U.S. stocks opened higher on Wednesday as investors continued to digest financial earnings and economic reports.
“What we’re seeing at least so far is companies coming in and beating estimates,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Bank of America posted a first-quarter profit, swinging from a surprise loss a year earlier when it took a charge of $6 billion for litigation expenses. However, the bank saw a slight decline in its investment banking and equity and debt market businesses while JPMorgan Chase reported investment banking fees and core trading revenues were both up about 20 percent year over year.
“Those financials that have trading desks may have had a better quarter than those that don’t,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. Volatility for about two-thirds of the quarter has increased trade volume while the low interest rates continue to weigh on institutions with a greater focus on lending.
Among the several other financial firms posting results before the bell, US Bancorp reported earnings in-line with estimates on revenue that missed. PNC Financial beat on earnings but missed on revenue.
Delta Air Lines earned an adjusted 45 cents per share for its latest quarter, one cent above estimates, with revenue essentially in line. Delta said this represented the best March quarter in its history, although it added that the strong dollar was presenting headwinds for its international revenue.
On the data front, industrial production for March showed a greater-than-expected decline of 0.6 percent, following a slight gain in February. Capacity utilization also came in slightly below the previous month.
“Every data point is coming in and saying the same thing—weak comparables,” Luschini said, noting that the Federal Reserve will carefully watch April data for signs that the weak first quarter data was weather-related.
“They seem to be willing to look through this data and do what they are inclined to do and that is raise rates in the second half of this year,” Luschini said.
Mortgage applications decreased 2.3 percent from the prior week as interest rates ticked up slightly, according to the Mortgage Bankers Association.
Meanwhile, the Empire Manufacturing survey for April Manufacturing activity showed growth in New York State unexpectedly contracted in April, weakening for a third straight month as the pace of new orders fell to a multi-year low, a New York Federal Reserve survey showed on Wednesday. The index showed a decline of 1.19 in April versus March’s 6.90 read.
The latest National Association of Home Builders housing market index is due at 10:00 a.m. and the Federal Reserve’s Beige Book comes at 2:00 p.m. ET . Treasury data on international capital flows is due at 4 p.m.
Oil extended gains after boosting markets on Tuesday. Investors will watch the weekly inventory figures at 10:30 a.m. for indications on supply pressure.
Falling unemployment and an improving U.S. economy are evidence that the Federal Reserve should start raising interest rates, St. Louis Fed President James Bullard said in prepared remarks on Wednesday, citing risks of asset bubbles if the central bank keeps rates too low for too long.
The S&P 500 opened up 7 points, or 0.33 percent, at 2,103, with energy leading all 10 sectors higher.
The Nasdaq opened up 19 points, or 0.38 percent, at 4,996.
Reuters contributed to this report.
On tap this week:
Earnings: Netflix, SanDisk, Universal Forest Products, Progressive, ASML Holdings
10:00 a.m.: NAHB survey
10:40 a.m.: Fed Vice Chairman Stanley Fischer, moderating IMF panel
2:00 p.m.: Beige Book
4:00 p.m.: TIC data
Earnings: BlackRock, Citigroup, Goldman Sachs, Blackstone, American Express, Schlumberger, Celanese, Crown Holdings, UnitedHealth, Taiwan Semiconductor, Philip Morris, First Republic Bank, KeyCorp, Mattel, Sherwin-Williams, Sonoco Products, PPG Industries, WW Grainger
8:30 a.m.: Initial claims
8:30 a.m.: Housing starts
10:00 a.m.: Philadelphia Fed survey
1:00 p.m.: Atlanta Fed President Dennis Lockhart
1:10 p.m.: Cleveland Fed President Loretta Mester
1:30 p.m.: Boston Fed President Eric Rosengren
3:00 p.m.: Fed Vice Chairman Fischer on inflation at IMF spring meeting
Earnings: GE, Honeywell, Synchrony Financial, Comerica
8:30 a.m.: CPI
10:00 a.m.: Consumer sentiment