U.S. stock futures rose Tuesday as large companies continued to report strong earnings for the third quarter, dispelling concerns that ongoing Covid cases and rising costs would undo the American company's earnings rebound.
Futures pegged to the Dow Jones Industrial Average rose about 150 points, or 0.4%. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.3%.
The Dow and S&P 500 are both about 1% off record highs on Tuesday.
Dow member Travelers posted price gains of more than 3% after the insurance company's quarterly earnings report beat expectations.
Fifth Third Bancorp's shares rose in early morning trading after its earnings and earnings surpassed Wall Street estimates.
Procter & Gamble continued its uptrend with better-than-expected gains, but its stocks lost more than 1% in pre-trading hours. The consumer goods giant said it was raising prices to cover rising raw material and freight costs and warned that inflation could persist.
Johnson & Johnson also beat earnings expectations for the third quarter by 25 cents a share, but saw stocks decline in early morning trading.
Elsewhere, Walmart shares gained around 2% pre-trading after Goldman Sachs added the big box retailer to its buy list and said the stock could rise nearly 40%.
According to FactSet, 82% of the S&P 500 companies that reported profits exceeded expectations on Tuesday morning. Taking these reports and estimates into account for the coming years, earnings growth in the third quarter will be 30%, according to FactSet.
Other important reports after Bell Tuesday include Netflix and United Airlines.
Although the reports have been strong, investors are looking for comments from American companies on supply chain issues and inflation.
“Financials got off to a strong start into earnings season again, but let's face it, COVID and supply chain issues are not going to affect this group. Now it will be very interesting to see what other industries have to say about the health of the economic recovery, "said Ryan Detrick, chief market strategist at LPL Financial.
Netflix could set the tone for tech wins this season. Three months ago, the streaming giant forecast 3.5 million net paying subscribers, while analysts are forecasting around 3.84 million, according to StreetAccount. Analysts are also forecasting a subscriber forecast of 8.5 million for the fourth quarter, which would be the highest outlook since Q1 2019.
Netflix stock has traded lower on six of the last seven earnings releases.
United Airlines revenue should provide investors with a clue to the travel recovery from the pandemic.
Stocks have had a successful week but have been volatile since September. Morgan Stanley's chief US equities strategist Mike Wilson, who has called for a correction in the broader market, told clients Monday that despite a deterioration in fundamentals, the market appears resilient to a major pullback.
"Whether or not we get that final move at index level this year will largely depend on retail involvement, the message that the third quarter results are bringing with them from a forecast perspective, and the PMI's path to year-end "said Wilson.
The S&P 500 and the Nasdaq Composite had their fourth day of earnings on Monday. The S&P 500 was up 0.34%. The Nasdaq was the relative outperformer, gaining 0.84% as Facebook, Amazon, Apple, Netflix and Google parent Alphabet all closed higher. The Dow Jones Industrial Average lost 36 points, dragged down by a 3% decline in Disney stock.
Economic data from China weighed on investor sentiment following reports of low GDP in September and industrial production that fell below expectations. Industrial production in the US also fell in September as supply bottlenecks continued to hamper production, the Federal Reserve reported on Monday.
– with reports from Robert Hum of CNBC.