U.S. stock futures charged higher Monday evening after capping a whipsaw trading session in the red as investors brace for a deluge of earnings reports due out this week.

Contracts on the S&P 500 and Nasdaq rose 0.3% and 0.4%, respectively, after both indexes settled at one-month lows at the closing bell. Futures tied to the Dow Jones Industrial Average jumped 100 points heading into overnight trading. Meanwhile, Treasury yields continued their climb, with the 10-year U.S. benchmark reaching 2.86%, the highest since December 2018.

Quarterly results from 69 companies in the S&P 500 are in the queue for investors to digest through Friday. Big names on the docket of earnings set for release this week include United Airlines (UAL), American Express (AXP) and Tesla (TSLA). Netflix (NFLX), which is slated to report quarterly earnings after market close Tuesday, will provide investors insights into whether subscriber growth at the streaming service has slowed down post-COVID-19.

As of Monday, 53% of 34 S&P 500 companies (comprising 10% of index earnings) that have reported so far beat on both sales and earnings per share, Bank of America’s research team pointed out, slightly better than the typical Week 1 beat rate of 47% and last quarter’s Week 1 rate of 50%. The institution expects a first quarter EPS beat of 4% but anticipates downside risks to the full year 2022 estimates, which imply earnings accelerating every quarter into next year.

“Pressure on profit margins from higher costs for virtually everything, notably labor, materials, and transportation, made this quarter difficult to navigate,” LPL Financial strategists Jeff Buchbinder and Ryan Detrick said in commentary Monday. “Add spillover from the Russia-Ukraine conflict and intermittent COVID-19 lockdowns in China, and companies’ bottom lines are getting hit from several directions.”

“Despite the tough environment, we believe the odds favor companies beating estimates as they have done historically on the back of double-digit revenue growth,” Buchbinder and Detrick added. “High inflation translates into more revenue so earnings can grow at a solid pace even with some narrowing of profit margins.”

Source by: Reuters