Stock Futures Edge Higher as Bank of America Beats Earnings Estimates
New York (Oct 13) Stock futures were slightly higher on Friday, Oct. 13, as the third-quarter earnings season powered on with Bank of America Corp. (BAC - Get Report) and Wells Fargo & Co. (WFC - Get Report) reporting their quarterly performances.
Dow Jones Industrial Average futures were up 0.9%, S&P 500 futures added 0.06%, and Nasdaq futures increased 0.05%. Markets fell shy of new records a day earlier with just small losses.
Bank of America posted higher quarterly profit than analysts estimated, driving shares 1% higher in premarket trading. Increasing interest rates fueled returns on lending enough to overcome sliding bond-trading revenue. Earnings of 48 cents a share rose 7 cents from a year earlier and beat estimates by 2 cents. Net income increased 13% to $5.6 billion.
Revenue from trading bonds, currencies and interest-rate swaps fell 19% to $2.15 billion at Bank of America. JPMorgan Chase & Co. (JPM - Get Report) and Citigroup Inc. (C - Get Report) both saw a drop in trading revenue over their third quarter. The two reported earnings on Thursday, unofficially kicking off the third-quarter earnings season.
Wells Fargo will report earnings later Friday morning.
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Just 6% of S&P 500 companies have reported earnings so far, the majority of which have bested earnings and sales estimates. Analysts anticipate blended earnings growth of 4.4% in the third quarter, or 2.3% excluding energy, according to Thomson Reuters estimates. Revenue is expected to rise by 4.4%.
U.S. consumer prices for September, to be issued on Friday, Oct. 13, are anticipated to have risen 2.3% year over year, and 1.8% excluding food and energy, according to FactSet estimates. Producer prices, out a day earlier, showed positive momentum toward the Federal Reserve's 2% target.
Even so, inflation trends remain a conundrum to Federal Reserve members. According to September meeting minutes, some members grow concerned low inflation readings could "prove more persistent" than transitory. The Fed has still signaled that it expects to hike rates again by year's end.
Health insurance stocks such as UnitedHealth Group Inc. (UNH - Get Report) and Aetna Inc. (AET - Get Report) were mixed in premarket trading after President Donald Trump made his biggest move yet to dismantle the Affordable Care Act. The Department of Health and Human Services moved late Thursday, Oct. 12, to cut off subsidies to health insurers under the Obama-era Affordable Care Act.
"We will discontinue these payments immediately," said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma.
The White House said in a separate statement that the government cannot legally continue to pay the so-called cost-sharing subsidies because they lack a formal authorization by Congress. Halting the payments is likely to trigger a spike in premiums for next year, unless Trump reverses course or Congress authorizes the money. The next payments are due around Oct. 20.
TheStreet
