(Reuters) – Wall Street should have opened higher on Tuesday after bullish earnings from big US banks and Halliburton, while investors awaited a speech from Janet Yellen, candidate for the US Treasury Secretary, who is expected to incur heavy fiscal spending.
Shares of Goldman Sachs Group Inc rallied 2.5% as fourth-quarter profit more than doubled, dwarfing estimates after another outstanding performance in its trading and underwriting business.
Bank of America also outperformed fourth-quarter earnings estimates and joined JPMorgan, Citigroup Inc and Wells Fargo & Co in releasing some cash reserves to cover loan losses caused by the coronavirus, underscoring its confidence in the economy. .
Its shares, however, were down 1.6% after a sharp rise in the past two weeks.
“The bank’s earnings are coming in better than expected and we see investors respond favorably to the numbers,” said Sam Stovall, chief investment strategist at CFRA Research.
Earnings for S&P 500 companies are likely to decline by 7.8% in the fourth quarter of 2020 from a year ago, but a rebound is expected in 2021, with an increase of 16.7% expected for the first quarter, according to IBES data from Refinitiv.
The major Wall Street indices fell Friday as investors posted profits after a recent rally to all-time highs in hopes of a rapid economic recovery fueled by a hefty fiscal stimulus package and vaccine distribution.
Yellen is expected to testify to the Senate Finance Committee, starting at 10am ET (1500 GMT), that the government needs to “go big” with its next coronavirus aid plan.
President-elect Joe Biden, who will be inaugurated on Wednesday, outlined a proposed $ 1.9 trillion stimulus package last week to get the economy going again.
“Yellen encouraged the United States to act on this coronavirus relief bill. It looks like it’s the kind of package that Wall Street is wrapping up will likely go through both houses of Congress and then be put to work pretty quickly. ”Stovall added.
Meanwhile, global equities rallied earlier in the day from data showing that China’s economy was one of the few to grow in 2020, and actually picked up speed at the close of the year. [MKTS/GLOB]
At 08:40 ET, the Dow E-mini was up 208 points, or 0.68%, S&P 500 E-mini was up 25.5 points, or 0.68%. Nasdaq 100 E-minis were up 101.5 points, or 0.79%.
Tesla Inc gained 1.6% after Jefferies raised its earnings estimates ahead of next week’s electric car makers’ fourth quarter results.
Boeing Co added 1.5% as Canada said it would lift a nearly two-year flight ban on its 737 MAX following two fatal crashes involving the model during a final clearance from Europe to resume flying the jet is expected next week.
Halliburton Co was up 2.7% after posting a better-than-expected fourth quarter profit, supported by cost cuts and a recovery in demand for oil field equipment and services following the industry slump last year.
Reportage by Devik Jain and Medha Singh in Bengaluru; Editing by Bernard Orr and Saumyadeb Chakrabarty