaining 1.5 to 2.3%.

In the German market, Deutsche Bank, MTU Aero Engines, Commerzbank and Covestro are advancing 2 to 2.7%.

Infineon Technologies is up nearly 2%, while Siemens Healthineers, Brenntag, Mercedes-Benz, Sartorius, Vonovia and Continental are gaining 1 to 1.5%.

On the economic front, the ZEW Indicator of Economic Sentiment for the Euro Area dropped by 3.6 points to 6.4 in April 2023, from a score of 10 in the prior month. The reading dropped for a second straight month after five consecutive months of increases, due to uncertainty about the outlook for inflation, growth and interest rates.

U.S. Economic Reports

The Commerce Department released a report on Tuesday showing a decrease in new residential construction in the U.S. in the month of March.

The report said housing starts slid by 0.8 percent to an annual rate of 1.420 million in March from a revised rate of 1.432 million in February.

Economists had expected housing starts to decline to a rate of 1.400 million from the 1.450 million originally reported for the previous month.

Meanwhile, the Commerce Department said building permits plunged by 8.8 percent to a rate of 1.413 million in March from a revised rate of 1.550 million in February.

Building permits, an indicator of future housing demand, were expected to fall to a rate of 1.441 million from the 1.524 million originally reported for the previous month.

At 1 pm ET, Federal Reserve Board Governor Michelle Bowman is due to speak on Considerations for a Central Bank Digital Currency before a Psaros Center for Financial Markets and Policy event.