S&P 500 Futures Rebound on Upbeat Earnings

Buyers returned to US equities Tuesday after another batch of stronger than expected corporate earnings lifted investor sentiment.

Futures on the S&P 500 Index were trading higher in pre-market activity, which led to a strong start to the day. The large-cap S&P 500 Index advanced 13.10 points, or 0.6%, to close at 2,139.60. The S&P had declined in two of the previous three sessions.


All 11 major sectors finished in positive territory, led by a 1.1% gain in healthcare. On Tuesday Johnson & Johnson (NYSE: JNJ) reported better than expected quarterly earnings and sales and said its pharmaceutical division will continue to grow despite competition from rival drugmakers.

Johnson and Johnson was one of many Wall Street juggernauts to report solid earnings. US multinational investment bank Goldman Sachs Group (NYSE: GS) and media streaming company Netflix Inc. (NASDAQ: NFLX) also reported much better than expected quarterly results.

The S&P 500’s information technology index rose 0.7% as a result, while financials also added 0.8%. Meanwhile, shares of materials companies rose 0.9%. Real estate and consumer discretionary finished up 0.5% and 0.6%, respectively.

Strong performances were recorded throughout Wall Street. The Dow Jones Industrial Average climbed 75.54 points, or 0.4% to 18,161.94. The Nasdaq Composite Index advanced 44.01 points, or 0.9%, to 5,243.84.

The CBOE VIX, a leading measure of market volatility, fell 5.7% to 15.28. The VIX trades on a scale of between 1 and 100, with readings below 20 signifying below-trend volatility.

In economic data, rising gasoline prices and rent costs pushed US inflation higher in September. The consumer price index (CPI) rose at an annualized 1.5%, up from 1.1% in August. That was the biggest gain in five months, the Labor Department said.

So-called core inflation, which strips away food and energy costs, slowed to 2.2% in the 12 months through September from a 2.3% rise in August.

The Federal Reserve targets inflation at 2%. According to experts, higher inflation weakens the argument against raising interest rates. Fed Vice Chair Stanley Fischer said on Monday that the US central bank was “very close” to its inflation target. The Fed is expected to hold off on adjusting monetary policy at its next meeting in November, but is on track to continue hiking rates in December, according to the 30-day Fed Fund futures prices.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.