NEW YORK (AP) — Stocks traded modestly higher Monday morning as investors were cautiously optimistic ahead of earnings reports this week, including key readings from the banking sector.
Investors had been cautious as they prepare for earnings reports this week, including from some of the nation’s largest financial firms. Banks have been among the hardest hit companies since the recession began in late 2007 as investment and loan losses piled up.
Financials were getting a boost after banking analyst Meredith Whitney said on CNBC that she was upgrading her view on Goldman Sachs Group Inc., which has long been considered the strongest bank amid the economic downturn. She also noted Bank of America, one of the hardest hit by mounting loan losses, could provide value for investors.
Goldman Sachs, Bank of America, JPMorgan Chase & Co., and Citigroup Inc. are all scheduled to report second-quarter results this week.
“People are focused on sectors battered the most to see if there is any bounceback,” said Dan Deighan, founder of Deighan Financial Advisors in Melbourne, Fla. Financial firms and retail companies will probably be the most closely watched sectors as earnings reports are released, Deighan said.
Commercial finance lender CIT Group Inc., meanwhile, said late Sunday it is talking with regulators about ways to improve its short-term liquidity as recent losses may jeopardize its compliance with capital requirements.
In early morning trading, the Dow Jones industrial average rose 18.29, or 0.2 percent, to 8,164.81. The Standard & Poor’s 500 index gained 1.46, or 0.2 percent, to 880.59, while the Nasdaq composite index fell 7.63, or 0.4 percent, at 1,748.40.
Earnings reports are expected from major companies in non-financial industries as well this week, including Dow Jones industrial average components Johnson & Johnson, International Business Machines Corp. and General Electric Co. and technology bellwethers Intel Corp. and Google Inc.
The earnings results will give investors a chance to see if there was any meaningful economic improvement during the second quarter. But second-quarter results aren’t expected to be stellar, so investors will instead focus on executives’ “optimism or pessimism moving forward,” Deighan said. Stocks rallied in the spring amid hope of an eventual recovery in late 2009. Investors want evidence that timetable will be met and corporate outlooks could provide it.
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