JPMorgan and Wells Fargo & Co. are scheduled to report quarterly earnings tomorrow. Analysts forecast Wells Fargo, the largest U.S. home lender, will post record profit. Analysts project income at banks increased 19 percent in the third quarter, helping limit the S&P 500’s first drop in quarterly earnings in three years to 1.7 percent.
The S&P 500 has slipped about 2 percent since reaching an almost five-year high of 1,465.77 on Sept. 14 after the Federal Reserve announced plans to buy $40 billion in mortgage securities a month to boost growth. The benchmark index is less than 1 percent higher than its 50-day moving average of 1,427.14.
‘Focus Is Shifting’
“It’s the beginning of earnings season and the focus is shifting from the boost that stocks got from provisional liquidity around the world,” Brian Gendreau, a market strategist at El Segundo, California-based Cetera Financial Group Inc., said in a telephone interview. The firm has about $20 billion in assets under management. “We’ve had a string of warnings now from internationally oriented companies that profits and revenues aren’t going to be what they had been. This is coming in a context of a global slowdown in growth.”
U.S. 30-year bond yields decreased for a third straight day. The 30-year U.S. securities sold by the Treasury today drew a yield of 2.904 percent, compared with a forecast of 2.880 percent in a Bloomberg News survey of eight of the Federal Reserve’s primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.49, versus an average of 2.65 for the previous 10 sales.
The Stoxx Europe 600 Index snapped a three-day slump as luxury goods companies and retailers also climbed. Burberry Group Plc, the U.K.’s largest luxury-goods maker, rallied 13 percent after reporting a partial recovery in retail sales growth since September’s profit warning. Christian Dior SA and Cie. Financiere Richemont SA rose more than 3 percent.
Carrefour SA climbed 3.7 percent in Paris after the world’s second-largest retailer posted third-quarter sales that beat analyst estimates. Direct Line Insurance Group Plc, a U.K. insurer, added 7.4 percent on the first day of trading following its 787 million-pound ($1.3 billion) initial public offering.
Italy’s 10-year bond yield dropped nine basis points to 5.02 percent after the nation sold 3.75 billion euros ($4.8 billion) of benchmark three-year bonds at 2.86 percent and investors bid for 1.67 times the amount offered, up from 1.49 times last month.
Spain’s two-year notes erased earlier losses, with the yield falling five basis points to 3.22 percent. The nation’s 10-year rates were down four basis points at 5.76 percent. S&P yesterday cut Spain’s debt rating to one level above junk, citing economic and political risks as the government considers a second bailout.