Big tech earnings will be a focus of morning trading as Netflix Inc. beat expectations for subscriber growth after the closing bell on Monday.
While the company came up short of third-quarter profit estimates, it said it added 4.45 million international customers and 850,000 in the United States over the same period, which were both well ahead of estimates.
Coming off of a day in which Netflix shares already rang in a new all-time closing high, the numbers were enough to lift the company's shares in postmarket trading as well.
Other active stocks are likely to include Johnson & Johnson, UnitedHealth Group Inc., Goldman Sachs Group Inc., and Morgan Stanley, which are all slated to report earnings before the opening bell on Tuesday.
The final earnings season of the calendar year arrives at an uneasy time for U.S. equities, with valuations relatively high and earnings growth slowing down.
Profit forecasts for the quarter have declined steadily over the course of the year, partially as a result of damage caused by the summer's hurricanes.
Expected earnings growth for S&P 500 index companies has declined to 4.1 per cent from 10.2 per cent at the start of the year, according to Thomson Reuters.
That hasn't stopped the stock market from continuing to rise, though, as the S&P 500 index rang in a new record high on Monday. Year to date, the index has gained 14 per cent.
Meanwhile, it's still early days in Canadian earnings season, with only a few members of the S&P/TSX composite index having reported. On Tuesday after the close of trading, Canadian Pacific Railway Ltd. is scheduled to release its financial results.
Over all, companies in the S&P/TSX composite index are forecast to post third-quarter earnings growth of 10.7 per cent, with energy, financials, and utilities sectors shaping up for double-digit growth from the prior year.
A key sector to watch in Canada Tuesday will be the marijuana industry. Late Monday, the Canadian Securities Administrators set out "specific disclosure expectations" for marijuana industry firms with investments in the U.S., offering much-anticipated clarity for companies that operate on both sides of the border.
The umbrella organization for Canada's provincial and territorial securities regulators said that cannabis companies must tell investors about certain risks when they invest south of the border — where growing and selling marijuana remains illegal under federal laws.
The cannabis industry has been operating under an unwritten rule that companies which trade on the Toronto Stock Exchange or the TSX Venture Exchange must not invest in the U.S. cannabis sector.
Also Tuesday, look for major volume in shares of Bombardier Inc.. News emerged late Monday that Bombardier has struck an agreement to sell a majority stake in its marquee C Series airliner program to Europe's Airbus.