(Reuters) – Futures tracking Wall Street’s main indexes were muted on Wednesday as investors awaited a slew of big bank earnings and a crucial inflation report that could influence market direction, especially for U.S. stocks currently sitting on ripe valuations.
At 04:27 a.m. ET, Dow E-minis were up 35 points, or 0.08%, S&P 500 E-minis were up 3 points, or 0.05% and Nasdaq 100 E-minis were up 23.75 points, or 0.11%.
JPMorgan Chase & Co, Wells Fargo, Citigroup and Goldman Sachs edged up in light premarket trading, ahead of their quarterly earnings reports, due before markets open. Analysts expect the lenders to report stronger earnings, fueled by robust dealmaking and trading.
The S&P 500 Banks Index has gained about 3% in January, outperforming Wall Street’s main indexes, which have logged declines so far this month. In 2024, the banking index logged its biggest annual jump since 2019, on expectations that incoming U.S. President Donald Trump’s policies such as tax cuts and loose regulations could boost the financial sector.
Following a more than two-year bull rally, the S&P 500 is trading at valuations well above its historical long-term average and a disappointing earnings season could put further gains for equities in jeopardy.
Also on the radar is the consumer price index, due at 8:30 a.m. ET, and economists polled by Reuters expect the figure to rise 2.9% in December, from the previous month’s 2.7% advance. Excluding volatile items such as food and energy, the index is expected to increase 3.3%.
“Vital is an understatement to characterise the relevance of today’s CPI release in the U.S., and after Friday’s stellar employment report, the bond market in particular is on tenterhooks for what could be another tumultuous session and days ahead if the data comes in hot,” Societe Generale strategist Kenneth Broux said in a note.
Signs of strong economic activity and expectations that Trump’s policies on immigration and tariffs could further stoke price pressures have caused markets to pare back bets on the U.S. Federal Reserve’s pace of monetary policy easing this year.
Traders see the central bank delivering a total of 31.2 basis points worth of rate cuts this year, according to data compiled by LSEG. The central bank is expected to unveil its beige book on economic activity at 2:00 p.m. ET, which is expected to throw further light on the health of the economy.
Adding to investor unease, yields on longer-dated Treasury bonds remained near their more than one-year highs. [US/]
Remarks from New York Fed President John Williams and Chicago Fed President Austan Goolsbee, both Federal Open Market Committee voting members, will also be parsed later in the day.
Among stocks, Applied Digital lost 4.7% after the data center operator posted a loss for the second quarter.
(Reporting by Johann M Cherian and Medha Singh in Bengaluru; Editing by Pooja Desai)
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