S&P futures stabilize ahead of Wall Street earnings

S&P 500 futures stabilized Friday after a tech-led selloff on Wall Street, with traders now awaiting the next batch of price data as well as earnings reports from some of the biggest banks.

As Wall Street giants prepare to start the earnings cycle, investors have been switching to cheaper cyclical stocks including banks and out of tech megacaps. Contracts on Nasdaq 100 slipped following a 2.2% plunge on Thursday as inflation data supported the case for Federal Reserve interest rate cuts.

“Expectations are for the rest of the market to close the gap with megacap tech. That means that earnings are broadening out,” Supriya Menon, EMEA head of multi-asset strategy at Wellington Management, said in an interview with Bloomberg TV. “When we look ahead, we see big-cap tech moderating in terms of the earnings they can deliver in the coming quarters.”

JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. are set to report results later, followed by Goldman Sachs Group Inc. on Monday. Morgan Stanley and Bank of America Corp. report Tuesday. 

Treasury yields were steady after the prospect of lower US interest rates had sent 10-year yields seven basis points lower to 4.21% in the prior session. A gauge of the dollar held near a five-week low after falling Thursday by the largest margin since May.

Despite the latest setback, global stocks are set for their sixth weekly advance, the longest stretch since March, as Fed easing bets aid overall risk sentiment. 

The US inflation data prompted traders to fully price in a rate cut in September and at least two by year-end. Fed Bank of Chicago President Austan Goolsbee described the CPI data as “excellent,” saying the report provided the evidence he’s been waiting for to be confident the central bank is on a path to its 2% goal. Producer price data later Friday will add to the picture, while investors will also eye 

The Stoxx Europe 600 index rose for a third day, with only one industry sector — technology — in the red as chip makers including ASML Holding NV and ASM International NA followed US peers lower. Telecom stocks led the advance, with Swedish network-equipment maker Ericsson AB surging more than 6% after reporting results that beat analysts’ expectations.

Oil climbed for a third day on signs of stronger demand, and signals the Fed is getting close to its much-anticipated pivot. Gold fell after a sharp rally on Thursday. 

Key events this week:

• University of Michigan consumer sentiment, US PPI, Friday
• Citigroup, JPMorgan and Wells Fargo’s earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 4:01 a.m. New York time
• Nasdaq 100 futures fell 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 rose 0.2%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0876
• The British pound rose 0.1% to $1.2929
• The Japanese yen fell 0.3% to 159.26 per dollar

Cryptocurrencies

• Bitcoin fell 0.8% to $57,086.59
• Ether fell 1.4% to $3,072.05

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.22%
• Germany’s 10-year yield advanced four basis points to 2.51%
• Britain’s 10-year yield advanced five basis points to 4.12%

Commodities

• West Texas Intermediate crude rose 1% to $83.43 a barrel
• Spot gold fell 0.5% to $2,404.46 an ounce

This story was produced with the assistance of Bloomberg Automation.