By Peter Nurse
Investing.com -- U.S. stocks are seen opening lower Tuesday at the start of a potentially influential quarterly earnings season and with important inflation data looming large.
At 7 AM ET (1100 GMT), the Dow Futures contract was down 280 points or 0.9%, S&P 500 Futures traded 30 points or 0.8% lower, and Nasdaq 100 Futures dropped 70 points or 0.6%.
The new earnings season starts in earnest later this week with the big banks due to report their second quarter results. However, drinks giant PepsiCo (NASDAQ:PEP) started the ball rolling Tuesday, with the soft drinks giant raising its full-year revenue forecast, helped by sustained demand for its produce even in the face of rising prices.
Companies have been lowering their expectations for the quarter, but investors are still nervous about whether they will be able to meet expectations and, more importantly, what they will say about the near-term outlook amid rising interest rates and challenging conditions, given high fuel and other input costs.
Aggregate annual S&P earnings are expected to grow 5.7% over the April to June period, according to data from Refinitiv as of Friday, down from the 6.8% forecast at the beginning of the quarter.
The economic data calendar is light Tuesday, with the Fed’s Redbook, the main ingredient, but a lot of focus will be on Wednesday’s release of June inflation data.
The U.S. consumer price index is expected to show annual growth of 8.8%, an increase from May’s 8.6% figure, driven mainly by higher gas prices and the cost of energy. Such an increase is likely to point to another substantial hike by the Federal Reserve later this month, following on from June’s increase of 75 basis points, the largest rise since 1994.
Elsewhere, Twitter (NYSE:TWTR) will remain in focus as investors look to see what the social media platform’s board will do next in the battle with Elon Musk, the billionaire who now wants to walk away from his $44 billion take-private offer.
Gap (NYSE:GPS) will also be in focus after the clothes retailer said Chief Executive Sonia Syngal will step down just over two years into the role, as the company wrestles with weak demand for its casual attire.
Oil prices fell Tuesday as fresh COVID restrictions in China, the world’s biggest importer of crude, weighed heavily on demand expectations.
Several Chinese cities are adopting fresh curbs to attempt to stop the spreading of the highly infectious BA.5 Omicron subvariant of the COVID-19 virus, with close to 30 million people now under some form of movement restrictions.
Later in the session, both OPEC and the EIA are due to release their monthly reports on the state of the crude market, while the American Petroleum Institute offers up its estimate of weekly U.S. crude supply.
By 7 AM ET, U.S. crude futures traded 4% lower at $99.83 a barrel, while the Brent contract fell 3.9% to $102.98.
Additionally, gold futures fell 0.1% to $1,731.35/oz, while EUR/USD traded 0.3% lower at 1.0013.