U.S. stock-index futures were higher after stronger-than-expected quarterly results from Goldman Sachs, building on gains seen as expectations of an aggressive Federal Reserve interest rate hike eased.
How are stock-index futures trading
- Futures on the Dow Jones Industrial Average YM00, +0.84% rose 251 points, or 0.8%, to 31,498.
- S&P 500 futures ES00, +0.74% were up 26 points, or 0.7%, at 3,891.
- Nasdaq-100 futures NQ00, +0.90% climbed 100 points, or 0.8%, to 12,107.
On Friday, the Dow DJIA, +2.15% rose 658 points, or 2.2%, as it and the S&P 500 SPX, +1.92% and the Nasdaq Composite COMP, +1.79% trimmed weekly losses.
What’s driving markets
Shares of Dow component Goldman Sachs Group Inc. GS, +4.36% jumped 3.8% in premarket trade after the investment-banking giant posted stronger-than-expected second-quarter profit, although earnings fell from the year-ago quarter.
Bank of America Corp. BAC, +7.04% shares fell after the bank fell short of Wall Street’s profit estimate, but revenue matched the analyst view as the first full week of the U.S. second quarter earnings season gets under way. IBM IBM, +0.62% will deliver its figures after the closing bell. Reports from other big banks, such as JPMorgan Chase JPM, +4.58%, were not initially well-received last week.
But the market mood brightened by Friday — and was continuing on Monday, after Federal Reserve officials made an effort to talk down the prospects of a 100-basis point rate hike at next week’s policy meeting.
Read: Investors are obsessed with size of Fed’s next rate hike. Here’s what they’re missing.
The chances of such a sharp tightening are now less than 30%, compared with more than 90% last Thursday, and a 75 basis point move to 2.25% to 2.50% is baked in. The dollar index DXY, -0.50% eased from 20-year highs in response, falling 0.6% to 107.44.
Traders were watching to see if upside momentum would continue after a strong Friday close that saw major indexes rally into the final bell and end near session highs.
“The bulls need the [S&P 500] to break 3,950, which could set off a trend,” said Chris Weston, head of research at Australia-based Pepperstone, in a note.
A follow-through in the rally “could see some systematic players cover shorts, propelling the market higher — don’t discount the impact that may have on options market makers too, and the need to buy back delta hedges is also there,” Weston wrote.
Strategists at Deutsche Bank noted that aside from earnings, and with the Fed now in the premeeting blackout period, it would be a quiet week for U.S. macroeconomic catalysts, and that attention may turn elsewhere.
“All things European will be at the forefront of market attention this week with the highlight being the ECB’s likely first rate hike since 2011 on Thursday. Gas flows from Russia after maintenance on the Nord Stream pipeline ends the same day will also be a big focus with the EU expected to detail energy contingency plans the day before,” said Deutsche Bank.
How are other assets faring?
- Oil futures were higher with U.S. crude futures CL.1, +2.12% adding 1.8% to $99.38 a barrel, also benefiting from signs that U.S. President Joe Biden had not secured an immediate increase in Saudi Arabian supply.
- The 10-year Treasury yield TMUBMUSD10Y, 2.992% rose 2 basis points to 2.953%. Yields and debt prices move opposite each other.
- The ICE Dollar index DXY, -0.50% fell 0.6%, helping to inspire gains for gold GC00, +0.46%, which rose 0.5%.
- Bitcoin BTCUSD, +5.66% advanced 5.9% to $22,041.
- In Europe, the Stoxx 600 XX:SXXP rose 1.5%, while the FTSE 100 UKX, +0.95% rose 1.3%.
- Asia markets got an added lift from signs the Chinese authorities will look to support the construction sector and ease monetary policy. Hong Kong’s Hang Seng HSI, +2.70% rose 2.6% and the Shanghai Composite SHCOMP, +1.55% climbed 1.6%. Japan was shut for a holiday.
