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Wall St set to open higher on earnings boost, Big Tech bounces back

Randy Mancini 5 Jan 19
Traders work on the floor of the NYSE in New York City
A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 18, 2022. REUTERS/Brendan McDermid

January 19, 2022

By Shreyashi Sanyal

(Reuters) -Upbeat results from a host of companies nudged U.S. stock index futures higher on Wednesday, partially righting a wobbly start to the fourth-quarter reporting season, while Big Tech stocks also made a comeback.

Quarterly reports from Dow components including UnitedHealth Group Inc and Procter & Gamble Co supported sentiment in premarket trade, while Bank of America Corp and Morgan Stanley wrapped up earnings from big lenders on a positive note.

“Stocks were getting hit last quarter even though they beat estimates, which tells me that their prices were inflated,” said Joe Saluzzi, co-manager of trading at Themis Trading in New Jersey.

“Now that we’ve seen a bit of a sell off, when a company reports better-than-expected earnings, they should get a price rise as opposed to last quarter.”

UnitedHealth rose 0.6% after the health insurer beat market estimates for quarterly profit on strong demand in its health insurance business.

Procter & Gamble gained 1.2% as it raised its annual sales forecast, benefiting from higher prices and resurgent demand for cleaning products due to a spike in COVID-19 infections.

Bank of America added 3.9% on reporting a jump in fourth-quarter profit, while Morgan Stanley rose 4.0% after posting quarterly earnings above market expectations.

Most other big banks including JPMorgan Chase & Co, Citigroup and Goldman Sachs Group Inc reported disappointing results, knocking down the S&P 500 financial sector and banks subsector from record highs.

Earnings from S&P 500 companies are expected to grow 23.1% year-over-year in the fourth quarter, according to IBES estimates from Refinitiv.

The Nasdaq index came a hair’s breadth away from confirming a 10% correction at the close on Tuesday, having lost 9.7% from its Nov. 19 record closing high.

The tech-heavy index also closed below its 200-day moving average, a key technical support level, for the first time in almost two years, as the tech-heavy index has been pressured by a jump in benchmark U.S. Treasury yields. [US/]

Shares of beaten-down megacap growth companies, including Apple Inc, Microsoft Corp, Alphabet Inc, Tesla Inc, Meta Platforms Inc and Netflix Inc, rose up to 1%.

Investors are now waiting for next week’s Federal Reserve policy meeting for more cues on the central bank’s plan to control inflation. Data last week showed U.S. consumer prices increased strongly in December, adding up to the largest annual rise in inflation in nearly four decades.

At 8:44 a.m. ET, Dow e-minis were up 90 points, or 0.26%, S&P 500 e-minis were up 17.25 points, or 0.38%, and Nasdaq 100 e-minis were up 85.5 points, or 0.56%.

Cisco Systems Inc fell 2.4% after Goldman Sachs downgraded the network equipment maker’s stock to “neutral” from “buy”.

United Airlines rose 0.5% ahead of its fourth-quarter results after markets close. Last week, peer Delta Air Lines reported better-than-expected results.

(Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel and Bernard Orr)