U.S. stocks were set to open higher on Monday after influential bank analyst Meredith Whitney upgraded Goldman Sachs Group shares and gave bullish comments on financial stocks, sparking hopes corporate quarterly results may be surprisingly strong.
The comments offset investor caution over the current earnings season and news that CIT Group Inc
Goldman Sachs jumped nearly 4 percent to $147.15 in premarket trading after Whitney upgraded the stock to buy from neutral. On comments to CNBC television, Whitney, known for a bearish stance on financial stocks, said Bank of America Corp
The Goldman upgrade could boost sentiment, according to Peter Boockvar, equity strategist at Miller Tabak & Co in New York. But he added that the bank's earnings results, to be released the following day, will be a lot more relevant than Whitney's comments.
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We've had a big run on optimism that the economy has turned the corner, and we'll get to hear directly from companies whether that is the case or not, with guidance for the end of the year, said Boockvar.
The market becomes a minefield once earnings season starts, he added.
S&P 500 futures rose 5.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 45 points and Nasdaq 100 futures added 8.0 points.
In news that underscored fallout from the recession, CIT, the commercial U.S. lender struggling to finance its business, said late on Sunday it remained in discussions with regulators on measures to improve its near-term liquidity position.
Separately, the Wall Street Journal reported over the weekend that CIT hired a top law firm to explore a possible bankruptcy filing.
CIT shares fell 16 percent to $1.25 before the bell.
The S&P 500 index has lost more than 7 percent from its recovery peak in early June. That puts it on the cusp of a correction, defined as a drop of at least 10 percent from a recent high.
(Additional reporting by Ellis Mnyandu; Editing by Padraic Cassidy)