MW: Futures point higher as more key earnings ahead
Wall Street seen rebounding from China-related routing
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — U.S. stock market futures were pointing to a firmer start for Wall Street on Wednesday, as investors looked ahead to yet another batch of key earnings from Boeing, Morgan Stanley and others.
Futures for the Dow Jones Industrial Average (DJZ10 10,956, +13.00, +0.12%) rose 16 points to 10,959, while those for the S&P 500 (SPZ10 1,168, +4.40, +0.38%) gained 3.8 points to 1,167.60. Futures for the Nasdaq 100 (NDZ10 2,078, +10.50, +0.51%) rose 9.75 points to 2,077.25.
The Dow Jones Industrial Average lost 165.07 points or 1.5% to 10,978.62 on Tuesday, the worst drop since early August, as investors reeled from a surprise rate hike from China and fears Bank of America (BAC 11.80, -0.54, -4.38%) may have to repurchase bad mortgages.
“The mortgage valuation and foreclosure issue remains a serious problem, though analysts believe the problem is hundreds of millions of dollars as opposed to billions of dollars in terms of litigious action,” said David Buik, strategist at BCG Partners, who expects U.S. markets will open marginally higher on Wednesday. See story on B. of A.
The S&P 500 fell 1.6% and the Nasdaq Composite lost 1.8% as markets also took a negative view on earnings from Apple Inc. (AAPL 309.49, -8.51, -2.68%) and International Business Machines (IBM 138.03, -4.80, -3.36%) .
Gary Jenkins, head of fixed-income research at Evolution Securities, pointed out in a note that of 56 companies that have reported, 47 have come ahead of expectations, or 83% in percentage terms, against 75% in the second quarter.
“The revenue beat isn’t so positive, however, with only 45% of companies reporting revenue ahead of consensus,” he said, adding that the market still has to get through another 77 this week.
A chunk will be reporting on Wednesday, with Morgan Stanley (MS 25.39, -0.01, -0.04%) , Boeing (BA 69.05, -1.18, -1.68%) , Abbott Laboratories (ABT 52.87, -0.80, -1.49%) and Wells Fargo & Co. (WFC 24.55, -0.32, -1.29%) all due before the opening bell. After the market open, eBay Inc. (EBAY 25.53, -0.19, -0.74%) is due to report.
Shares of Yahoo Inc. (YHOO 15.49, -0.44, -2.73%) could be in focus after the company reported a surge in profits, but flat net sales. Earnings of 13 cents a share were below expectations of 15 cents a share from analysts polled by FactSet Research. See Yahoo earnings story
On the economic side, the Fed Beige Book for October will be released at 2 pm Eastern time, while speeches are also expected from Fed governors Charles Plosser and Jeffrey Lacker.
China stocks rebounded, with the Shanghai Composite advancing after an earlier loss as some analysts took the view that the rate hike in China was a sign that the country’s growth can be sustained despite the policy hike. See Asia Markets column on China hike
In Europe, stocks were largely higher as markets absorbed a handful of earnings. Gains were led by German chemicals giant BASF, which rose after lifting its outlook. See Europe Markets
The FTSE 100 was slightly higher ahead of austerity plans due to be announced by the government on Wednesday, expected to be the biggest spending cuts in decades.
After a sharp sell-off Tuesday in the wake of China’s rate move, December gold futures were up $6.10 to $1,342 an ounce, while November crude-oil futures gained $1.05 to $81.21 a barrel.
The euro was up 0.7% against the dollar at $1.3825.
