Stock futures are lower ahead of Friday’s big bank earnings

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After the major averages staged a historic turnaround rally on Friday, investors turned their attention to significant bank earnings, which caused stock futures to fluctuate.

Dow Jones Industrial Average futures gained 0.14 percent or 46 points. NASDAQ 100 futures lost 0.08 percent and S&P 500 futures gained 0.06 percent.

After revenue exceeded expectations, Wells Fargo and JPMorgan Chase benefited. Shares fell more than 2% in premarket trading after Morgan Stanley reported a loss. Additionally, Citigroup reported lower-than-expected third-quarter profits.

Stock futures are lower ahead of Friday's big bank earnings
Stock futures are lower ahead of Friday’s big bank earnings

United Health, a member of the Dow, also released results on Friday that exceeded expectations set by Wall Street, propelling shares higher.

The earnings season is not looking good. According to the most recent estimates from analysts that have been gathered by FactSet, profit growth for S&P 500 companies in the third quarter was a pitiful 2.4 percent, which is the lowest growth since the third quarter of 2020, when the pandemic was at its height.

Earnings growth was anticipated to be 10% during the third quarter, but rising costs and interest rates have eaten away at businesses’ bottom lines. According to FactSet data, 65 S&P companies have issued negative guidance before the start of this reporting season, while only 41 have provided positive outlooks.

The news comes just one day after the market made a huge comeback. After being down over 500 points at the intraday low, the Dow Jones Industrial Average ended the session on Thursday up 827 points. Breaking a six-day losing streak, the Nasdaq Composite and the S&P 500 gained 2.6% and 2.2%, respectively.

The changes came after the consumer price index, a crucial measure of inflation in the United States, arrived higher than expected for September. As investors prepared for the Federal Reserve to continue its aggressive rate-hiking plan, this initially weighed on the markets. However, they later ignored those concerns.

Still, the Fed faces a problem with persistent inflation as well as investor concerns regarding the Fed’s policy tightening.

In a note published on Friday, UBS global wealth management chief investment officer Mark Haefele stated, “With core CPI still moving in the wrong direction and the labor market strong, the conditions are not in place for a Fed policy pivot, which would be one of the conditions for a sustained rally in the equity market.”In addition, as inflation remains elevated for a longer time and the Fed increases interest rates, the likelihood that the US economy will enter a recession due to the cumulative effect of policy tightening undermines the outlook for corporate earnings increases.”

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Additionally, there are additional economic data this week. Retail sales for September will be released at 8:30 a.m. ET. Investors are anticipating the most recent University of Michigan consumer sentiment data later in the day.