Dow futures hold steady as earnings season kicks off

U.S. stock rose further Tuesday, with both the Dow and S&P 500 index posting new intraday records, helped by good earnings reports from banks JPMorgan Chase and Citigroup.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +0.48% rose 110 points, or 0.4%, to 29,016 while the S&P 500 index SPX, +0.16% gained 0.5 points, or 0.02%, to trade at 3,288. The Nasdaq Composite index COMP, +0.19% was up 2 points, or 0.03%, to trade at 9,276.

The Dow on Tuesday rose 83.28 points, or 0.3%, to end at 28,907.05, 0.2% away from its record close of 28,956.90 set on Thursday. The S&P 500 rose 22.78 points, or 0.7%, to finish at 3,288.13, while the Nasdaq Composite  closed at 9,273.93, a gain of 95.07 points, or 1%. Monday’s closing levels marked the third record of the new year for the S&P 500 and the fourth for the Nasdaq.

What’s driving the market?

Wall Street’s big banks were giving earnings season its unofficial kickoff Tuesday, with fourth-quarter results reported ahead of the opening bell from JPMorgan Chase & Co. JPM, +1.95%, Citigroup Inc. C, +2.67%  and Wells Fargo & Co. WFC, -4.15%.

JPMorgan and Citigroup both surpassed Wall Street expectations for profit and sales, sending shares 1.9% and 2.6% higher, respectively. J.P. Morgan CEO Jamie Dimon cited a healthy U.S. consumer a factor that helped it surpass forecasts, along with a stabilization of economic growth and easing trade tensions.

Wells Fargo, however, missed consensus forecasts for both profit and revenue, with performance dragged down in part by litigation costs, sending shares 4.2% lower.

According to FactSet, S&P 500 index company earnings are estimated to have declined 2.0% in the fourth quarter.

“We’re seeing a mixed bag of results from big banks to start earnings season with JPM and Citi coming in very strong but Wells missing expectations,” wrote Mike Loewengart, vice president of investment strategy at E-Trade, in an email.

“There is a lot to live up to this earnings season since Q3 was so robust,” he added. “That said, growth expectations for the beginning of 2020 are tepid at best. Inflation has been climbing slowly but steadily since September, but really it’s not enough to force the Fed’s hand for any action.”

Analysts said the start of earnings season could take the spotlight away from U.S.-China trade issues ahead of the expected Wednesday signing of a so-called phase-one agreement.

China will pledge to buy $200 billion of $US goods over a two-year period in four industries, according to several reports. This includes $75 billion of manufactured goods, $50 billion of energy products, $40 billiion of agricultural products, and $40 billion worth of services. White House trade adviser Navarro also said the deal contains very strong enforcement mechanism, noting the US will be allowed to reimpose tariffs unilaterally if China breaks any commitments. At the same time, reports also continued to highlight some of the skepticism surrounding the ability to reach a more meaningful phase two deal.

The U.S. Treasury late Monday lifted its designation of China as a currency manipulator. News reports that such a move was imminent helped buoy stocks during the session.

See: As investor optimism nears 2-year highs, analysts warn of stock-market pullback

China’s yuan has strengthened since late last year, taking back much of the ground lost in a late summer swoon, aided by increased optimism over trade policy as well as early signs the Chinese economy is stabilizing, economists said.

See: Why the Chinese yuan is in rebound mode versus the U.S. dollar

What’s on the economic calendar?

The National Federation of Independent Business said its small-business optimism index fell 2 points in December to 102.7.

Consumer prices rose less than expected in December, with the Labor Department’s consumer price index rising 0.2%, versus the 0.3% expected by economists polled by MarketWatch. The year-over increase came in at 2.3%, it’s largest yearly advance since 2011. Core prices, which strip out volatile food and energy costs, also rose 2.3% on an annual pace, though the 0.1% rise in December also fell short of economists expectations of 0.2%.

New York Federal Reserve Bank President John Williams, a voting member of the Fed’s rate-setting panel, delivered a speech to the London School of Economics Tuesday morning on the topic of risk-taking culture at financial services companies.

Kansas City Fed President Esther George, who isn’t a 2020 voter, is due to deliver a speech in Kansas City at 1 p.m.

Which companies are in focus?

Delta Air Lines Inc.’s DAL, +3.80%  stock gained 4.0 Tuesday topping profit and revenue expectations.

Shares of Tesla Inc. TSLA, +3.14%  gained 2% Tuesday, setting another record high after Deutsche Bank’s Emmanuel Rosner raise his price target on the stock, the latest in a string of analysts to do so. Tesla has already soared about 29% in January, setting 5 record closes.

Perrigo Co. Plc PRGO, +11.77%  issued updated guidance for the fourth quarter Tuesday morning, announcing it expects full-year 2019 sales to be $4.8 billion, above the $3.98 billion FactSet consensus. The pharmaceutical company’s stock rose 8%.

Boeing BA, +1.35%  was up 1.3% even though the aircraft maker said in 2019 it delivered half the commercial planes it delivered the previous year and American Airlines AAL, +1.20%  pushed back its timeline for when it might fly the Boeing 737 Max again.

Deep Dive: Big-bank earnings preview: The Fed’s policies cut both ways

How are other markets trading?

The yield curve flattened Tuesday, with the yield on the 10-year U.S. note TMUBMUSD10Y, -1.13%  declining 2 basis points to 1.823%, while the yield on the 3-month Treasury bill TMUBMUSD03M, +0.85%  rose 1 basis point to 1.559%.

Oil futures bounced higher Tuesday in an effort to snap a five-day losing streak that dragged the U.S. benchmark to its lowest level since early December. West Texas Intermediate crude for February delivery  CLG20, +0.62%  rose 19 cents, or 0.3%, to $58.29 a barrel.

In precious metals markets, the price of gold for February delivery fell $7.40, or 0.5%, to $1,543.

European stocks on Tuesday inched higher. After losses for two straight sessions, the Stoxx Europe 600 SXXP, +0.29%  edged up 0.3% to 419.56, not far from the record close of 419.74 reached on Dec. 27.

In Asia overnight, Japan’s Nikkei NIK, +0.73%  gained 0.7% as traders returned from a holiday Monday. Hong Kong’s Hang Seng Index HSI, -0.24%  slipped 0.2% t while China’s CSI 300 000300, -0.34%  index slipped 0.3%.