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Wall St futures rise ahead of earnings, data; Israel-Hamas conflict weighs

2023-10-16T11:46:13Z

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File Photo

Wall Street index futures started an earnings-packed week on a firm footing though tensions over the Israel-Hamas conflict kept gains in check, while investors also awaited key economic data for clues on the U.S. economy.

Israeli bombardments intensified ahead of a likely ground invasion in southern Gaza, dashing hopes of a brief ceasefire as residents of the Hamas-ruled region said the overnight strikes were the heaviest yet in nine days of conflict.

Yields on long-dated U.S. Treasury notes gained as the United States strives to prevent an escalation in tensions, with Secretary of State Antony Blinken arriving in Israel for talks after top U.S. officials warned the conflict could worsen.

The S&P 500 and the Nasdaq dropped on Friday as deteriorating consumer sentiment data and the Middle East conflict kept investors away from riskier bets and overshadowed some upbeat earnings from big U.S. banks.

“This suggests that investors are currently more focused on the war in the Middle East rather than the earnings season, but this could well change when tech giants begin to report and needless to say, conditional upon no further escalation in geopolitical tensions,” Charalampos Pissouros, senior investment analyst at forex broker XM said in a note.

Results from large banks Goldman Sachs (GS.N), Bank of America (BAC.N), Morgan Stanley (MS.N), pharmaceutical giant Johnson & Johnson (JNJ.N), EV maker Tesla (TSLA.O) and video-streaming pioneer Netflix (NFLX.O) are due this week.

Brokerage Charles Schwab (SCHW.N) is scheduled to report results before the opening bell.

Third-quarter earnings for the S&P 500 companies are estimated to grow 2.2% on an annual basis, LSEG data showed.

Of the 32 S&P 500 companies that have reported results, 87.5% have surpassed expectations compared with the long-term average of 66.5%.

Investors await economic data including retail sales for September and the Philly Fed Business Index for October later this week, while the reading for the New York Fed’s Manufacturing index for October is due before market open.

Philadelphia Fed President Patrick Harker will speak later in the day while Federal Reserve Chair Jerome Powell is due to speak on Thursday.

Harker had said on Friday he believes the U.S. central bank is likely done with its rate-hiking cycle.

Chicago Fed president Austan Goolsbee said on Monday that it was “undeniable” the slowdown in U.S. inflation was a trend rather than a momentary blip, according to a report.

At 7:36 a.m. ET, Dow e-minis were up 139 points, or 0.41%, S&P 500 e-minis were up 11.5 points, or 0.26%, and Nasdaq 100 e-minis were up 7.25 points, or 0.05%.

Nvidia (NVDA.O) fell 1.4% in premarket trading after Reuters reported U.S. would take steps to prevent American chipmakers from selling semiconductors to China in a bid to block more AI chip exports.

Pfizer (PFE.N) lost 2.6% after slashing its full-year revenue forecast by 13% on Friday. Rival Moderna (MRNA.O) dipped 5.1%

Lululemon Athletica (LULU.O) added 5.8% as the sportswear apparel maker is set to join the S&P 500 index this week, replacing Activision Blizzard (ATVI.O).

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