Dow Set to Open at Record, PayPal Spikes—and What Else Is Happening in the Stock Market Today
Facebook is the first of the U.S. tech giants to report earnings this week.
Denis Charlet/AFP via Getty Images
The stock market was rising Monday, and the Dow Jones Industrial Average was set to open at a record high, as investors eagerly anticipated a wave of corporate earnings in the week ahead.
Futures for the Dow indicated an open 25 points higher, after the index climbed 73 points closed Friday at a new record of 35,677. Futures for the S&P 500
—which remained near an all-time high set last week—and Nasdaq signaled a similar higher start.
Overseas, Hong Kong’s Hang Seng Index ended just above flat, and London’s FTSE 100 was 0.5% higher.
Investors seized on strong corporate earnings last week to help markets shake off a funk that had weighed on stocks for much of the prior month. Roughly 85% of the companies in the S&P 500 that have reported earnings beat Wall Street’s expectations, compared with the five-year average of 76%, according to Jim Reid, a strategist at Deutsche Bank.
However, “a large part of the beats so far is due to loan-loss reserve releases by banks,” Reid noted. “Excluding those, the aggregate S&P 500 beat is running much closer to historical average, suggesting the headline beats have not been as broad-based as they look at first glance.”
In the week ahead, 164 components of the S&P 500 index, including 10 of the 30 components of the Dow, will report results. These include some of the largest U.S. technology companies— Facebook (ticker: FB), Microsoft (MSFT), Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN)—alongside General Electric (GE), Boeing (BOE), General Motors (GM), Caterpillar (CAT), Exxon Mobil (XOM), Visa (V), and others.
“It will be big-tech, however, that decides whether the U.S. earnings season party continues, before the FOMC reasserts its dominance next week,” said Jeffrey Halley, an analyst at broker Oanda.
The monetary policy body of the U.S. Federal Reserve, the Federal Open Market Committee (FOMC), will meet on Nov. 2 and Nov. 3, when markets expect to see the central bank announce that it will begin tapering its program of monthly asset purchases.
Meanwhile, earnings in the day ahead include results from manufacturer Kimberly-Clark (KMB) and tech giant Facebook.
All eyes will be on Facebook after shares in social-media peer Snap (SNAP) tumbled 26.6% Friday, pressuring Facebook stock, which fell 5.1%. Snap earnings showed an unexpectedly-large impact to its advertising business, blamed in part on privacy changes made by Apple to its mobile operating system. The same changes could hurt Facebook.
Bond yields, which have risen across the past week amid signs of a stronger U.S. job market and rising inflation expectations, remained elevated. The yield on the benchmark 10-year U.S. Treasury note was up above 1.66%.
Here are four stocks on the move Monday
Darktrace (DARK.U.K.) fell 10.5% in London, after broker Peel Hunt initiated coverage of the cybersecurity stock with a rating of ‘sell’ and target price for the shares nearly half of the closing price Friday. Analysts saw a disconnect between the company’s valuation and the revenue opportunities.
Banco de Sabadell (SAB.Spain) rose 4.1% in Madrid amid recent speculation in the media over a major acquisition by the Spanish bank.
PayPal (PYPL) was 5.8% higher in the U.S. premarket, after the payments giant said over the weekend that it wouldn’t pursue an acquisition of social network Pinterest (PINS). Pinterest fell 9.8% in the premarket.
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