Earnings and economic data lift S&P 500 higher

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Earnings and economic data lift S&P 500 higher

Stock futures opened slightly higher to extend gains after a rally on Wall Street, with stronger-than-expected earnings and economic data helping lift the S&P 500 by the most in seven months.

Shares of big banks stocks including Bank of America BAC Citi C and Morgan Stanley MS steadied during the after-hours session. Each of these stocks jumped earlier after these banks posted much stronger than expected third-quarter earnings results. Peer banking titan Goldman Sachs also GS is planning to release earnings results before the opening bell Friday morning.

This week's early batch of strong-than-expected quarterly results has helped to calm investors’ concerns about a sharp deceleration in the corporate profits, especially as expenses mount for companies across industries in the face of higher input and labor costs. Investors have at least temporarily looked through ongoing reports of shipping challenges and increased prices, with new inflation data this week showing price increases at both consumer and producer level held at historically high levels at the start of the fall. Still, upbeat economic data counterbalanced these reports with Thursday's weekly jobless claims report showing new unemployment filings were lower than expected to a pandemic-era low last week.

We've had a lot of volatility over the past few months and I think markets are looking for any little glimpse or glimmer of good news, Jack Manley, JPMorgan Asset Management global market strategist, told Yahoo Finance Live. The earnings season has been good so far, and if history is anything, it's only going to get better from here. Other strategists agreed that stocks may be set up to continue marching higher with the lowered earnings season, given the lowered expectations many investors had heading into the reporting season.

We've had a number of Wall Street strategists call for a correction. If you look at things like the surprise indices, they're all looking below forecasts for the third and fourth quarter have leveled off, Jack Janasiewicz, of Natixis Investment Managers, reported Yahoo Finance Live. To me, it feels like the market is bearish. When we start to think about the value of buyer power that would come back when everybody starts to flip positive — earnings might be that catalyst, and we could definitely see that upside.