Stock Market Today: Dow futures hold near record highs as banks lead earnings reports

Johnson & Johnson’s stock was up in premarket trades Tuesday after the drugmaker reported better-than-expected third-quarter sales and raised full-year revenue guidance.

Bank of America’s stock reversed early losses to trade up 1% premarket Tuesday, as investors focused on a better-than-expected per-share earnings number and overlooked a decline in net interest income that pulled profit down from a year ago.

Trading revenue and investment banking fees were a highlight of the quarter, with equities trading revenue up 18% and FICC, or fixed income, currencies and commodities trading revenue, up 8%. Investment banking fees rose 18% boosted by strong debt issuance and a recovery in M&A.

On the credit quality front, the bank set aside $1.5 billion in provisions for potential loan losses in the quarter, up from $1.2 billion a year ago. Banks have been providing more in the current high interest rate environment.

“With declines reported on a linked-quarter basis in consumer credit and commercial real estate losses, asset quality was solid,” said CFO Alastair Borthwick, in prepared remarks.

Boeing Co.’s stock rose 2.8% premarket Tuesday, after the aerospace giant said it has entered a $10 billion supplemental credit agreement with a group of banks, easing concerns about its liquidity position.

In a regulatory filing, the company said BofA Securities, Citibank NA, Goldman Sachs Lending Partners LLC and JPMorgan Chase Bank NA are acting as joint lead arrangers and joint book managers for the credit agreement.

The company was widely expected to tap capital markets to keep its target cash balance, fund operating and working capital, and meet debt maturities, but has opted to borrow instead, at least for now.

UnitedHealth’s stock was diving 3.7%, to pull back from a record high, and enough to pace the Dow’s premarket losers, after the healthcare giant’s earnings report disappointed investors.

UnitedHealth’s stock is the highest priced Dow component, so it has the biggest impact on the price-weighted index. The implied price decline early Tuesday would cut about 144 points off the Dow’s price, while Dow futures were recently down 22 points.

UnitedHealth beat Q3 profit and revenue expectations, but the problem was that medical care profitability missed forecasts, as the government cut Medicare funding, and the full-year profit outlook was trimmed.

The U.K. 10-year government bond yield is down 4.7 basis points to 4.195% after labor data released Tuesday showed a slowdown in the pace of wages growth.

When combined with a recent report showing meek GDP growth in July and August, it suggests the Bank of England has plenty of leeway to reduce borrowing costs further, according to Russ Mould, investment director at AJ Bell.

“A small interest rate cut might be warranted to help grease the wheels and get the country moving a little bit more…Markets are now pricing in an 83.5% chance of a quarter percentage point rate cut when the Bank of England’s monetary policy committee meets next month,” says Mould.

This is music to the ears of BlackRock Investment Institute’s global chief investment strategist Wei Li, who in a new note says to favor U.K. government bonds over U.S. Treasuries.

“We have less conviction in U.K. stocks on a soft economy and heading into the new government’s budget announcement, yet we stay overweight for now. We go overweight U.K. gilts as we see the Bank of England having to cut policy rates more than markets are pricing given the soft economy,” says Li.

Here are some of the companies presenting earnings on Tuesday:

Before the opening bell.

After the close.

Here are some of the potential market catalysts due Tuesday for traders to consider:

How are stock-index futures trading:

On Monday, the Dow Jones Industrial Average rose 201 points, or 0.47%, to 43,065, the S&P 500 increased 45 points, or 0.77%, to 5,860, and the Nasdaq Composite gained 160 points, or 0.87%, to 18,503.

Futures show mostly a fractionally lower open on Wall Street after both the S&P 500 and Dow Jones Industrial Average closed the previous session at fresh record highs.

Focus will be on the resumption of the third-quarter earnings season after Monday’s Columbus Day break. Big banks such as Goldman Sachs, Citigroup and Bank of America will lead the charge.

“This calm start to the week gives investors time to reflect before earnings season gets into full swing. Plenty of key economic data points are on the horizon, including retail sales, jobless claims, and housing market updates,” notes Matt Britzman, senior equity analyst at Hargreaves Lansdown.