Stock futures are down ahead of Friday’s big bank earnings

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Traders on the floor of the NYSE, October 12, 2022.

Source: NYSE

Stock futures fell early on Friday as investors turned to big bank earnings after major averages staged a historic rally.

Futures contracts linked to the Dow Jones Industrial Average fell 110 points, or 0.37%. S&P 500 futures fell 0.4% and Nasdaq 100 futures fell 0.7%.

JPMorgan Chase, Wells Fargo, Morgan Stanley and Citigroup are all scheduled to show up before the bell. US Bancorp and PNC Financial are also on the program, as well as UnitedHealth.

The reports will come a day after the market staged a massive comeback. The Dow Jones ended Thursday’s session up 827 points after losing more than 500 points to start the day. The S&P 500 rose 2.6% to snap a six-day losing streak and the Nasdaq Composite jumped 2.2%.

The moves followed the release of the Consumer Price Index, a key US inflation reading that came in hotter than expected for September. Initially, that weighed on markets as investors braced for the Federal Reserve to continue with its aggressive rate hike plan. Later, however, they ignored these concerns.

“The best excuse for today’s rally is ‘sell the news’ coupled with very negative sentiment/positioning,” said Ross Mayfield, investment strategy analyst at Baird. “The market had already fallen for six straight days, taking the risk off the report a bit, and the September CPI is unlikely to change the Fed’s (already quite hawkish) short-term path.”

Still, persistent inflation remains a problem for the Fed and for investors to worry about central bank policy tightening.

“The turnaround is a welcome respite for investors, but the market still needs more clarity on the extent of the tightening still to come,” said Brian Levitt, global market strategist at Invesco. “The focus remains on the pace of inflation and the underlying strength of the job market. A market rally will likely begin when the market believes a pause in Fed tightening is in sight.”

There is even more economic data this week as well. September retail sales will be released at 8:30 a.m. ET. Later in the morning, investors eagerly await the latest consumer sentiment numbers from the University of Michigan.

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