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Stock futures inched lower as earnings season gained steam and Wall Street looked ahead to more key financial reports on Wednesday.
Futures connected to the Dow Jones Industrial Average dipped 0.1%, or 30 points. S&P 500 futures and Nasdaq-100 futures edged 0.1% and 0.07% lower, respectively.
Shares of United Airlines fell more than 4% in extended trading on soft guidance, while J.B. Hunt lost more than 3% on disappointing results.
Stocks are coming off a muted trading session. The Dow Jones Industrial Average rose about 13 points, or 0.04% to 33,997.65, while the S&P 500 inched 0.01% lower to 4,373.20. The Nasdaq Composite lagged, falling 0.25% to 13,533.75.
Tuesday’s moves came as bond yields popped on stronger-than-expected September retail sales, and the yield on the 10-year U.S. Treasury note hit its highest level since Oct. 6. Chip stocks such as Nvidia and Advanced Micro Devices sold off as the U.S. announced plans to tighten restrictions on AI chip exports to China.
Wall Street continued to assess the impact of the ongoing Israel-Hamas war. Traders also parsed through third-quarter earnings reports, including results from financial institutions such as Bank of America, Goldman Sachs and Bank of New York Mellon.
While the earnings season may only be in its early innings, 83% of companies have so far topped earnings expectations, while about 70% have surpassed sales estimates, according to FactSet data.
“It’s not a surprise that profits are likely to surpass analysts’ estimates” given that companies face an already-low bar, said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “It’s more about the outlooks, and the direction of interest rates that are really going to inform the near-to-intermediate term direction of stocks.”
The reporting season carries on with results from Morgan Stanley, Procter & Gamble and Travelers due out before the bell Wednesday. Netflix and Tesla are on deck after the market close.
On the economic front, Wall Street awaits housing starts and building permits data for September.
Alan Schwartz says, with balance sheets strong and PE pushed away, corporates are ready to return to M&A
Large corporations have strong balance sheets and are ready to return to the merger and acquisition market now that private equity investors have been pushed aside as interest costs have risen, Guggenheim Partners executive chairman Alan Schwartz said Tuesday on CNBC’s “Squawk Box.”
“Now they’re seeing the chance to come back in, right, because they kept their balance sheets strong,” the former Bear Stearns CEO said. “At the same time, the macro environment, especially geopolitical and all these other things, you know, creates concerns in the boardroom as to whether now’s the time, or wait on some of these things.”
Guggenheim advises lots of C-suite executives, and “what we’re saying is we saw a big drop in M&A activity, right, when the capital markets tied up for a lot of the private deals, but now you’re seeing a lot of, let’s say, discussions and activity beginning clearly picking up from the corporate side that are seeing their opportunity to come in. But you know, how many of those will get across the line?”
— Scott Schnipper
Interactive Brokers, J.B. Hunt among stocks moving the most after the bell
These are some of the companies making the most significant moves in extended trading:
Interactive Brokers Group — Shares of the electronic broker dropped more than 4% in after-hours trading. Interactive Brokers posted third-quarter adjusted earnings of $1.55 per share on adjusted revenue of $1.14 billion.J.B. Hunt Transport Services — The transportation and logistics stock lost 3.6% after reporting third-quarter results that fell short of Wall Street’s expectations.Omnicom Group — The marketing company’s shares slipped 1.4%, even as the company narrowly beat analysts’ expectations in the latest quarterly report.
Read the full list of companies moving here.
— Samantha Subin
United Airlines falls on soft guidance
Shares of United Airlines dropped nearly 5% in extended trading after it warned that warning that elevated fuel costs and a halt in Tel Aviv flights amid the Israel-Hamas war would hit current-quarter profits.
The company said it expects adjusted earnings to range between $1.50 and $1.80 per share, versus the $2.06 per share expected by analysts polled by LSEG, formerly known as Refinitiv.
Despite the after-hour moves, United Airlines topped Wall Street’s expectations for the recent quarter. The airline reported adjusted earnings of $3.65 per share on $14.48 billion in revenue. That topped the EPS of $3.35 and $14.44 billion anticipated by analysts.
— Samantha Subin, Leslie Josephs
Stock futures open lower
Stock futures opened slightly lower on Tuesday evening.
Futures connected to the Dow Jones Industrial Average dipped 0.1%, or 30 points, while S&P 500 futures edged down 0.1%. Nasdaq-100 futures lost 0.07%.
— Samantha Subin
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