Wall St set to open higher as banks report strong quarter

(Reuters) -Wall Street’s main indexes were set for a strong open on Thursday after big banks reported better-than-expected quarterly results, helping investors to look away from inflation concerns.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 13, 2021. REUTERS/Brendan McDermid

Lenders Bank of America and Wells Fargo and Citigroup topped market expectations for third-quarter profit, helped by the release of reserves to cover loan losses.

Investment bank Morgan Stanley posted a bigger quarterly profit than expected, as it closed more deals and generated a record $1.27 billion from advisory business.

Their shares jumped between 0.8% and 2.7% in premarket trading.

“Investors have been generally looking forward to a mostly positive earnings season,” said David Swank, portfolio manager at Hood River Capital Management.

“There are certainly pockets of speculation out there where things look frothy, but overall, the valuations are not too bad.”

Analysts expect corporate America to report strong quarterly profit growth and will focus on commentary from companies on how they are going to battle rising costs, labor shortages and supply chain disruptions.

Meanwhile, data showed the number of Americans filing new claims for unemployment benefits fell close to a 19-month low last week, while a separate report showed producer prices accelerated 8.6% in the 12 months through September.

The reports come a day after consumer prices rose solidly in September, which further strengthened case for a Fed interest-rate hike.

The S&P 500 and the Nasdaq ended higher on Wednesday, led by mega-cap tech names, after the Federal Reserve signaled it could start reducing its crisis-era support by mid-November, with several policymakers worried that high inflation could persist longer than previously thought.

At 8:40 a.m. ET, Dow e-minis were up 298 points, or 0.87%, S&P 500 e-minis were up 41.25 points, or 0.95%, and Nasdaq 100 e-minis were up 161.5 points, or 1.09%.

Shares of growth names including Facebook Inc, Microsoft Corp, Amazon.com Inc, Tesla Inc, Apple Inc and Google-parent Alphabet pointed to a positive open.

Energy firms including Chevron Corp and Exxon Mobil gained 0.9% and 1.3%, respectively, tracking Brent crude prices that topped $84 per barrel. [O/R]

UnitedHealth Group Inc rose 2.8% after the health insurer beat analysts’ estimates for third-quarter profit, helped by a jump in revenue from its Optum unit that manages drug benefits.

Walgreens Boots Alliance Inc gained 1.5% after it reported a 68% surge in fourth-quarter profit on strong pharmacy, retail sales.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co Ltd added 3.7% after the chipmaker posted a 13.8% jump in quarterly profit and lifted its revenue growth forecast for 2021, citing an “industry megatrend” of strong chip demand.

Domino’s Pizza Inc slipped 3.6% after the pizza chain reported a surprise drop in U.S. same-store sales on a slowdown in demand for deliveries.

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