Five things you need to know before the market opens on Friday April 14:
1. -- Stock Futures Slip Lower Ahead of Earnings, Retail Sales Data
U.S. equity futures edged lower Friday, while the dollar was on pace for its longest run on weekly declines in two years, as investors look to the end of the Federal Reserve's rate hiking cycle while bracing for the start of the first quarter earnings season.
Softer-than-expected factory gate inflation Thursday, which showed producer prices declining on a monthly basis in March, and the core reading falling for the first time since April of 2020, suggest that disinflation trends are starting to take root in the U.S. economy. Pared with the two-year low reached in the headline reading of the March CPI report, traders are now looking to the end of the Fed's tightening cycle and look more focused now on the prospects of a near-term recession.
The first quarter earnings season will provide significant clues as to likelihood of a U.S. downturn, with collective S&P 500 profits expected to fall 5.2% from last year to a share-weighted $419.1 billion. Second quarter earnings are also expected to show a year-on-year decline of around 4%.
March retail sales data will also provide a crucial piece to the growth puzzle, with economists expecting a notable drop in consumer activity over the month of March ahead of the Commerce Department's report at 8:30 am Eastern time.
Bonds continue to price recession risks along the way, with benchmark 2-year note yields holding at 3.967% in overnight dealing, some 54 basis points higher than yields on 10-year Treasury notes.
The U.S. dollar index, meanwhile, was marked 0.1% lower at 100.936 against a basket of its global peers, as traders price in an increasing chance of a summer Fed rate cut while maintaining bets that the central bank will lift rate one final time -- to a range of between 5% and 5.25% -- at its next policy meeting on May 3.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500 are priced for a modest 6 point opening bell dip while those linked to the Dow Jones Industrial Average are indicating an 82 point move to the downside. The tech-focused Nasdaq is priced for a 30 point decline.
Overnight in Europe, the region-wide Stoxx 600 was marked 0.37% higher in early Frankfurt trading, with London's FTSE 100 rising 0.26%
Overnight in Asia, the MSCI ex-Japan index was marked 0.5% higher into the close of trading while the Nikkei 225 added 1.2% for its sixth consecutive session gain in Tokyo.
2. -- JPMorgan Kicks Of Big Bank Earnings With Focus On Sector Fallout
JPMorgan (JPM) will lead a trio of big bank earnings Friday that will kick-off the start of the first quarter reporting season amid concerns over the impact the Silicon Valley Bank failure and a likely U.S. recession.
JPMorgan is expected to post a bottom line of around $3.41 per share, a 23.5% increase from the same period last year, on revenues of around $36.26 billion. Investors are likely to focus on the bank's net interest margin forecast, however, as well as any cash it will set aside to cover both the potential for bad loans in its lending book and the $5 billion it placed in the deposit coffers of First Republic (FRC) as part of a rescue plan coordinated by CEO Jamie Dimon.
Citigroup (C) and Wells Fargo (WFC) are also slated to report March quarter earnings prior to the start of trading
"Bank earnings typically set the stage for how the rest of earnings season plays out and bank CEO commentary will be particularly important over the next week, as investors continue to gauge the probability of an upcoming recession," said David Trainer, CEO of Nashville-based research group New Constructs. Bank lending is arguably the most important component of a strong economy, so insights from bank CEOs are critical right now, as investors keep an eye on the trajectory of bank lending after the recent crisis of confidence in the banking sector.
JPMorgan shares were marked 0.24% higher in pre-market trading to indicate an opening bell price of $129.30 each. Citigroup rose 0.42% to $47.50 while Wells Fargo slipped 1.24% to $39.17 each.
3. -- U.S. Banks Pare Borrowing From Fed As Crisis Pressure Ease
U.S. banks trimmed their borrowing from the Federal Reserve's various lending programs again this week, suggesting lenders are slowing recovering from the Silicon Valley Bank collapse early last month.
Banks borrowed $67.6 billion from the Fed's main discount window over the seven-day period ending on April 5, according to Fed data, down nearly $2 billion from the previous period and some $85.7 billion lower than the record amount drawn in the immediate wake of the SVB failure.
Borrowing from the Fed's new Bank Term Funding Program, which allows banks to exchange high-quality assets for one-year loans, fell by nearly $7 billion to $71.8 billion.
Action in the Fed's latest liquidity effort, a daily offering of U.S. dollar swap lines to foreign central banks, fell by $10 billion to $30 billion after attracting virtually no interest over its first few days in effect. The Fed's overall balance sheet, meanwhile, shrunk by around $18 billion to $8.664 trillion.
4. -- Boeing Shares Slump On Renewed 737 Max Delivery Delays
Boeing (BA) shares slumped lower in pre-market trading after the planemaker said it would halt a "significant" number of deliveries of its 737 Max jet amid ongoing logistics issues with supplier Spirit AeroSystems (SPR).
Boeing said the issue is linked to fittings that connect the fuselage to the tail of the workhorse 737 aircraft, a problem that goes back to at least 2019, but stressed that there was no immediate safety issue linked to planes that have already been delivered to customers. The Federal Aviation Administration said it agreed with that assessment.
The delivery halt could affect Boeing's plans to boost 737 Max production by around 22% over the June quarter, to around 38 planes per month, and blunt the impact of the first quarterly delivery tally that topped rival Airbus in nearly five years.
"We have notified the FAA of the issue and are working to conduct inspections and replace the non-conforming fittings where necessary," Boeing said. "We regret the impact that this issue will have on affected customers and are in contact with them concerning their delivery schedule."
Boeing shares were marked 4.5% lower in pre-market trading to indicate an opening bell price of $203.97 each. Spirit AeroSystems shares slumped 11.5% to $31.50 each.
5. -- Washington Commanders Sold For $6 Billion In NFL Franchise Record
Daniel Snyder, the controversial owner of the NFL's Washington Commanders, has agreed to sell the franchise to a group of owners, including basketball legend Magic Johnson, for around $6 billion.
Snyder, who purchased the team -- then known was the Washington Redskins -- in 1999 for around $800 million, has been under pressure to sell the franchise following multiple investigations into allegations that he presided over a toxic work culture and covered up instances of sexual harassment.
The purchase group is lead by Josh Harris, who owns the Harris Blitzer Sports & Entertainment investment vehicle, which co-owns the National Basketball Association's Philadelphia 76ers, the National Hockey League's New Jersey Devils and part of the Crystal Palace of the English Premier League.
The $6 billion price tag would top the $4 billion paid by United Wholesale Mortgage CEO Mat Ishiba for the Phoenix Suns late last year, as well as the $4.65 billion paid for the Denver Broncos and marks the most expensive franchise sale in NFL history.
