Here are five things you must know for Tuesday, October 18:
1. -- Stock Futures Extend Rally As Dollar Eases, Sentiment Improves
U.S. equity futures powered higher again Tuesday, as the dollar fell further against its global peers, as investors looked to the release of blue-chip earnings and calming bond market sentiment to sustain Wall Street's recent really.
The U.S. dollar index, which tracks the greenback against a basket of global currencies and often acts as a proxy for broader risk sentiment, edged 0.04% lower in overnight trading as markets appeared soothed by the revised tax and spending plans from Britain's new finance minister Jeremy Hunt.
Hunt, who has essentially shredded the economic agenda of new Prime Minister Liz Truss, has said tax hikes and spending cuts will likely feature in his late October budget, while the Financial Times reported that the Bank of England will delay plans to see around $950 billion worth of bonds from its balance sheet in order to ensure bond market stability.
The elimination of that near-term risk has allowed investors to shift focus to the U.S. earnings season, where collective S&P 500 profit are forecast to rise by 3.6% to around $462 billion. And with big-name reports from Johnson & Johnson, Goldman Sachs, Netflix and Tesla due over the next two days, investors are hoping that better-than-expected updates gain sustain a solid two-day rally on Wall Street, which has added around 118 points to the S&P 500 since Thursday night's close.
Market volatility has also eased, albeit modestly, with the Vix index, the CBOE group's key volatility gauge, falling 3.3% overnight to 30.97 points. That move, however, still suggests daily swings of around 70 points over the next 30 days for the biggest U.S. benchmark.
Benchmark 10-year U.S. 10-year notes yields, meanwhile, are holding near 4% in overnight trading while interest rate traders bet on a 96.2% chance of a 75 basis point rate hike from the Federal Reserve next month, following last week's hotter-than-expected September inflation reading of 8.2%, with bets on a fifth consecutive move in December rising to 69.1%.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 39 point opening bell gain, while those linked to the Dow Jones Industrial Average are priced for a rally of around 265 points. The tech-focused Nasdaq is priced for a 138 point gain.
Stocks in Europe were also higher, with London's FTSE 100 up 1.2% and the region-wide Stoxx 600 rising 0.95% in early Frankfurt trading. Overnight in Asia, Japan's Nikkei 225 ended 1.42% higher as the yen fell to another 32-year low of 149.10 against the dollar, while the MSCI ex-Japan index added 1.5% into the final hours of trading.
2. -- Goldman Sachs To Close Out Big Bank Earnings
Goldman Sachs (GS) shares will likely be in focus Tuesday as the bank rounds-out a parade of financial sector earnings with a third quarter update prior to the start of trading.
Goldman, like its Wall Street rivals, is likely to see a big decline in investment banking fees, offset in part by a jump in net interest income as it passes along three Fed rate hikes of 75 basis points each to its business and consumer clients.
The group may also confirm reports that suggest its preparing to merger its major divisions, including investment bank and trading, into a single unit as part of a major reorganization. Marcus, its consumer lending business, will reportedly be added into its wealth management division.
Goldman will also detail any plans to set aside more capital to cover the potential for bad loans in a weakening domestic -- and global economy -- after JPMorgan (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC) booked a collective $1.8 billion in so-called credit reserves on Friday and Monday.
Goldman Sachs shares were marked 0.67% higher in pre-market trading to indicate an opening bell price of $308.75 each.
3. -- Johnson & Johnson Rises Ahead of Q3 Earning
Johnson & Johnson (JNJ) shares bumped higher in pre-market trading ahead of the healthcare group's third quarter earnings prior to the opening bell.
Johnson & Johnson, which unveiled a $5 billion share buyback plan last month while reiterating its full-year profit targets, is expected to post earnings of around $2.48 per share for the three months ending in September, on revenues of $23.34 billion, a tally that would be largely flat to last year's third quarter total.
The group is likely to see a slowdown in Covid vaccine sales, thanks in part to a global glut of doses and waning infection figures in western countries, while a stronger U.S. dollar -- trading at the highest levels in at least two decades against its global peers - is likely to act as a headwind to overall pharmaceuticals sales.
For the full 2022 year, Johnson & Johnson said last month that it sees earnings of between $10.65 and $10.75 per share, with adjusted operational sales growth of between 6.5% and 7.5%.
Johnson & Johnson shares were marked 1% higher in pre-market trading to indicate an opening bell price of $168.24 each.
4. -- Nordstrom Continues Takeover Defense With CFO Departure
Nordstrom (JWN) shares moved higher in pre-market trading after the retailer continued maneuvers to defend itself from a hostile takeover with the departure of group CFO Anne Bramman.
Nordstrom, which adopted a so-called 'poison pill' last month to prevent an single investor or entity from acquiring more than 10% of company's shares, said Bramman would step down by the end of the year, with Michael Maher, the retailer's chief accounting officer, assuming the role on an interim basis.
Nordstrom officials, however, spoke with TheStreet Tuesday to indicate that Bramman had decided to leave the group of her own accord, and was specifically thanked for her efforts over her near five year tenure by CEO Erik Nordstrom.
Last month, Mexico-based retailer Liverpool unveiled a 9.9% stake in Nordstrom, calling the Seattle-based retailer "an attractive opportunity to diversify assets geographically."
Nordstrom also reiterated its full-year profit targets, which were downgraded in August, that forecast adjusted earnings of between $2.45 to $2.75 per share and sales growth of between 5% and 7% from 2021 levels.
Nordstrom shares were marked 1.4% higher in pre-market trading to indicate an opening bell price of $19.50 each.
5. -- Netflix Ad Service In Focus As Q3 Earnings Loom
Netflix (NFLX) shares edged higher in pre-market trading ahead of the streaming media group's third quarter earnings after the closing bell.
With the group's November launch of an ad-supported service, priced at $6.99 per month, unveiled last week, investors will be looking for signs that Netflix has been able to arrest the slide in global subscribers for its mainstream service amid a pullback in discretionary spending and the ongoing market share gains from rivals such as Amazon (AMZN), Disney (DIS) and Comcast (CMCSA).
Analysts expect Netflix to post a bottom line of $2.13 per share, down 33% from the same period last year when the South Korean-made hit "Squid Game" boosted its global subscriber base, on revenues of around $7.84 billion.
Netflix shares were marked 0.85% higher in pre-market trading to indicate an opening bell price of $247.00 each.
