The Friday Market Minute

  • Wall Street futures point to sharp rebound after the biggest two-day sell-off since February Friday, but banks earnings and Treasury bond yields will be key for the overall market's direction.
  • World stocks notch their best day in 2 years, thanks to big gains in Asia, after a bigger-than-expected China-U.S. trade surplus suggests export growth will support the world's second largest economy in the third quarter.
  • Global oil prices rise modestly, but crude is set for its first weekly decline in five thanks to questions over global demand and bigger-than-expected rises in U.S. stockpiles.
  • JPMorgan posts a stronger-than-expected third quarter net of $2.34 a share on $27.8 billion in revenues even as fixed income trading figures continue to fall short of estimates.

Market Snapshot

U.S. Stocks are set for their biggest gains in more than six months Friday, as investors return to an equity market that has suffered its biggest two-day decline since February, ahead of key third quarter reports from the banking sector that would set the tone for a corporate earnings season that will define the market's strength heading into the final months of the year.

World stocks has their best rebound in two years Friday, lead by a 2.1% surge for the MSCI Asia ex-Japan index, as investors rushed to buy cheap stocks following yesterday's accelerated sell-off on Wall Street. Overnight data showing China's trade surplus with the United States hit a record 34.13 billion in August was also supportive for stocks, even as it raises further questions over the efficacy of President Donald Trump's trade policies with the world's second-largest economy. 

European stocks were also firm in the overnight session, with the Stoxx 600 benchmark rising 0.7% by early afternoon in Frankfurt and Britain's FTSE gaining 0.65% just after the mid-day break in London.

U.S. equity futures suggest the bullish tone will flow-through into Wall Street trading today, although much of the day's direction will likely be dictated by the earnings performance of Citibank (C) and Well Fargo (WFC) , all of which report prior to the opening bell. Contracts tied to the Dow Jones Industrial Average suggest the board will claw back around 390 of the more than 1300 points its lost over the past two sessions, with a rebound of 43 points anticipated for the broader S&P 500 , where 75% of the benchmark's constituents are trading in correction territory. Nasdaq Composite futures were indicating a 163 points opening bell gain, but that number could fade if U.S. Treasury bond yields resume their return to the multi-year highs seen earlier this week.

JPMorgan Chase (JPM) got things rolling with a better-than-expected third quarter net income of $2.34 per share on revenues of $27.8 billion. The bank also said it expects 2018 adjusted expenses of $63.5 billion against net interest income of $55.5 billion. JPMorgan shares were marked 1.04% higher at $109.25 each in pre-market trading following the results. 

Wells Fargo was next, with an adjusted third quarter bottom line of $1.16 per share that narrowly missed the Street consensus of $1.17 on revenues of $21.9 billion. Still, shares were indicated about 1% higher at $52.00 each. 

Citigroup followed with a forecast-beating third quarter figure of $1.73 per share, against a $1.39 estimate, on $18.4 billion in revenues. Citigroup shares popped nearly 2% to $69.73 in pre-market trading following the release. 

Starbucks (SBUX)  were also on the move after it said it would start buying back $5 billion in shares as part of a broader plan to return around $25 billion to investors just days after a key activist, Pershing Square Capital's Bill Ackman, unveiled a stake in the world's biggest coffee chain.

Starbucks shares were marked 2.8% higher in pre-market trading, indicating an opening bell price of $56.40 each, a move that would trim the stock's year-to-date decline to around 1.5%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% higher to 95.08 as the global market sentiment improved, helping 10-year U.S. Treasury yields retrace to around 3.17% after a mixed week of auctions for benchmark bonds that raised more than $230 billion.

Global oil prices were also on the rise, although crude is set for its first weekly decline in five following a bigger-than-expected 6 million barrel increase in U.S. inventories and a report this morning from the International Energy Agency that suggested global markets are "adequately supplied" for the moment thanks to the recent surges in U.S. and Russian production.

Brent crude contracts for December delivery, the global benchmark, were seen 21 cents higher from their Thursday close in New York and changing hands at $80.47 per barrel while WTI contracts for November delivery, which are more tightly liked to U.S gas prices, were seen 40 cents higher at $71.37 per barrel.