Stock futures were little changed on Wednesday night as investors awaited quarterly earnings results from the largest US banks.
Dow Jones Industrial Average futures and S&P 500 futures were up 0.01%. Nasdaq 100 futures up 0.09%.
In regular trading, the Dow is up about 344 points, or 1%. The S&P 500 and Nasdaq Composite were each up 1% and 2% respectively, each on a three-day losing streak as investors shrugged off the latest CPI report, which showed inflation levels not seen since 1981.
The reversal came after a first batch of better-than-expected quarterly earnings from the likes of Delta, Fastenal and BlackRock. Investors were curious to see how well companies have coped with rising inflationary pressures.
Meanwhile, shares of JPMorgan fell more than 3% on Wednesday after the company booked a $902 million charge to build credit reserves for expected credit losses and $524 million in losses related to Russia-related market turmoil .
Despite Wednesday’s rally, all major averages for this week are still in the red. The Dow and Nasdaq are down more than 0.4%, while the broad market S&P is down nearly 0.1%.
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“Given the extreme scale of the geopolitical crisis [and] After the sharpest Fed pivot, the market has shown resilience,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “Yields will be lower, but there’s still a case for investing in stocks — there’s almost nowhere else to go.” We’ll have to see how earnings fare – how much companies are talking about inflation, supply chain issues impacting margin and the outlook for the rest of the year.”
“I believe earnings will once again exceed expectations,” she added. “If that happens, we could see a reversal of these bearish daily trends.”
As of 7 a.m. Thursday, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup are set to report their first-quarter results. Investors will be watching as banks weathered macro headwinds during the quarter, particularly a yield curve flattening.
JPMorgan’s experience doesn’t necessarily bode well for them, but there are still good signs for its Wall Street rivals. The company’s trading desks managed to take advantage of the volatile markets created by the Ukraine conflict: the bank’s fixed-income and equity businesses generated around $1.3 billion more in sales than analysts had expected.
JPMorgan also saw interest income rise on credit growth and rising interest rates, which bodes well for its consumer competitor Wells Fargo. Wells was chosen by analysts this year for its above-average sensitivity to rising interest rates.
“The bar for bank earnings is low, expectations for a roughly 1% decline in Q1 earnings,” said Stephanie Lang, chief investment officer at Homrich Berg. “Breaking that low bar could propel stocks higher, with the bright spot being net interest income as interest rates have risen.”
US Bancorp, PNC Financial and Ally Financial are also expected to report earnings on Thursday.
For economic data, retail sales, import prices and jobless claims are all released at 8:30 am
– CNBC’s Hugh Son contributed to the coverage.