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Dow futures slip lower ahead of the release of big bank earnings

Published 10/12/2023, 07:30 PM
Updated 10/13/2023, 06:40 AM
© Reuters. -- U.S. stock futures retreated Friday, set to end the week on a negative note as investors digested stronger-than-anticipated U.S. consumer price data ahead of the earnings for a number of major banks. 

By 06:30 ET (10:30 GMT), the Dow Futures contract was down 50 points, or 0.1%, S&P 500 Futures traded 13 points, or 0.3%, lower and Nasdaq 100 Futures dropped 85 points, or 0.6%.

The main indices on Wall Street closed in the red Thursday, with the 30-stock Dow Jones Industrial Average ending 174 points, or 0.5%, lower, while the benchmark S&P 500 and the tech-heavy Nasdaq Composite both closed down 0.6%.

That said, these averages are all on course for weekly gains - the Dow is up nearly 0.7% this week to date, the S&P 500 is up 0.9% and the Nasdaq Composite is set to gain 1%.

U.S. CPI raises rate hike expectations

Thursday’s losses came after data showed the U.S. CPI rose 0.4% in September, slightly more than the 0.3% expected, up 3.7% from 12 months earlier.

U.S. Treasury yields pushed higher as signs that inflation remains sticky raised expectations that the Federal Reserve will increase interest rates once more before the end of the year.

Markets are now pricing in about a 40% probability of a rate hike in December, versus a 28% chance before the report.

The economic data slate is quieter Friday, with the University of Michigan's consumer sentiment reading for October the main release. This is expected to fall to 67.4, down from 68.1 the prior month.

Big banks set to start earnings season

However, with the inflation release behind us, attention is set to turn Friday to the unofficial start of the quarterly earnings season, with results from key Wall Street lenders.

JPMorgan Chase (NYSE:JPM), the country's biggest bank, as well as peers Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C), are all set to report.

A recent surge in interest rates will likely be in focus. Analysts have flagged concerns that the tighter financial conditions may have dented lending margins and contributed to a slowdown in loan demand, placing pressure on balance sheets.

Microsoft cleared to buy Activision Blizzard

Away from the banking sector, Britain's antitrust agency, the Competition and Markets Authority, on Friday gave the green light to Microsoft's $69 billion purchase of "Call of Duty" maker Activision Blizzard (NASDAQ:ATVI), clearing the way for an imminent closure of the gaming industry's largest-ever deal following almost two years of legal reviews.

Microsoft (NASDAQ:MSFT) is now on track to close the deal by Oct. 18. It had previously extended the deadline to finalize the acquisition by three months in a bid to restructure the agreement to assuage the CMA's concerns.

Crude rises after U.S. imposes price cap sanctions

Oil prices rose sharply Friday after the U.S. imposed on Thursday the first sanctions on owners of tankers carrying Russian oil priced above the G7's price cap of $60 a barrel.

Russia is the world's second-largest oil producer and a major exporter, and this move could tighten global supply.

This news overshadowed U.S. crude oil stockpiles jumping more than 10 million barrels last week, their most in eight months, while output from the world’s largest producer of the commodity hit a new record high of 13.2 million barrels per day, according to Thursday’s official data.

By 06:30 ET, the Crude Oil WTI Futures futures traded 3.6% higher at $85.91 a barrel, while the Brent contract climbed 3.4% to $88.95 a barrel. 

Brent is set for a weekly gain of over 5%, while WTI is set to climb 4% after both contracts surged on Monday in the wake of Hamas' attack on Israel.

Additionally, gold futures rose 1% to $1,901.65/oz, while EUR/USD traded 0.1% lower at 1.0520.

(Oliver Gray contributed to this item.)


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