US stocks are likely to be taking their cues again from big corporate earnings and further comments from Fed Chair Janet Yellen in the upcoming session.
US markets look set to open higher following on-target Chinese growth numbers and positive earnings from Intel after yesterday’s close and ahead of earnings from Bank of America and US Bancorp before the opening bell.
Futures suggest the Dow Jones will open 49 points higher at 17,109 with the S&P500 expected to open 5 points higher at 1,978 and the Nasdaq 19 points higher at 3,933.
Yesterday blue-chip earnings and Yellen’s speech caused a divergence across indices
with the Dow finishing higher on positive earnings from big banks and Johnson & Johnson while the Fed Chair alluded to stretched valuations in small cap, social media and biotech stocks which contributed to a lower close in the S&P 500.
Intel and Yahoo! Reported earnings overnight with Intel beating expectations while Yahoo! tempered an earnings miss by saying the internet giant will maintain a larger stake in Alibaba after the upcoming IPO.
Bank of America is expected to report earnings of 29c per share on revenue of $21.62bn, both lower on the year. The bank is in the midst of settling what could be the largest mortgage market related fine to date with the US Justice Department around $17bn which would be on top of the $6.3bn already paid on similar charges.
Early in the quarter the bank had to resubmit its capital plan to the Federal Reserve for share buy-backs and a dividend increase after failing a scenario under the Fed’s stress test. Peers Wells Fargo and JP Morgan have beaten expectations so BoA’s stock may take an extra hit if it underperforms.
Despite the headwinds though, recent experience would suggest the bank has probably managed expectations to level that’s beatable in today’s report.
US Bancorp is expected to earn 77c per share on revenue of $4.94bn.
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