US Stocks Soar Ahead of Opening as Rebound Continues; JNJ Beats the Street

Investors are expecting a higher opening in the cash market on Tuesday as stock index futures continue to rise in the pre-market session following a stellar performance the previous session. For a second straight day, the pre-market rally is being fueled by strong risk sentiment and better-than-expected earnings.

At 12:16 GMT, the blue chip Dow Jones Industrial Average futures contract is trading 30733.00, up 503.00 or +1.66%. The benchmark S&P 500 Index is at 3759.25, up 70.00 or +1.90% and the tech-heavy NASDAQ Composite is trading 11343.00, up 232.75 or +2.09%.

Strong Earnings from Johnson & Johnson Set Early Tone

Shares of Johnson & Johnson rose 1.7% in pre-market trading after it beat estimates on the top and bottom lines for the third quarter.

The healthcare conglomerate beat Wall Street expectations for third-quarter sales, helped by strong demand for its cancer drug Darzalex and Crohn’s disease drug Stelara.

J&J has raised prices at its consumer health unit, which it expects to spin off in mid-to-late 2023, in response to surging inflation. On Tuesday, the company signaled that supply-chain pressures that pushed up costs at the unit were expected to ease next year, Reuters reported.

“I would say that while no business, no industry is entirely immune to a recession, I think healthcare is much more resilient than most,” Chief Financial Officer Joseph Wolk told Reuters in an interview.

Goldman Sachs Revenue, Earnings Beat the Street

Goldman Sachs shares rose more than 2% after strong trading results helped the investment bank beat expectations for earnings and revenue.

The bank also announced it was reorganizing its business into three units, as the Wall Street giant undertakes another overhaul in less than three years.

Goldman Sachs CEO Issues Recession Warning

Goldman Sachs may have pleased investors with its third-quarter results, but CEO David Solomon sees trouble on the horizon for the U.S. economy, according to CNBC.

The bank chief told CNBC that there is a “good chance” the U.S. economy falls into a recession and that business leaders should act with that in mind.

“It think it’s time to be cautious, and I think that if you’re running a risk-based business, it’s time to think more cautiously about your risk box, your risk appetite,” Solomon said during a live interview on CNBC’s “Squawk Box.”

Daily Outlook

Risk is on for the second time this week with the major indices “gapping and going” in the pre-market session.

There are no major U.S. economic releases to stand in the way of the rally and the technical picture is looking rosy. The Dow Jones Industrial Average has already broken out to the upside. The S&P 500 Index is poised to breakout and the NASDAQ Composite still has a little way to go, but seems to have the most momentum, following yesterday’s biggest gain since July.

After the close on Tuesday, traders will get the opportunity to react to earnings from Netflix, a NASDAQ component.

For the quarter that ended September 30, Wall Street expects Netflix to earn $2.17 per share on revenue of $7.84. This compares to the year-ago quarter when earnings were $3.19 per share on $7.48 billion in revenue. For the full year, ending in December, Netflix’s earnings are projected to decline 10.3% year over year to $10.08 per share, while full-year revenue of $31.67 billion would mark an increase of 6.6% year over year.