Wall Street opens flat as investors await big earnings

Analysts estimate second-quarter earnings for the S&P 500 companies rose 8.1 per cent from a year earlier.
Analysts estimate second-quarter earnings for the S&P 500 companies rose 8.1 per cent from a year earlier.PHOTO: REUTERS

NEW YORK (REUTERS) - US stocks opened little changed and held steady at record levels on Monday as investors turned their focus to a busy earnings week from big US companies.

Microsoft, IBM and Johnson and Johnson are scheduled to report results this week.

Netflix, which will report results after the market close on Monday, rose 0.8 per cent in early trading.

Analysts estimate second-quarter earnings for the S&P 500 companies rose 8.1 per cent from a year earlier. First-quarter earnings posted their best performance since 2011, according to Thomson Reuters data.

Earnings will be closely watched to see if high valuations are justified in the face of tepid inflation and a recent patch of mixed economic data.

The S&P 500 has been trading at about 18 times earnings estimates for the next 12 months, compared with the long-term average of 15 times.

"The US market isn't cheap right now," said Phil Guarco, global investment specialist at JP Morgan Private Bank. "Earnings are going to take an important role. We're in a situation where the corporate profits and the profits they are going to deliver in the future will be of keen interest."

At 9:40 a.m. ET (9:40 p.m. Singapore time), the Dow Jones Industrial Average was down 6.09 points, or 0.03 per cent, at 21,631.65, the S&P 500 was down 0.37 points, or 0.01 per cent, at 2,458.90. The Nasdaq Composite was up 3.02 points, or 0.05 per cent, at 6,315.48.

Seven of the 11 major S&P sectors were higher, with the telecommunications index's 0.28 percent rise leading the advancers.

The financial sector led the laggards with a 0.43 per cent fall after results and forecasts on Friday by big banks such as JPMorgan, Citigroup and Wells Fargo failed to excite investors.

Bank of America, Morgan Stanley, Goldman Sachs will report results later this week.

The Dow and the S&P hit record highs on Friday after weak economic data dulled prospects of more interest rate hikes this year.