Stock Futures Gain as Earnings Season Moves Past Banks


US stock futures rose as investors reviewed a fresh batch of earnings for insight into the state of the economy.

Futures for the S&P 500 added 0.9% Tuesday. Contracts for the tech-focused Nasdaq-100 gained 0.9% and futures for the Dow Jones Industrial Average rose 0.5%. US stocks dipped on Monday.

Investors are parsing earnings for signs of how decades-high inflation is impacting companies and consumer spending. Economists are upping the chances of a US recession within the next 12 months, worried that interest-rate increases to tame inflation will weigh on growth. Focus is now turning to how companies are responding to those expectations, particularly if they plan to cut back on hiring or other investments.

“If the corporate sector starts to cut back on investment spending, that to me is the nail in the coffin,” said Luca Paolini, chief strategist at Pictet Asset Management.

Netflix results are due after the market closes. Some technology companies have already slowed hiring or cut jobs.

In premarket trading, shares of International Business Machines fell 5.7% after the technology company said shutting down its Russia operations and a strong dollar weighed on its quarterly results. Shares of Lockheed Martin fell 3.4% premarket after the aerospace and defense contractor reported second-quarter results that missed analysts’ profit and sales estimates.

Johnson & Johnson shares added 1.5% premarket after the pharmaceutical and consumer health products company reported second-quarter profit and sales that beat expectations but reduced its full-year earnings outlook. Shares of Halliburton rose 1.9% premarket after the oil services company beat profit and revenue expectations.

The US could be headed toward a recession, according to economists and latest GDP figures. But this recession might be different from past ones because of one main indicator: unemployment. WSJ’s Jon Hilsenrath explains.

In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 3.008% from 2.959% Monday. Yields and prices move inversely.

In energy markets, Brent crude, the international benchmark for oil prices, fell 1.8% to $104.40 a barrel.

In currencies, the euro, which hit parity with the dollar last week, rose 0.8% to $1.0230. The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, fell 0.6%. The greenback has surged against other currencies this year as investors shelter from falling stocks and bet on US economic resilience.

The European Central Bank is expected to raise interest rates for the first time in 11 years at a meeting Thursday. Typically, interest-rate increases cause currencies to strengthen because investors are paid more to invest in those assets.

Officials are expected to discuss raising interest rates by half a percentage point, according to a person familiar with the matter, though economists still expect a quarter-percentage-point increase, in line with what ECB President Christine Legarde has reported.

Traders worked on the floor of the New York Stock Exchange on Wednesday.


Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the pan-continental Stoxx Europe 600 edged up 0.4%. Shares of Electricite de France jumped 15% in Paris trading after the French government said Tuesday that it plans to pay about 9.7 billion euros, equivalent to $9.84 billion, to take full control of the energy company.

In Asia, major indexes close with mixed performance. China’s Shanghai Composite was flat, and Japan’s Nikkei 225 added almost 0.7%. South Korea’s Kospi edged down 0.2%, and Hong Kong’s Hang Seng fell 0.9%.

Tom Fairless contributed reporting to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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