Stock futures edge lower as banks report earnings

U.S. stock futures edged lower ahead of the open Friday amid key earnings reports from financial heavyweights.

Futures tied to the S&P 500 (^GSPC) down 0.9%, while futures on the Dow Jones Industrial Average (^DJI) were lower by 0.7%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) declined by roughly 1.0%.

Bond prices ticked up. The yield on the benchmark 10-year U.S. Treasury note fell to three.46% from 3.5% on Wednesday. The dollar index showed little change.

On the earnings front, JPMorgan (JPM) posted better-than-expected fourth-quarter earnings as CEO Jamie Dimon said the the U.S. economy “stays strong.” JPMorgan said earnings for the three months ending in December were pegged at $11.1 billion, or $3.57 per share, up 7.2% from the identical period last 12 months.

Bank of America (BAC) reported fourth-quarter earnings that showed the bank’s revenue benefited from higher rates of interest. Bank of America reported revenue of $24.5 billion within the quarter, topping estimates of $24.2 billion. That was 11% higher from the year-ago quarter.

Wells Fargo (WFC) also posted quarterly earnings that beat expectations, while revenue got here in below Wall Street forecasts. The financial heavyweight reported fourth-quarter earnings of 67 cents a share on revenue of $19.7 billion, compared with year-earlier earnings of $1.38 a share on revenue of $20.9 billion.

Goldman Sachs (GS) said its consumer lending business has lost greater than $3 billion since 2020. This comes ahead of their fourth quarter earnings that’s scheduled to be released next week.

Stocks finished higher on Thursday after investors digested fresh inflation data that showed prices increased at a slower annual rate in December, a report that was according to expectations from economists. Consumer-price inflation slowed to six.5% in December over the prior 12 months. That was according to expectations, as year-over-year inflation cooled from 7.1% a month earlier.

Core CPI, excluding volatile food and energy components, prices climbed 5.7% year-over-year and 0.3% over the prior month. The core CPI reading got here in line as expected from Bloomberg economist forecasts.

In response to the information, investors grew more confident that the Fed could ease the pace of its tightening at its next monetary policy meeting, which starts Jan. 31.

“With regards to the Fed, the discharge led to growing expectations that they’d downshift the pace of rate hikes again on the February meeting, moving from 50bps last time right down to 25bps,” Jim Reid and colleagues at Deutsche Bank wrote in an early-morning note Friday.

Central bankers have made clear they aren’t done with rate of interest increases. Fed Chair Jerome Powell stressed on Tuesday the importance of stable inflation, which could lead on the central bank to take actions which can be crucial, even when not popular.

Meanwhile, other Fed officials like Philadelphia Fed President Patrick Harker have echoed remarks that might suggest that the central bank could also be open to slowing the pace of rate hikes.

In market-specific moves, shares of Tesla (TSLA) sank nearly 5% in premarket after the company cut prices for his or her Model 3 and Model Y vehicles. Delta Air Lines (DAL) shares dropped 4% in premarket trading after the carrier forecasted current-quarter profit below expectations amid higher operating costs.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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