U.S. stock-index futures pointed to a higher open on Friday, with issues surrounding trade and other government policies taking a back seat to the unofficial earnings kickoff, which investors have been expecting to add clarity to a trading environment marked by uncertainties.
Major banks, including JP Morgan Chase & Co and Citigroup, reported results on Friday. Investors were also watching for developments in the U.S.-China trade spat and around the potential for U.S.-led military action against Syria.
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What are the main benchmarks doing?
Futures for the Dow Jones Industrial Average YMM8, +0.63% added 150 points, or 0.6%, to 24,611, while those for the S&P 500 ESM8, +0.53% rose 15 points to 2,679, a gain of 0.6%. Nasdaq-100 futures NQM8, +0.45% were up 33.75 points, or 0.5%, to 6,703.50.
Major indexes have trended to the upside recently, rising in six of the past eight sessions. As of Thursday, the Dow and S&P 500 were each headed for weekly gains of 2.3%, while the Nasdaq is up 3.3%.
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What’s driving markets
Earnings could prove to be a bright spot for investors, who have been looking for fundamental news to trade on, as opposed to uncertainties surrounding U.S. politics and trade with China. Potential U.S. military action against the Syrian government has also contributed to caution of late, though the market impact from a strike is expected to be minimal.
The first-quarter earnings season is expected to be strong, with companies posting their strongest rates of both earnings and revenue growth in years. While the high expectations could increase the likelihood of disappointments, strong results could assuage concerns that market valuations aren’t justified by economic activity, and they could limit volatility if stocks move on their own fundamentals, as opposed to macroeconomic trends, as has recently been the case.
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Political issues will likely remain in focus, despite the ramp-up of earnings.
The White House plans to step up pressure on China to make trade concessions, via a plan for fresh tariffs and a threat to block Chinese technology investments in the U.S., according to a report. Details of which Chinese products are on the hit-list of $100 billion in tariffs could be revealed as soon as next week. For its part, China is considering lining up allies, such as Europe, against the U.S.
Meanwhile, President Donald Trump has directed senior aides to look into the possibility of joining the Trans-Pacific Partnership, which could pose a further challenge to China. The trade imbalance between the world’s two biggest economies grew, as China posted a sharp jump in its trade surplus with the U.S. That rise came even as China logged its first overall monthly trade deficit in 13 months.
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Which stocks look like key movers?
Bank stocks were in focus following results from a trio of major firms.
JPMorgan JPM, +2.49% climbed 1% in premarket after reported first-quarter earnings and revenue that topped Wall Street estimates.
Citigroup Inc. C, +3.21% reported earnings that topped consensus forecasts, and revenue that was in line with expectations. The stock rose 1% before the bell. Wells Fargo WFC, +1.48% also reported better-than-expected earnings, though revenue declined year-over-year.
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Zillow Group Inc. Z, +0.73% shares fell 6.7% in premarket trading. The real estate listings company said Thursday it will get into the business of buying and flipping homes, which is considered by some to be high risk.
SeaWorld Entertainment Inc. SEAS, -0.77% shares could be active after posting losses late Thursday. The move came as the theme-park operator disclosed notice of possible civil action from the Securities and Exchange Commission.
Amazon.com Inc. AMZN, +1.50% shares slipped 0.5% in premarket trading. Trump issued a surprise executive order Thursday night calling for look at the U.S. Postal Service’s finances and operations, along with its position in the package delivery industry. Trump has blamed Amazon in recent weeks for the woes of the USPS and charging that the company isn’t paying enough tax, charges experts have disputed.
What are analysts saying?
“So far, companies are putting up good numbers this season, which confirms what we’ve been expecting, which is one of the strongest earnings seasons since the Great Recession. Companies are delivering, and that’s going to raise sentiment,” said Adam Sarhan, chief executive of 50 Park Investments. “The bank results are especially encouraging, because they serve as a proxy for strength in both Main Street and Wall Street.”
Sarhan added that while geopolitical issues “are definitely a concern, they’re a secondary one, not a primary one. There’s a lot of drama coming out of Washington, but so far none of it has adversely effected the economy or earnings, which are really what the market cares about.”
What is on the economic docket?
A reading on the consumer sentiment index for April is due at 10 a.m. Eastern Time, with a reading of 101.0 expected. A report on job openings in February is scheduled for release at the same time.
Boston Fed President Eric Rosengren said the Federal Reserve may have to tighten monetary policy by more than is currently reflected in the median forecast for the federal funds rate. The Fed reducing its balance sheet has been cited as one of the primary risks facing markets.
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What are other markets doing?
Asian stocks had a mixed session, while European stocks SXXP, +0.44% moved higher, on track for a third-straight week of gains.
Gold futures GCM8, -0.06% GCM8, -0.06% inched lower, while the ICE U.S. Dollar Index DXY, +0.07% held steady.
Oil prices CLK8, +0.24% slipped, but hovered at fresh three-year highs.