(Reuters) – Wall Street was set for a subdued open on Friday as investors digested mixed results from big banks, while slightly hotter-than-expected producer price numbers reined in bets that the Federal Reserve would begin easing interest rates in September.
JPMorgan Chase (NYSE:JPM)’s second-quarter profit increased on a boost from rising investment banking fees and an $8 billion accounting gain from a share exchange deal with Visa (NYSE:V). However, shares of the world’s largest bank edged 0.2% lower in choppy premarket trading.
Wells Fargo slid 5.5% as the lender missed estimates for quarterly interest income, while Citigroup rose 2.8% after posting a surge in investment banking revenue and gains in its services division.
The results come against a backdrop of expectations that some of the largest U.S. banks would report weaker second-quarter profits due to lower interest payments and higher provisions for deteriorating loans.
As the S&P 500 and the Nasdaq scale new peaks, investors are hoping for strong profit growth from companies beyond heavyweight tech names such as Nvidia (NASDAQ:NVDA), so that the U.S. stocks rally can broaden out.
“Big bank earnings, big tech earnings and consumer company earnings will be the most important to watch, as these companies are highly levered to the strength of the economy,” said Clark Bellin, president and chief investment officer, Bellwether Wealth.
Analysts, on average, expect earnings for S&P 500 firms to grow by 10.1% during the quarter from a year ago, compared to a decline of 2.8% last quarter, according to LSEG IBES data. Financial firms are likely to post a profit growth of 6.7%.
After data showed a surprise fall in U.S. consumer prices on Thursday, solidifying bets on a September rate cut, the latest report showed producer prices rose 0.2% on a monthly basis in June, compared to an expectation of a 0.1% rise. Annually, it rose 2.6%, versus an estimated 2.3% rise.
“Friday’s stronger-than-expected PPI is an important reminder that inflation is still here and that the inflation data can be volatile,” Bellin said.
Traders still see a 93% chance of a rate cut in September, up from 72% a week ago, according to CME Group’s (NASDAQ:CME) FedWatch tool.
Focus now turns to the University of Michigan’s consumer survey report, due after markets open.
At 8:47 a.m. ET, Dow e-minis were up 22 points, or 0.05%, S&P 500 e-minis were up 1.25 points, or 0.02%, and Nasdaq 100 e-minis were down 1.5 points, or 0.01%.
The S&P 500 and Nasdaq logged their worst sessions in more than two months on Thursday, on a rotation out of high-flying large-cap stocks in favor of small-cap shares, which have underperformed this year. The rotation has also set the blue-chip Dow on track for its best week in four.
Tesla (NASDAQ:TSLA) dropped 1.7% after UBS downgraded the EV maker’s stock to “sell” from “neutral”.
BNY climbed 2.5% after the U.S. bank posted a 10% rise in second-quarter net profit.
AT&T (NYSE:T) dropped 1.5% after the telecom firm said data from about 109 million customer accounts containing records of calls and texts from 2022 had been downloaded illegally in April.
Source: Economy - investing.com
