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The
benchmark S&P 500 registered a second consecutive monthly gain
on Friday, with upbeat reports from Alphabet Inc, Microsoft Corp
and Meta Platforms Inc boosting hopes of a strong earnings
season even as worries of a U.S. economic slowdown lingered.
Analysts now expect first-quarter earnings for S&P 500 companies
to fall 1.9% from a year earlier, compared with a 5.1% fall
expected at the start of April, according to Refinitiv data.
However, double-digit gains in shares of Apple Inc, Microsoft
and Alphabet this year have sparked a debate if the U.S.
market's biggest tech and growth names are getting too
expensive.
Meanwhile, recent economic data have reinforced bets of another
25-basis point interest rate hike following the U.S. Federal
Reserve's two-day policy meeting on Wednesday, with investors
pricing in 90% chances of such a move, according to CME Group's
FedWatch tool.
Focus will also be on the statement and Chair Jerome Powell's
press conference to see if the Fed pushes back against market
pricing of rate cuts before the year-end amid the recent banking
turmoil and threats of an imminent recession.
Meanwhile, First Republic Bank's shares tanked 38.5% in
premarket trading. JPMorgan Chase & Co will buy most of the
bank's assets in a last-ditch rescue led by U.S. regulators.
JPMorgan's shares rose 2.4%.
The rescue comes after the collapse of Silicon Valley Bank and
Signature Bank in March, amid a deposit flight, forced the U.S.
central bank to step in with emergency measures to stabilize
markets.
The KBW Regional Banking index and the S&P 500 Banks index have
lost 22% and 10%, respectively, so far this year.
On Monday, manufacturing data from the Institute for Supply
Management and S&P Global for April, and the Commerce
Department's construction spending for March will be parsed for
more clues on the Fed's interest rate trajectory.
On the earnings front, Norwegian Cruise Line Holdings, ON
Semiconductor Corp, MGM Resorts International and Franklin
Resources Inc are some of the major companies reporting
quarterly results before the opening bell.
At 5:45 a.m. ET, Dow e-minis were up 13 points, or 0.04%, S&P
500 e-minis remained unchanged, and Nasdaq 100 e-minis were down
1 point, or 0.01%.
(Reporting by Ankika Biswas in Bengaluru; Editing by Shounak
Dasgupta)
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