Goldman Sachs and Bank of America Earnings Lift S&P 500 as Dow Retreats from Record High

Stock Futures Steady as Dow Hits Record High

U.S. stock futures were little changed on Tuesday morning, following a historic close for the Dow Jones Industrial Average. The blue-chip index rose more than 200 points to close above the 43,000 mark for the first time. Traders are now digesting the latest earnings reports while assessing the sustainability of the market’s recent rally.

Technology stocks were key drivers for the S&P 500’s gains, with the sector climbing 1.4% in Monday’s session. Nvidia, the AI sector leader, posted a 2.4% gain, boosting the stock to a record high and contributing to the overall positive sentiment. However, some analysts, including Citi’s Scott Chronert, have warned that the S&P 500 may be overvalued at current levels. Chronert noted that the market could remain elevated as long as favorable news continues to support the bullish sentiment.

Earnings Reports Drive Market Action

Several key companies made headlines with their earnings reports, setting the tone for premarket movements.

• Bank of America shares increased 1% after exceeding Wall Street estimates. The bank reported earnings of $0.81 per share versus expectations of $0.77, and revenue of $25.5 billion compared to the forecast of $25.3 billion.
• Goldman Sachs surged 2% after posting better-than-expected earnings of $8.40 per share, far above the $6.89 analysts had anticipated. Revenue also topped forecasts, driven by strong performance in trading and investment banking.
• Johnson & Johnson saw a slight rise in its stock as quarterly earnings surpassed expectations, bolstered by robust sales in its oncology division. The company raised its full-year 2024 profit and sales guidance.
• UnitedHealth Group fell 3.2% despite strong quarterly results, as the company revised its earnings forecast downward due to the lingering effects of a cyberattack earlier this year.
• Walgreens Boots Alliance jumped 5% following an upbeat earnings report. The company also announced plans to close 1,200 stores over the next three years, a move aimed at cutting costs and improving profitability.

Surprise NY Manufacturing Contraction

In economic news, the New York Fed’s Empire State Manufacturing Index revealed an unexpected contraction in October, posting a reading of -11.9, well below the expected 3.0. This marked a significant drop from September’s levels, with sharp declines in new orders and shipments. Despite this negative headline, the forward-looking expectations index improved to 38.7, reflecting optimism about future activity.

Upcoming Economic Updates and Fed Remarks

Traders will be closely watching upcoming data on U.S. manufacturing and consumer expectations. Additionally, Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic, are expected to deliver comments that may offer further insight into the central bank’s policy direction.

Market Forecast: Caution Ahead

While the stock market continues to show resilience, the recent earnings and economic data suggest that caution is warranted. With mixed results from corporate reports and a surprising contraction in manufacturing, market participants may see choppier waters ahead. Traders should monitor Federal Reserve comments and economic releases for signals that could tilt market sentiment. Overall, the short-term outlook leans toward a neutral to slightly bearish stance, especially if earnings or economic indicators begin to weaken further.