Impending Earnings News May Lead to Choppy Trading
By Investors Hub
The major U.S. index futures are pointing to a roughly flat opening on Monday, with stocks likely to show a lack of direction in early trading.
Traders may be reluctant to make significant moves ahead of the release of quarterly results from a slew of big-name companies in the coming days.
Bank of America (BAC), Johnson & Johnson (JNJ), IBM (IBM), Morgan Stanley (MS), PepsiCo (PEP), and American Express (AXP) are among the companies due to report their results this week.
Financial giants Citigroup (C) and Goldman Sachs (GS) released their quarterly results this morning and are moving in opposite directions in pre-market trading.
The impending release of data on industrial production, retail sales, and housing starts may also keep some traders on the sidelines along with the holiday on Friday.
Stocks did not see much follow-through on an initial upward move but remained mostly positive throughout the trading session on Friday. The gains on the day lifted the Nasdaq and the S&P 500 to their best closing levels in over six months.
Reflecting late-day strength, the major averages finished not far off their best levels of the session. The Dow jumped 269.25 points or 1 percent to 26,412.30, the Nasdaq rose 36.80 points or 0.5 percent to 7,984.16 and the S&P 500 advanced 19.09 points or 0.7 percent to 2,907.41.
For the week, the Nasdaq and the S&P 500 climbed by 0.6 percent and 0.5 percent, while the Dow edged down by less than a tenth of a percent.
The early strength on Wall Street came amid a positive reaction to quarterly results from JPMorgan Chase (JPM), with the financial giant jumping by 4.7 percent.
Before the start of trading, JPMorgan kicked off the earnings season by reporting record first quarter earnings and revenues that exceeded analyst estimates.
The better than expected results from JPMorgan partly offset some of the recent concerns about corporate results for the quarter.
Shares of Disney (DIS) also surged up by 11.5 percent after the entertainment giant initially priced its streaming service well below Netflix (NFLX).
Buying interest waned shortly after the start of trading, however, as traders seemed reluctant to make more significant moves ahead of the release of quarterly results from a slew of big-name companies next week.
A report from the Labor Department showing a bigger than expected increase in import prices in March may also have raised inflation concerns, although the price growth was largely due to another spike in fuel prices.
Meanwhile, the University of Michigan released a separate report showing consumer sentiment has deteriorated by more than anticipated in the month of April.
The preliminary report showed the consumer sentiment index dropped to 96.9 in April from the final March reading of 98.4. Economists had expected the index to edge down to 98.0.
Natural gas stocks moved sharply higher on the day, driving the NYSE Arca Natural Gas Index up by 2.2 percent to a five-month closing high.
The strength in the sector came after oil and gas exploration and production company Anadarko Petroleum (APC) agreed to be acquired by energy giant Chevron (CVX) in a stock and cash transaction valued at $33 billion.
The upbeat earnings news from JPMorgan also contributed to significant strength among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index climbing by 1.9 percent and 1.7 percent, respectively.
Semiconductor, chemical, and networking stocks also saw considerable strength on the day, while some weakness emerged among biotechnology and healthcare stocks.