LDN - Business

Futures slip as traders parse U.S. big bank earnings

[April 12, 2024] By Shashwat Chauhan and Shristi Achar A

(Reuters) -U.S. stock index futures traded lower on Friday as investors assessed earnings reports from big U.S. banks to gauge how corporate America has been faring in the current high interest rate environment.

Big U.S. banks kicked off the first-quarter earnings season, with Wells Fargo dropping 2.6% in premarket trading after its quarterly profit fell on decreased earnings from customer interest payments.

JPMorgan Chase & Co fell 3.6%, even as the lender's first-quarter profit rose on higher interest payments.

BlackRock rose 2% after the world's largest asset manager posted a rise in first-quarter profit on higher fee income.

"With the market now expecting higher for longer from the Fed, net interest income should continue to be a pillar of support for bank earnings in the future," Kathleen Brooks, research director at XTB, said in a note.

Custodian bank State Street and Citigroup are also slated to report quarterly numbers later in the day.

For the upcoming quarterly results, earnings are expected to grow 5% year-on-year, according to LSEG data.

The Dow and the S&P 500 eye weekly losses as sentiment was roiled this week following a hotter-than-anticipated inflation reading. That pushed traders to scale back their enthusiasm around the U.S. Federal Reserve cutting interest rates, while the tech-heavy Nasdaq was on track for its first weekly gain in three.

U.S. large-cap stocks suffered their largest weekly outflow since December 2022 in the week to Wednesday, Bank of America said.

The Nasdaq and the S&P 500 closed higher in the previous session as fresh economic data rekindled hopes that inflation remained in a cooling trend.

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Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 4, 2024. REUTERS/Andrew Kelly

Money market participants see about a 50% chance of the Fed bringing in the first interest-rate cut in July, according to the CME FedWatch Tool.

Meanwhile, Boston Fed President Susan Collins is eyeing a couple of interest-rate cuts this year, amid expectations that it could take some time for inflation to return to its targeted level.

Focus now turns to comments from Kansas City Fed President Jeffrey Schmid, Atlanta Fed President Raphael Bostic and their San Francisco counterpart Mary Daly later in the day, for hints on the central bank's rate outlook.

On the data front, a preliminary reading of the University of Michigan's overall index of consumer sentiment for April is due at 10 a.m. ET.

At 6:55 a.m. ET, Dow e-minis were down 129 points, or 0.33%, S&P 500 e-minis were down 26.25 points, or 0.50%, and Nasdaq 100 e-minis were down 116 points, or 0.63%.

Among other stocks, data-center operator Applied Digital slumped 11.7% in premarket trading after reporting a bigger-than-expected quarterly loss.

Advanced Micro Devices and Intel dropped 2.1% each after a report that Chinese officials had told the country's largest telecom carriers to phase out foreign processors by 2027.

(Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Shounak Dasgupta and Pooja Desai)

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