Dow Futures 40 Pts Lower; Earnings Season Set to Start

© Reuters.

By Peter Nurse   

Investing.com - U.S. stocks are seen edging lower at the open Monday, retreating from last week’s record levels ahead of the start of the first-quarter reporting season.

At 7:10 AM ET (1210 GMT), the Dow Futures contract was down 40 points, or 0.1%, S&P 500 Futures traded 5 points, or 0.1%, lower, and Nasdaq 100 Futures dropped 36 points, or 0.3%.

The S&P 500 and Dow Jones Industrial Average closed at record highs again Friday, helped by buying in tech and banking stocks, with these two indices climbing over 2% last week while the Nasdaq Composite rallied more than 3% over the same period.

Stock markets have been on a tear, helped by expectations of a strong U.S. economic recovery on the back of accommodative monetary policies,  unprecedented stimulus and a successful vaccination program.

The U.S. economy is at an "inflection point" with expectations that growth and hiring will pick up speed in the months ahead, but also risks if a hasty reopening leads to a continued increase in coronavirus cases, Federal Reserve Chair Jerome Powell said, in an interview Sunday.

He added that it’s highly unlikely that the central bank would raise interest rates this year, adding that a coming upswing in inflation readings is likely to be transitory. This followed Friday’s strong rise in producer prices, jumping 1% last month, a two-month high, and ahead of Tuesday’s consumer price index release.

This week marks the start of the first-quarter earnings season on Wall Street, with most analysts expecting strong results given expectations for faster economic growth.

The banking sector will lead the way, with JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) all set to report results this week. These banks are expected to show strong performance from trading and deals activity, boosted by the special purpose acquisition company, or SPAC, frenzy.

Other stocks likely to be in focus later include Microsoft (NASDAQ:MSFT), which has been linked with AI software group Nuance (NASDAQ:NUAN), and diagnostics company Luminex (NASDAQ:LMNX), which agreed to be bought by Italy’s DiaSorin (MI:DIAS) for $1.8 billion.

Also of interest will be the passage of the major infrastructure bill through Congress, with President Joe Biden set to meet with a bipartisan group of lawmakers later Monday to try to generate support for his $2 trillion package.

Oil prices pushed higher Monday after the Iran-backed Houthis in Yemen said they attacked oil facilities in Saudi Arabia with drones. There has been no confirmation from Saudi Arabia, and the extent of the damage, if any, is uncertain. 

Meanwhile, talks between Iran and world powers on resuscitating a 2015 nuclear accord are set to continue this week, which could result in the member of the Organization of Petroleum Exporting Countries cartel being allowed once more to supply crude to the global market.

U.S. crude futures traded 1.1% higher at $59.98 a barrel, while the Brent contract rose 1.2% to $63.70. 

Elsewhere, gold futures fell 0.2% to $1,742.20/oz, while EUR/USD traded 0.1% higher at 1.1911.