Futures remain subdued as the focus shifts to big U.S. banks’ results

(Reuters) – U.S. stock futures fell on Friday ahead of the results from major U.S. banks, which will kick off the quarterly earnings seasons and give more insight into the strength of corporate America.

JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Wells Fargo & Co are forecast to report lower fourth-quarter profits before the opening bell, as they stockpile funds to prepare for an economic slowdown.

Due to the Federal Reserve’s aggressive tightening campaign against inflation, consumers and businesses have been forced to cut back on their spending. This has had a negative impact on banks’ profits as credit demand slows down.

Michael Hewson (CMC Markets UK’s chief market analyst) stated that “Bank earnings will be a major test.”

“It will also be interesting to see if banks have made any additional provisions for nonperforming loans. It will also be interesting to see how they perceive the demand for loans.

Wall Street’s main indexes gained Thursday after consumer prices dropped for the first-time in over 2 1/2 years in December. This encouraged hopes of a sustained downtrend in inflation.

The tech-heavy Nasdaq and the benchmark S&P 500 are on track for their best weekly performance since November 2022.

Participants in the money market see a 90.6% likelihood that the Fed will raise the benchmark rate by 25 base points in February. However, they see the final rate at 4.9% by June following the December CPI print.

Investors will closely follow the University of Michigan’s January consumer sentiment survey, and the comments of Neel Kashkari, Minneapolis Fed President, to evaluate the strength of the U.S. Economy.

BlackRock Inc, UnitedHealth Group Inc, and Delta Air Lines Inc will also report fourth quarter earnings on Friday.

At 5:37 a.m. ET, Dow e-minis were up 10 points, or 0.03%, S&P 500 e-minis were down 0.5 points, or 0.01%, and Nasdaq 100 e-minis were down 16.5 points, or 0.14%.

Tesla Inc fell by 4% in premarket trades after it lowered prices on electric vehicles in Europe and the U.S. by as much as 20 percent after missing estimates for 2022 deliveries.

(Reporting by Shubham Btra and Ankika Biswas at Bengaluru; Editing By Shounak Dasgupta