Wall Street set to open flat as big bank results fail to cheer

[October 17, 2017]   By Sruthi Shankar

(Reuters) - Wall Street was set for a flat open on Tuesday as upbeat earnings from big investment banks Goldman Sachs and Morgan Stanley failed to fuel the optimism that has led the major indexes to record highs.

Shares of both the banks were up about 1 percent in premarket trading after their third-quarter profit beat estimates despite continuing weakness in trading revenue.

"The market seems like it's in a holding pattern as investors look for additional evidence to drive it higher," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

"As we get into the meat of earnings season, investors are looking to confirm the valuations of equities."

The three major U.S. stock indexes rose to record closing highs on Monday, with the Dow Jones Industrial Average coming within 50 points of the 23,000 mark.

However, the CBOE Volatility index <.VIX>, Wall Street's measure of market nervousness, stayed near its recent record lows at below 10 percent.

At 8:30 a.m. ET, Dow e-minis <1YMc1> were up 14 points, or 0.06 percent, with 14,676 contracts changing hands.

S&P 500 e-minis <ESc1> were down 0.75 points, or 0.03 percent, with 72,410 contracts traded.

Nasdaq 100 e-minis <NQc1> were down 4.75 points, or 0.08 percent, on volume of 16,521 contracts.

The dollar and U.S. treasury yields took comfort from news that U.S. President Donald Trump might pick Stanford University economist John Taylor to lead the Federal Reserve, after Janet Yellen's term ends next year.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 4, 2017. REUTERS/Brendan McDermid

The former Fed board member is seen as more hawkish than Yellen and other names being considered to take over the central bank.

Trump will meet Yellen on Thursday as part of his search for a new candidate for her position, a source familiar with the planned meeting said.

Among other big names that reported earnings, Johnson & Johnson <JNJ.N> gained 1 percent after posting a better-than-expected profit.

UnitedHealth <UNH.N> rose 1.45 percent after the largest U.S. health insurer's profit beat estimates and the company raised its full-year earnings forecast.

The reporting season is set to pick up pace with some big names Honeywell <HON.N>, Procter & Gamble <PG.N>, United Continental <UAL.N> and Alcoa <AA.N> expected later this week.

Netflix <NFLX.O> was set to open at record level after the online video streaming service added more subscribers than expected in the third quarter and projected growth in line with Wall Street forecasts.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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