Five things you need to know before the market opens on Friday January 13:
1. -- Stock Futures Drift Higher, Yields Slide, With Earnings On Deck
U.S. equity futures edged edged higher Friday, while Treasury bond yields extended their weekly decline and the dollar tested fresh six-month lows, as markets looked to re-set rate hike expectations ahead of the unofficial start to the fourth quarter earnings season.
A largely in-line reading for U.S. inflation, which slowed to the lowest levels in more than year last month, alongside last week's better-than-expected jobs report and a host of data indicating softening price pressures, has triggered big changes in rate bets and sparked notable rally in Treasuries.
Benchmark 10-year note yields, which move in the opposite direction of prices, were trading at a four-week low of 3.43% in overnight dealing and are down nearly 20 basis points for the week. Over the same timeframe, 2-year have retraced by around 17 basis points to 4.112% as bets on big near-term rate hikes continue to fade.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, was marked 0.03% lower at $102.218, the lowest in more than six months.
The CME Group's FedWatch now indicates a 93.3% chance of a 25 basis point rate hike from the Fed on February 1, up from around 75.7% this time last week, with traders expecting the Fed Funds rate to peak at a range of between 4.75% and 5% in the early spring.
That's given stocks solid momentum heading into the earnings season, which kicks-off with a series of investment banking earnings, along with Dow component UnitedHealth Group, prior to the start of trading.
Analysts expect S&P 500 earnings to fall 2.2% from last year to a share-weighted $447.1 billion, the first quarterly decline in more than two years. Stripping out the energy sector, however, and the decline expands to around 6.7%.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 3 point opening bell decline while those linked to the Dow Jones Industrial Average are set for a 27 point bump. The tech-focused Nasdaq, which is on its best four-day run since November, is looking at a 6 point pullback.
In overseas markets, the the region-wide MSCI ex-Japan index rose 1.27% to a fresh seven-month high into the close of trading, while Tokyo's Nikkei 225 slumped 1.25% as the yen surged to a seven-month high against the U.S. dollar amid reports of tighter monetary policy next week from the Bank of Japan.
Europe's Stoxx 600 was marked 0.46% higher in early Frankfurt dealing, while London's FTSE 100 was up 0.51%.
2. -- JPMorgan Leads Bank Earnings Parade With Growth Outlook In Focus
JPMorgan Chase (JPM) will lead a quartet of the biggest banks on Wall Street reporting fourth quarter earnings Friday, with investors likely focused on near-term growth projections.
JPMorgan, Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC), are slated to report December quarter earnings prior to the start of trading, with analysts expecting a collective decline in headline earnings of between 17% and 20% from last year's levels, linked in part to a slump in global dealmaking.
Merger activity fell around 40% last year from record 2021 levels, according to Refinitiv data, with a 56% contraction over the fourth quarter.
The biggest Wall Street banks are also likely to set-aside as much as $5.7 billion to absorb potential losses in their loan and credit books, a more than 50% increase from the same period last year, suggesting the expect weaker economic growth and rising customer defaults.
JPMorgan shares were marked 0.26% higher in pre-market trading to indicate an opening bell price of $139.85 each. Citigroup was little-change at $49.09 each, while Wells Fargo rose 1.1% to $43.30 each. Bank of America was marked 0.67% higher at $34.70 each.
3. -- Tesla Shares Slump After Another Round Of U.S. Price Cuts
Tesla (TSLA) shares slumped lower in pre-market trading after the carmaker unveiled yet another round of deep price cuts in its key global markets
Tesla will slash the price of its Model 3 and Model X sedans, along with the Model Y crossover, by between 6% and 20% for U.S. customers, a move that parallels the impact of a $7,500 federal tax credit for electric vehicle purchases put in place earlier this year as part of President Joe Biden's Inflation Reduction Act. Price cuts were also revealed in Europe.
Last week, Tesla reduced the starting price of its Model 3 sedan by around 13.5% in China, according to data from its website, and lowered the price of its Model Y by around 10%. Price cuts were also seen in markets in South Korea and Japan as well as Australia.
Tesla will publish its fourth quarter earnings on January 25, with forecasts pointing to an adjusted bottom line of $1.20 per share on revenues of $25.1 billion.
Tesla shares were marked 4.9%% lower in pre-market trading to indicate an opening bell price of $117.50 each.
4. -- Boeing 737 Max Makes First Flight In China Since 2019 Grounding
Boeing (BA) shares edged lower in pre-market trading following news that the planemaker's workhorse 737 Max jet made its first commercial flight in China in nearly four years.
The Boeing-made jet, which was grounded by aviation authorities around the world following two fatal crashes in 2018 and 2019, had remained under close scrutiny in China more than a year after most countries brought it back into service following changes to its pilot control system.
A 737 Max operated by China Southern Airlines flew from Guangzhou to Zhengzhou this morning, according to FlightRadar24 data, marking the first domestic flight since 2019 just as the country -- a key Boeing market -- emerges from its tight Covid travel restrictions.
Boeing shares were marked 0.51% lower in pre-market trading to indicate an opening bell price of $213.22 each.
5. -- Delta Air Lines Earnings Lead Optimistic U.S. Carriers
Delta Air Lines (DAL) shares edged higher in pre-market trading ahead of the carrier's fourth quarter earnings prior to the start of trading.
Delta, the first of the major airlines to report December quarter profits, is expected to post an adjusted bottom line of $1.53 per share on revenues of $12.23 billion, a near 30% increase from the same period last year.
Delta said last month that momentum into the final months of this year should help 2022 revenues rise to between $45.5 billion and $45.6 billion, with adjusted earnings of between $3.07 and $3.12 per share.
Earlier this week, Delta's larger rival American Airlines (AAL) boosted its fourth quarter profit forecast, indicating it will post adjusted earnings that are more than double its prior estimate, amid the ongoing boost in domestic travel and the loosening of restrictions on U.S. passengers heading to China.
Delta shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $39.75 each.
