U.S. Stock Futures Edge Down as Bank Earnings Reports Roll In
October 14 2020 - 8:43AM
Dow Jones News
By Caitlin Ostroff
U.S. stock futures ticked lower Wednesday as another round of
earnings reports from major banks and blue-chip companies began
trickling in.
Futures tied to the S&P 500 edged down 0.1%, suggesting that
the broad market gauge could slip after the New York opening
bell.
In premarket trading, shares of Bank of America fell 2.1% after
it reported profit that fell 16% in the third quarter, though it
indicated that it is well prepared to weather the coronavirus
recession. Shares in Goldman Sachs rose 3.2% after the bank
reported sharply higher profits for the third quarter. Shares in
Wells Fargo declined 1.8% after it said profit in the last quarter
fell 56%.
Shares in PNC Financial Services Group rose 1.6% after it said
profit rose and the amount it set aside to cover potential loan
losses fell significantly from the previous quarter.
JPMorgan Chase and Citigroup posted better-than-expected results
Tuesday, while also warning that the economy isn't out of the woods
yet and there may be significant defaults on loans by customers in
the future.
"Earnings expectations are still reasonably conservative, but
they are starting to pick up," said Willem Sels, global chief
market strategist at HSBC Private Banking. "Anything that has to do
with hiring plans or redundancy plans are going to be extremely
important," he added.
Renewed hiring by businesses would signal the start of a
stronger rebound and aid consumer spending, a significant driver of
the economy, he said.
U.S. hospitalizations are at their highest level since Aug. 29,
according to data from the Covid Tracking Project. Investors remain
concerned that a continued uptick will result in fresh local
restrictions, placing pressure on businesses and economic
recovery.
Markets are also broadly reflecting an expectation that
lawmakers will pass a new stimulus package after the election,
which would aid the economic recovery by bolstering consumer
spending, and support corporate earnings and U.S. stocks. But some
investors continue to hope that smaller coronavirus-relief packages
-- such as aid for small businesses or airlines -- may be approved
even before Nov. 3.
"Congress is going to throw trillions at the economy, and growth
in 2021 and 2022 will be strong," said Patrick Spencer, managing
director of U.S. investment firm Baird. "At the end of the day, the
economic numbers are softening a little, so stimulus is coming.
It's just concerns around when it's coming."
Investors are also monitoring progress on developing a
coronavirus vaccine. Drugmaker Eli Lilly said Tuesday that it was
pausing a study of its Covid-19 treatment due to a potential safety
concern. Johnson & Johnson, meanwhile, said it hopes to know
within days whether it can resume testing its Covid-19 vaccine,
which it paused after a study volunteer fell ill.
"Our assumption is ultimately we will get one, whether it's a
vaccine or a number of drugs that help you treat it to such an
extent that the consumer gathers confidence," Mr. Sels said. "One
of the things that also gives us confidence is there's a number of
them working in parallel."
In bond markets, the yield on the 10-year Treasury note ticked
down to 0.716%, from 0.726% Tuesday.
Overseas, the pan-continental Stoxx Europe 600 ticked down
0.2%.
In Asia, major benchmarks were mixed by the end of trading. The
Shanghai Composite Index closed down 0.6%. Japan's Nikkei 225 edged
up 0.1%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
October 14, 2020 08:28 ET (12:28 GMT)
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