Stock futures little changed ahead of major bank earnings Thursday

Business

Stock futures were little changed Wednesday evening as investors awaited quarterly earnings results from the biggest U.S. banks.

Futures tied to the Dow Jones Industrial Average inched lower by 0.04%. S&P 500 futures and Nasdaq 100 futures slipped 0.08% and 0.04%, respectively.

In regular trading the Dow advanced about 344 points, or 1%. The S&P 500 and Nasdaq Composite advanced 1% and 2%, respectively, each snapping 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 an initial batch of quarterly results from companies including Delta, Fastenal and and BlackRock which came in better than expected. Investors have been eager to see how well companies have managed mounting inflationary pressures.

Meanwhile, JPMorgan shares lost more than 3% Wednesday after the company posted a $902 million charge for building credit reserves for anticipated loan losses, and $524 million in losses tied to Russia-linked market upheaval.

Still, despite Wednesday’s rally, all of the major averages are still in the red for the week. The Dow and Nasdaq are down more than 0.4%, while the broad-market S&P is down nearly 0.1%.

“Given the extreme level of geopolitical crisis [and] sharpest Fed pivot, the market has been resilient,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “Returns are going to be lower but there is still an argument to be made for investing in equities – there is almost nowhere else to go. We will have to see how earnings go – how much companies talk about inflation, supply chain issues impacting margin, and rest of year outlook.”

“I believe that earnings are going to beat expectations yet again,” she added. “If this happens, we could see a reversal of these bearish daily trends.”

Starting 7 a.m. Thursday, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup will post their first-quarter earnings. Investors will be looking monitoring how banks weathered macro headwinds during the quarter, particularly a flattening yield curve.

JPMorgan’s experience may not 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 volatile markets created by the Ukraine conflict: the bank’s fixed income and equities operations posted about $1.3 billion more in revenue than analysts had expected.

JPMorgan also posted a boost in interest income from loan growth and rising rates, which is a good sign for consumer banking rival Wells Fargo. Wells has been an analyst pick this year for its greater-than-average sensitivity to rising rates.

“The bar is low for bank earnings with expectations for Q1 earnings declining about 1%,” said Stephanie Lang, chief investment officer at Homrich Berg. ”Beating this low bar could move shares higher with the bright spot being net interest income as interest rates have moved higher.”

U.S. Bancorp, PNC Financial and Ally Financial are also scheduled to report earnings Thursday.

In economic data, retail sales, import prices and jobless claims are all set to come out at 8:30 a.m.

CNBC’s Hugh Son contributed reporting.

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