October 4, 2023

Tricia Oak

Business & Finance Excellency

Stocks trade mixed as earnings roll in

U.S. stocks pared earlier losses to trade mixed on Monday as investors returned from a holiday weekend and geared up for another busy week of corporate earnings results.

The S&P 500 was flat to slightly higher during afternoon trading. The Dow also edged up, while the Nasdaq traded slightly in the red. Treasury yields advanced, with the yield on the benchmark 10-year note holding above 2.8%. U.S. West Texas intermediate crude oil futures rose and extended last week’s gains.

For equity investors, earnings season will remain in focus this week as a number of major companies including United Airlines (UAL), American Express (AXP), Netflix (NFLX) and Tesla (TSLA) each report their latest quarterly results. These will come on the heels of last week’s mixed big bank earnings, with a number of firms including Morgan Stanley, JPMorgan Chase and Goldman Sachs topping some major metrics while warning of near-term uncertainty due to inflation and the ongoing Russia-Ukraine crisis.

So far, about 7% of S&P 500 index components have reported actual Q1 results and 77% of these have topped Wall Street’s earnings per share (EPS) estimates, matching the five-year average percentage of beats, according to data from FactSet. Heading into this week, the estimated earnings growth rate for the S&P 500 stood at at 5.1%. If maintained, this would mark the lowest earnings growth rate for the index since the fourth quarter of 2020.

Some strategists have also suggested investors brace for weaker profit growth this quarterly reporting season, as companies grapple with decades-high rates of inflation, lingering supply chain challenges and geopolitical turmoil.

“I do think that we’re potentially in for a tough earning season, only because when people gave guidance [last quarter], the input costs have clearly gotten worse than they expected,” Rhys Williams, Spouting Rock Asset Management chief strategist, told Yahoo Finance Live. Williams added that many companies last issued guidance before the Russia first invaded Ukraine in late February and further stirred up disruptions to supply chains and global markets.

“So you have further increases in costs. And then at the same time, the consumer has gotten a little rockier in the month of March. So I expect that there will be some revenue misses,” Williams added. “That’s probably a sign that there’ll be somewhat negative earnings surprises, certainly much more than compared to the last four or five quarters, where the earnings news has been just fantastic.”

12:52 p.m. ET: Natural gas jumps to highest level since 2008 amid Russia-Ukraine crisis

Natural gas prices extended a recent surge higher on Monday, with prices for the energy commodity leaping to the highest level in 13 years amid Russia’s ongoing war in Ukraine. Russia serves as a key supplier of natural gas to Western Europe.

Natural gas futures were up by more than 5% intraday on Monday, breaking above $8 per million British thermal units (MMBTU) for the first time since 2008. RBOB gasoline futures for May delivery were up more than 1% in New York Monday afternoon as well.

12:25 p.m. ET: Homebuilder sentiment declines to 7-month low in April

Sentiment among U.S. homebuilders dropped to the lowest level in 7 months in April, with rising mortgage rates and lingering supply chain disruptions further weighing on housing market activity.

The National Association of Realtors’ April housing market index dropped for a fourth consecutive month to reach 77. In March, the index had stood at 79. Readings above 50 indicate a majority of builders surveyed considered conditions good rather than unfavorable.

9:31 a.m. ET: Stocks open slightly higher

Here’s where markets were trading just after the opening bell Monday morning:

  • S&P 500 (^GSPC): +5.15 (+0.12%) to 4,397.74

  • Dow (^DJI): +85.27 (+0.25%) to 34,536.50

  • Nasdaq (^IXIC): -0.16 (-0.00%) to 13,350.64

  • Crude (CL=F): +$1.46 (+1.37%) to $108.41 a barrel

  • Gold (GC=F): +$21.60 (+1.09%) to $1,996.50 per ounce

  • 10-year Treasury (^TNX): +0.8 bps to yield 2.816%

9:20 a.m. ET: Bank of America profit tops estimates

Bank of America (BAC) reported first-quarter earnings that exceeded expectations, with performance at the firm’s key consumer banking division helping boost results.

First-quarter consumer banking revenue grew 9%, reaching $8.8 billion for the quarter ending in March. Overall, revenue net of interest expense came in at $23.23 billion, or about in-line with consensus estimates, according to Bloomberg-compiled data. And net interest income rose 13% to $11.6 billion, which was “supported by strong loan and deposit growth,” Chief Financial Officer Alastair Borthwick said in a statement.

Sales and trading revenue overall came in at $4.7 billion, according to Bank of America, which while down by 7% over last year, exceeded estimates for $4.3 billion. Equities sales and trading revenue alone grew 9.5% to reach a quarterly record of $2 billion.

7:17 a.m. ET: Stock futures fall, extending last week’s losses

Here’s where stocks were trading Monday morning:

  • S&P 500 futures (ES=F): -15.25 points (-0.35%) to 4,372.25

  • Dow futures (YM=F): -69 points (-0.2%) to 34,289.00

  • Nasdaq futures (NQ=F): -62.75 points (-0.45%) to 13,831.00

  • Crude (CL=F): -$0.48 (-0.45%) to $106.47 a barrel

  • Gold (GC=F): +$18.00 (+0.91%) to $1,992.90 per ounce

  • 10-year Treasury (^TNX): +2.9 bps to yield 2.837%

NEW YORK, NEW YORK – APRIL 12: Traders work on the floor of the New York Stock Exchange during afternoon trading on April 12, 2022 in New York City. Data released this morning showed that inflation rose 8.5 percent in March, the highest annual increase since December 1981, amid energy prices soaring due to Russia’s 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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