Off The Wire
Wall Street set open higher as banks rise after Citi results
(Reuters) - Wall Street was set to extend last week’s gains at the open on Monday as second-quarter corporate earnings got off to an upbeat start with results from the third largest U.S lender, Citigroup, beating expectations.
Shares of the Wall Street bank rose 0.7% in premarket trade as a tight lid on costs and strength in consumer lending helped it counter weakness in trading business.
Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, said optimism around corporate earnings, given the likelihood positive surprises due to lower estimates, and hopes of an interest rate cut by the Federal Reserve are helping lift markets.
As companies start reporting quarterly results, investors will assess how deep an impact the long-drawn U.S.-China trade dispute has had on corporate profit.
Comments from companies on scarcity of labor and the effect of higher wages on profit are things to look out for, Brown said.
Profits from S&P 500 companies is expected to dip 0.4% year-over-year, the first quarterly decline in three years, according to Refinitiv IBES data.
Last week, gains in stocks were powered by comments from Fed Chairman Jerome Powell that reassured investors that an interest rate cut was highly likely at the central bank’s policy meeting later this month.
The S&P 500 .SPX closed above 3,000 point mark for the first time on Friday as investors rebuilt their bets of a sharp 50 basis-point rate cut at the July 30-31 meeting.
Also helping the mood was upbeat data out of China. Quarterly growth at the world’s second largest economy beat analysts’ forecasts, while June reports on industrial production, retail sales and urban investment were also well above expectations.
At 8:27 a.m. ET, Dow e-minis 1YMcv1 were up 54 points, or 0.2%. S&P 500 e-minis EScv1 were up 6 points, or 0.2% and Nasdaq 100 e-minis NQcv1 were up 19.25 points, or 0.24%.
Among other stocks, Boeing Co (BA.N) fell 1.3% after a report that its 737 Max jet may stay grounded until early 2020.
General Electric Co (GE.N) fell 1% after brokerage UBS downgraded shares of the industrial conglomerate to “neutral” from “buy”, according to traders.
Shares of paper packaging companies Westrock Co (WRK.N), Packaging Corp of America (PKG.N) and International Paper Co (IP.N) fell between 2.1% and 3.1% and were among the top losers on the benchmark index before the bell.
KeyBanc downgraded their shares, citing risks from a further fall in containerboard and pulp prices.
Reporting by Medha Singh and Uday Sampath in Bengaluru; Editing by Arun Koyyur