Monday October 12th

12-10-2015

Wall Street on edge for earnings season

U.S. stock index futures pointed to a flat to slightly higher open on Monday as third-quarter earnings season gets underway, after minutes of last month's U.S. Federal Reserve meeting failed to illuminate the pathway ahead for U.S. monetary policy. Many analysts say the earnings reports are critical for fourth-quarter gains in stocks and finding clarity on the severity of an economic slowdown, especially amid mixed messages from the Federal Reserve. Major earnings due on Monday included Infosys. India's second-largest software services exporter trimmed its full-year dollar revenue forecast to account for a stronger U.S. dollar against the rupee, Reuters reported. JPMorgan Chase is scheduled to report after the close Tuesday,beginning a heavy week of earnings reports from financials, which includes Bank of America and Wells Fargo on Wednesday, and Citigroup and Goldman Sachs on Thursday. Earnings estimates for the sector are down to growth of 3.0 percent versus expectations of 6.1 percent growth two weeks ago, according to S&P Capital IQ. No major economic reports are expected Monday. Wall Street will also have plenty of economic data and comments from Federal Reserve policymakers to digest as the timing of a rate hike remains uncertain. The Fed's September meeting minutes released this past Thursday indicated policymakers were further from raising rates last month than many thought, as FOMC members were concerned about reaching their inflation target and the impact of a global economic slowdown. Fed speakers have generally maintained the central bank could still raise rates this year. Over the weekend, Federal Reserve Vice Chairman Stanley Fischer said U.S. Federal Reserve policymakers are still likely to raise interest rates this year but that is "an expectation, not a commitment," and could change if the global economy pushes the U.S. economy further off course. Chicago Fed President Charles Evans is scheduled to speak again Monday, as is Fed board member Lael Brainard. On Tuesday, St. Louis Fed President James Bullard is due to present remarks, while the New York Fed's William Dudley speaks Thursday. In Europe, equities traded mixed Monday, bucking the positive trend set in Asia as investors tread cautiously after a strong week of gains. U.S. stocks closed higher Friday, wrapping up a solid week of gains, as investors digested indications from the Fed on the timing of a rate hike ahead of earnings season. The S&P 500 closed up 3.26 percent for the week, its best since the week ended Dec. 19, 2014. The Dow Jones industrial average closed up 3.7 percent for the week, its second-best week of the year so far. Equity markets in China outperformed the region on Monday, following a report by the China Securities Journal that quoted a senior central banker saying that the country's stock market correction is "almost over." China's share markets came off the day's highs in the afternoon trading session, with the Shanghai Composite closing up 3.3 percent at its highest level since August 24. Earlier in the session, it surged more than 4 percent to hit an intra-day high of 3,318.7. Markets in Japan are closed for the Health and Sports Day holiday.  Oil prices seesawed on Monday after earlier rising on comments from Kuwait's oil minister, who said economic growth and the removal of high-cost producers would help tighten global fuel balances. Global benchmark Brent crude oil was up 5 cents a barrel to $52.70 by 8:29 a.m. EDT (1229 GMT), after briefly turning negative. U.S. light crude was up 2 cents at $49.65, having also dipped into the red. Brent fell to a six-year low just above $42 a barrel in August, down from a peak above $115 in June 2014. Gold rose to its highest level since early July on Monday as expectations that the Federal Reserve will postpone an expected U.S. interest rate hike beyond the end of the year pressured the dollar to three-week lows against a currency basket. The dollar index was down 0.1 percent on the day, stung by doubts that U.S. rates will rise this year. Spot gold reached a peak of $1,169.00 an ounce and was up 0.8 percent at $1,166.56 an ounce, while U.S. gold futures for December delivery were up $10.40 an ounce at $1,166.30.