Nebraska News Desk

Strong profits, China stimulus set Dow up for rebound

 Breaking News
  • No posts where found

Strong profits, China stimulus set Dow up for rebound

After suffering a shellacking Friday, the Dow looks to open solidly in the black Monday, powered by earnings beats and more stimulus from China’s central bank. On Friday, the Dow Jones industrial average plunged 280 points to 17,826.30, leaving it up just 3 points on the year. Friday’s sell-off was fueled by renewed fears of a Greek exit from the eurozone, moves by Chinese stock regulators to reduce stock purchases financed with borrowed cash and a move higher in U.S. inflation at the consumer level, which sparked fears of an earlier-than-expected rate interest hike from the Federal Reserve.1215-stock-market_full_600

But the Dow is in rebound mode in premarket trading. Forty-five minutes before the opening bell the Dow was up about 100 points, or 0.6%. The Chinese central bank lowered the amount of money banks need to keep in reserve by 1 percentage point, a move designed to spur economic growth there by freeing up more cash that could be used by banks to lend to small and mid-sized businesses. The latest round of stimulus measures offset some of the negative from regulators moves Friday to quell speculation in the Chinese stock market.

Toymaker Hasbro, investment bank Morgan Stanley (MS) and oil services company Halliburton all topped first-quarter profit estimates before the opening bell, allowing investors to shift their attention to the better-than-expected earnings season. Heading into Monday’s trading session, 75% of the companies that have reported earnings for the January through March quarter have topped forecasts, above the longer-term average of 63%. And while negotiations between Greece and its European creditors are still ongoing and appear to be at a stalemate, investors opted to overlook that issue for the time being. Still, the risk of a Greek exit from the eurozone remains a risk, as does the possibility of it defaulting on its debt obligations.