By Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks appeared set Tuesday to bounce back from their biggest drop in five months, with stock-index futures rising as gold futures recovered some of the previous day’s rout and Goldman Sachs Group Inc. topped first-quarter earnings forecasts.
Stock futures held their strong gains after data showed that U.S. housing starts rose 7% in March, exceeding analyst expectations, and consumer inflation fell 0.2% last month.
Futures for the Dow Jones Industrial Average DJM3 +0.96% rallied 144 points, or 1%, to 14,656, while those for the Standard & Poor’s 500 index SPM3 +0.96% rose 15.30 points, or 1%, to 1,558.70.
Futures for the Nasdaq 100 index NDM3 +0.93% rose 26 points, or 0.9%, to 2,809.7.
“I think it’s a combination of a number of factors, including the stabilization in the commodities space and the fact that the U.S. bombings, which saw U.S. equities hammered, didn’t compound into a much worse situation,” said Stan Shamu, market strategist at IG, in emailed comments.
“At the close of U.S. trade it seems panic was setting into investors’ minds and some of this might just have calmed,” said Shamu.
Goldman Sachs GS +0.88% reported earnings of $4.29 a share in the first quarter, while revenue came in at $10.09 billion, topping forecasts. Goldman shares rose 1.2% in premarket action.
Asia markets also pulled off lows.
A day earlier, sentiment soured on Wall Street, as investors got swept up by sharp losses for commodities and economic data that showed a drop in a gauge of U.S. home builders’ confidence, and a slowdown in China’s growth. In addition, news of a deadly explosion at the finish line of the Boston Marathon in the afternoon on Monday helped drain confidence.
The Dow industrials DJIA -1.79% fell 265.86 points, or 1.8%, to 14,599.20 on Monday, while May gold GCK3 +2.42% finished the day with a loss of more than $140, its worst one-day performance since the early 1980s.
However, gold prices appeared to be reclaiming a small piece of that rout on Tuesday, with futures up $32 an ounce. Other precious and base metals were also higher, though oil prices continued to fall ahead of supply data.
Earnings season is in full swing. Coca-Cola Co. KO +3.39% said first-quarter profit fell 15% as revenue declined 1%.
BlackRock Inc. BLK -3.52% , the biggest U.S. provider of exchange-traded funds, topped Wall Street forecasts with a 10% rise in first-quarter profit. U.S. Bancorp USB -2.26% matched earnings forecasts, while revenue saw an unexpected drop. Johnson & Johnson JNJ -1.24% was among other big names reporting ahead of Tuesday’s opening bell.
The flow continues after the closing bell, with analysts looking to Yahoo Inc.’s YHOO +1.25% first-quarter report for confirmation the Web portal’s slow but steady rebound remains intact. See: Yahoo sentiment rising ahead of results.
Philadelphia Federal Reserve Bank President Charles Plosser on Tuesday said the Fed should take steps right away to prepare for its eventual exit from ultra-loose monetary policy, including the normalization of the spread between the target federal funds rate and the discount or credit rate, at which banks borrow from the central bank. Plosser isn’t a voting member this year of the Fed’s rate-setting committee. Other Fed speakers will also be hitting the headlines on Tuesday, including New York Fed President William Dudley, who will be speaking from Staten Island at 8 a.m. Eastern.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer.
