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Stock futures are flat ahead of major earnings reports on Tuesday

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Traders are seen working on the New York Stock Exchange’s (NYSE) floor, October 12, 2021.

Brendan McDermid | Reuters

U.S. stock markets were stable in overnight trading on Monday, as investors prepared for Tuesday’s big earnings day.

Dow futures dropped just 12 points. S&P 500 futures fell 0.03% and Nasdaq 100 futures were around the flat line.

On Monday, the S&P 500 and Nasdaq Composite notched their fourth day of gains. The S&P 500 rose 0.34%. Nasdaq outperformed the S&P 500 by gaining 0.84% Facebook Amazon Apple NetflixGoogle-parent AlphabetAll are closed at a higher level.

Dow Jones Industrial Average fell 36 points due to a drop of 3% in DisneyStock.

Major reports continue Tuesday to keep the earnings season alive. Johnson & Johnson Procter & Gamble Netflix United Airlines

Of the 41 S&P 500 companies that have reported third-quarter results, 80% beat earnings expectations, according to FactSet. Despite strong reports, investors want to hear from corporations about inflation and supply chain issues.

The financials were a strong contributor to earnings season. But, let’s face it, supply chain and COVID issues won’t have any impact on this group. “Now it’s very fascinating to see what other industries have to share about the state of the economy recovery,” Ryan Detrick said, LPL Financial chief market strategist.

Netflix may set the standard for tech earnings in this year’s season. StreetAccount reports that the streaming company forecasted a paid net subscriber increase of 3.5million three months ago. Analysts expect 3.84 million to be added this quarter. StreetAccount reports that analysts are forecasting an increase in fourth quarter subscriber guidance to 8.5 million. This would mark the most optimistic outlook since the beginning of 2019.

Netflix shares have traded lower in six of seven recent earnings releases.

Earnings from United Airlines should give investors a gauge on the travel recovery from the pandemic and Procter & Gamble earnings could show how strong the consumer is in the goods sector.

Although stocks are celebrating a win week, they have been volatile ever since September. Morgan Stanley’s chief U.S. equity strategist Mike Wilson — who has been calling for a correction in the broader market — told clients on Monday that although fundamentals are deteriorating, the market seems to be resilient to a bigger pullback.

Wilson stated, “Whether or not we get the finishing move at index level this year will depend heavily on retail participation and the message that 3Q earnings bring from a guidance standpoint as well as the path of PMIs to year end.”

China’s economy impacted investor sentiment following its September report of a lower GDP and a fall in industrial production. This was below the expectations. According to the Federal Reserve, industrial production was also down in September because of supply problems.

— with reporting from CNBC’s Robert Hum.

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