Wall St set to jump at open as Goldman, J&J results lift earnings mood

  • Reuters
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Wall St set to jump at open as Goldman, J&J results lift earnings mood
Credit: © Reuters.

By Ankika Biswas and Shreyashi Sanyal

(Reuters) -U.S. stock index futures jumped on Tuesday as strong earnings from Goldman Sachs and Johnson & Johnson (NYSE: JNJ ) lifted hopes that upbeat corporate reports could soothe market worries of a potential recession due to rising inflation and interest rates.

Goldman Sachs Group Inc (NYSE: GS ) gained 2.7% in premarket trading after reporting a better-than-expected quarterly profit as rising borrowing costs boosted net interest income, cushioning the blow from a slowdown in investment banking.

With this, Goldman Sachs wraps up earnings reports from big U.S. banks this quarter on a largely positive note. The investment bank also said it was reorganizing its business into three units.

Johnson & Johnson rose 2.0% after the healthcare conglomerate beat Wall Street expectations for third-quarter sales and profit, helped by strong demand for its cancer drug.

"The earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream," said Art Hogan, chief market strategist at B. Riley Wealth.

"A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower."

All three of the major U.S. benchmark stock indexes have marked losses of more than 12% over the last two months as investors worry that the U.S. Federal Reserve's war on inflation may hobble the economy.

Analysts now expect profit for S&P 500 companies to have risen just 3% from a year ago, much lower than an 11.1% increase expected at the start of July, according to Refinitiv data.

Major mega-cap technology and other growth names like Apple Inc (NASDAQ: AAPL ), Meta Platforms (NASDAQ: META ), Amazon.com (NASDAQ: AMZN ) and Nvidia Corp were up between 1.9% and 3.2%, keeping with declines in the benchmark 10-year Treasury note. [US/]

Microsoft Corp (NASDAQ: MSFT ) gained 2.3% after a report that it was laying off under 1,000 employees this week, becoming the latest U.S. technology company to cut jobs or slow hiring amid a global economic slowdown.

Netflix (NASDAQ: NFLX ) added 2.4% ahead of reporting its earnings after markets close.

At 8:17 a.m. ET, Dow e-minis were up 579 points, or 1.92%, S&P 500 e-minis were up 79.75 points, or 2.16%, and Nasdaq 100 e-minis were up 266.75 points, or 2.4%.

The reversal of parts of a controversial UK fiscal plan that had roiled bond markets also aided sentiment.

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 17, 2022. REUTERS/Brendan McDermid

Meanwhile, a report said ratings agency Fitch has slashed U.S. growth forecasts for this year and next and was set to warn that the Fed's interest rate hikes and inflation will drive the economy into a 1990-style recession.

Toymaker Hasbro Inc (NASDAQ: HAS ) fell 1.3% upon posting a 28% fall in quarterly profit, highlighting that inflation-hit consumers were further discouraged by price hikes.

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