Wall Street set to open flat in run-up to big earnings

By Tanya Agrawal

REUTERS - U.S. stocks looked set to open little changed on Monday as investors treaded water ahead of a busy earnings week from big U.S. companies.

Bank of America, Morgan Stanley, Goldman Sachs, Microsoft, IBM and Johnson and Johnson are scheduled to report results this week.

Netflix, which will report results after the market close on Monday, rose 1 percent in premarket trading.

Analysts estimate second-quarter earnings for the S&P 500 companies rose 8.1 percent from a year earlier. First-quarter earnings posted their best performance since 2011, according to Thomson Reuters data.

Earnings will be closely watched to see if high valuations are justified in the face of tepid inflation and a recent patch of mixed economic data.

The S&P 500 has been trading at about 18 times earnings estimates for the next 12 months, compared with the long-term average of 15 times.

"The U.S. market isn't cheap right now," said Phil Guarco, global investment specialist at J.P. Morgan Private Bank.

"Earnings are going to take an important role. We're in a situation where the corporate profits and the profits they are going to deliver in the future will be of keen interest."

Dow e-minis were up 14 points, or 0.06 percent, with 14,981 contracts changing hands at 8:30 a.m. ET (1230 GMT).

S&P 500 e-minis were up 1.25 points, or 0.05 percent, with 107,776 contracts traded.

Nasdaq 100 e-minis were up 7.25 points, or 0.12 percent, on volume of 20,886 contracts.

The Dow and the S&P hit record highs on Friday after weak economic data dulled prospects of more interest rate hikes this year.

Last week, investor sentiment got a boost after Federal Reserve Chair Janet Yellen said future rate hikes could be gradual in the face of persistently low inflation. The Fed will meet next on July 25-26.

"Apart from earnings, the biggest driver has been the rate hike trajectory. The central banks need to be more transparent and continue to project that the unwinding of quantitative easing will be done in an extremely gentle way," said Guarco.

World shares continued to hover near record highs after data showed China's economy grew at a faster-than-forecast 6.9 percent year-on-year in the second quarter.

Shares of BlackRock fell 2.6 percent after the world's biggest asset manager's quarterly profit came in below expectations.

Procter & Gamble edged up 0.7 percent after activist investor Nelson Peltz's Trian Fund Management said it is seeking a board seat at the company.

(Reporting by Tanya Agrawal; Editing by Arun Koyyur)