July 7, 2022

Stock futures rise as traders look to profits

Stock futures rise as traders look to profits

US stock futures rose on Wednesday morning as investors watched a series of closely watched earnings reports and digested more hot data on US inflation.

Contracts advanced on the S&P 500 as the index looked to end a three-day losing streak. Dow Jones and Nasdaq futures also rose in pre-market trading.

On Wednesday, investors received a number of quarterly reports from some of the major US companies and stock index components. These included JPMorgan Chase (JPM) – the largest US bank by assets – along with Delta Airlines (DAand Bed, Bath & Beyond (BBBY).

Jamie Dimon, CEO of JPMorgan Chase A cautiously optimistic view of the US economy is in the bank’s earnings statement on Wednesday. Dimon noted that he remained “optimistic about the economy, at least in the short term,” but still saw “significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine.” Dimon said the bank boosted its credit reserves by a net amount of $902 million, “largely due to the higher downside potential.”

Meanwhile, Delta Air Lines, one of the major airlines in the midst of reopening trade, Suggested businesses will thrive more in current quarter Even as first-quarter results showed another loss, the airline fended off a wave of alternative omicron earlier this year. Delta indicated that the company returned to profitability in March, and indicated that revenue is expected to reach between 92% and 97% of pre-pandemic levels during the current quarter ending in June.

This early batch of earnings reports helped set the tone for what is expected to be an eventual milder quarter of earnings growth than in recent periods. As businesses grapple with rising labor costs, raw materials, transportation and the initial jump last year fueled by reopening business, many on Wall Street are looking for tighter profit margins than in recent quarters, even as sales continue to solidify amid a rally Consumer demand and its rise. the prices. Across the S&P 500, companies in aggregate are expected to post year-over-year earnings growth of just 4.5%, which, if achieved, would be the slowest rate since the fourth quarter of 2020, According to FactSet.

“This earnings season becomes one of the most important earnings seasons because it will give you a lot of insights into the companies … that have this perpetual demand, and the companies that have that pricing power,” Kristen Butterley, Citi’s head of global wealth investments, told Yahoo Finance Live on Tuesday.

“Even in decades like the 1970s, when we had hyperinflation, stocks of high-quality US stocks were able to double their share price during that time,” she added. “This is the pocket of the market where we can confidently either invest or invest.”

Indeed, inflation has remained a major concern for investors, threatening to further burden both consumer portfolios and corporate profits. Bureau of Labor Statistics” The March CPI showed that inflation rose at the fastest rate since late 1981 last month, It jumped 8.5% slightly faster than expected compared to last year.

However, some economists noted that the report wasn’t all bad news, and showed some initial signs of a peak rate of price appreciation.

“I think the CPI report actually contains a bit more good news than it appears on the surface… There are a number of things here that indicate we are starting to see a peak in inflation, and Tom Simmons, fixed income money market expert at Jefferies, will tell Yahoo! Finance Live on Tuesday: “[It’s] It is important to bear in mind that the CPI, for the month of March, was the reference period here immediately after the Russian invasion of Ukraine. So really, it’s picking up on the sharpest period of gasoline price increases. And we saw it really start to pull back a little bit in the market in the few weeks that followed.”

“The other thing is that the previous energy services – and if you exclude the airline component – that was actually a little softer compared to the last few months,” he added. “Housing has actually gotten somewhat softer in the last few months as well, and out-of-energy goods are also coming in softer. Inflation.”

7:20 a.m. ET: Stock futures rise amid gains

Here’s where the stock traded on Wednesday morning:

  • S&P 500 futures contracts (ES = F.): +26.5 points (+0.6%) to 4419.50

  • Dow futures contractsYM = F.): +172 points (+0.5%) to 34311.00

  • Nasdaq futures contractsNQ = F.): +110.75 points (+0.79%) to 14055.75

  • raw (CL = F.): + $1.45 (+1.44%) to $102.05 per barrel

  • He went (GC = F.): +$4.20 (+0.21%) to $180.30 per ounce

  • Treasury for 10 years (^ degeneration): +0.6 basis points to produce 2.733%

7:03 a.m. ET: JPMorgan reports mixed results for the first quarter with investment banking revenue lower than last year.

c. B. Morgan Chase published mixed results for the first quarter, With the adjusted total revenue exceeding Wall Street estimates, while some of the major companies within the bank showed some decline.

Adjusted revenue of $31.6 billion was down 4.6% from a year ago but beat consensus estimates of $31.4 billion, according to Bloomberg data. Fixed income, stock sales and trading revenue all beat expectations while declining compared to last year, with these forecasts being around $5.7 billion and $3.1 billion, respectively. However, investment banking revenue fell 28% more and missed estimates, totaling $2.06 billion with lower equity and debt underwriting activity at the start of this year compared to last year.

CEO Jamie Dimon also noted that the core lending business to banks remained strong during the quarter.

“Lending strength continued with companywide average loans up 5% while credit losses remain at historically low levels,” Dimon said in the earnings statement.

6:50 a.m. ET: Delta shares rose after the airline posted smaller-than-expected losses in the first quarter, and returned to profitability in March

Delta Air Lines shares rose in the pre-market session after the airline Published estimates topping first-quarter resultswhich included a less than expected loss.

Adjusted losses came in at $1.23 per share for the March quarter, or less than analysts’ forecasts for a loss per share of $1.26, according to Bloomberg data. Adjusted revenue was $8.2 billion, recovering 79% from comparable quarter levels in 2019 before the pandemic. Delta added that capacity was restored by 83% compared to the pre-pandemic period.

For the current quarter ending in June, Delta said it expects recovery capacity to increase to 84% from June 2019 quarter levels, with total revenue between 93% and 97% of levels from that period in 2019.

“With a strong rebound in demand as Omicron faded, we returned to profitability in March, producing a strong adjusted operating margin of approximately 10%,” Delta CEO Ed Bastian said in the company’s earnings statement Wednesday morning. “As our brand preferences and demand momentum grow, we managed to recover higher fuel prices, driving our expectations for an adjusted operating margin of 12-14% and strong free cash flow in the June quarter.”

6:10 PM ET Tuesday: Stock futures head toward a lower open

Here’s where the markets are trading on Tuesday evening before the opening bell:

  • S&P 500 futures contracts (ES = F.): +4.25 points (+0.1%) to 4,397.25

  • Dow futures contractsYM = F.): +33 points (+0.1%) to 34172.00

  • Nasdaq futures contractsNQ = F.): +17.75 points (+0.13%) to 13,962.75

NEW YORK, NY – APRIL 12: Traders work on the floor of the New York Stock Exchange during the afternoon of April 12, 2022 in New York City. Data released this morning showed that inflation rose by 8.5 percent in March, the highest annual increase since December 1981, amid higher energy prices due to the Russian war in Ukraine. (Photo by Michael M. Santiago/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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