Stock futures point higher as China equities recover; earnings in focus

Stock futures point higher as China equities recover; earnings in focus

U.S. stock-index futures rose modestly Monday as global equities took a cue from a continued rebound by China’s markets, and as investors looked ahead to this week’s deluge of third-quarter earnings reports.

What are major indexes doing?

Futures on the Dow Jones Industrial Average YMZ8, +0.13% rose 114 points, or 0.5%, to 25,542, while S&P 500 futures ESZ8, +0.25% were 0.4% higher at 2,779. Nasdaq-100 futures NQZ8, +0.86% were up 0.7% at 7,168.

What’s driving markets?

Stocks are trying to find direction after bulls and bears fought each other to a stalemate last week, leaving the benchmark S&P 500 SPX, +0.05% to eke out a weekly rise of less than 0.1%. The tech-heavy Nasdaq Composite COMP, +0.28% suffered a 0.6% fall for its third straight weekly decline as once-popular technology shares continued to take a beating, while the Dow Jones Industrial Average DJIA, +0.04% broke a three-week losing streak with a 0.4% rise.

Increased volatility has left investors nervous in what’s been a rough October. The S&P 500 is down 5% in the month-to-date, while the Dow is off 3.8% and the Nasdaq has shed 7.4%. That’s left the S&P 500 5.9% off its record high set in late September, while the Dow is down 5.6% from its early October peak.

Chinese stocks surged for a second day Monday on reassuring comments by leaders and regulators in the wake of last week’s market rout and disappointing economic data. The Shanghai SHCOMP, +4.09% closed 4.1% higher, while the smaller Shenzhen Composite 399106, +4.90% soared more than 5%.

Over the weekend, China President Xi Jinping emphasized China’s support for the private sector, according to the Xinhua News Agency, following concerted moves Friday by Vice Premier Liu He, Xi’s top economic official, and the head of the central bank and financial regulators to reassure investors.

Investors will be wading through a flood of earnings this week as the third-quarter reporting season hits its stride.

What are analysts saying?

Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management, told MarketWatch that “we have seen the narrative begin to shift,” to a more cautious one, citing fears over slowing global growth and whether U.S. companies can maintain their recent strong earnings growth in the quarters to come.

“Investors are anxious for more information,” he said, adding that while he believes the current backdrop is supportive of stocks, it will all some down to earnings. “With so many bellwether names across so many industries reporting this week, things should get interesting.”

U.S.-listed Chinese companies are set to surge out of the gate this morning, said Joel Kulina, analyst with Wedbush Securities. It’s a “risk on start of the week as investors position [themselves] ahead of an eps ramp,” he wrote in a note to clients.

“Reassurance from the Chinese leadership that they will support the economy have triggered the biggest one-day increase in equity indices since 2015 and has given markets everywhere a risk-friendly bias to start the week,” said Kit Juckes, global macro strategist at Société Générale, in a note.

What stocks are in focus?

Shares of Hasbro Inc. HAS, -5.94% were down more than 6% in premarket action after the toy maker missed third-quarter profit and revenue expectations and announced a restructuring that will cut jobs.

Kimberly-Clark Corp. KMB, -0.56% posted better-than-expected earnings and revenue, helping send shares up 3% before the market open.

Energy services company Halliburton Co. HAL, -0.56% on Monday topped third-quarter profit and revenue estimates. Shares were up 0.6% in premarket trade.

Shares of Chinese e-retailer, Inc. JD, +3.21% surged in premarket trading, after a strong showing on Chinese markets Monday. The stock is up 3%.

Another beneficiary of the Chinese rally was International, Ltd. CTRP, +3.36% China’s largest online travel agency. Shares in the company rose 5% before the market open.

What data are in store?

The Chicago Fed National Activity Index decreased to +0.17 in September from +0.27 in August.

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