Five things you need to know before the market opens on Monday April 17:
1. -- Stock Futures Edge Higher With Earnings, Treasury Yields In Focus
U.S. equity futures nudged higher Monday, while the dollar held firm against its global peers and Treasury yields pushed further into the green, as investors looked to consolidate bets on a final Fed rate hike while positioning for a busy stretch of corporate earnings over the next two weeks.
Stocks, in fact, are amid one of the strongest pre-earnings run-ups since the global financial crisis, with the S&P 500 rising just under 6% over the past month despite a series of data releases showing weakness in the broader economy and struggles in the banking sector.
Friday's better-than-expected first quarter updates from big lenders such as JPMorgan (JPM), Citibank (C) and Wells Fargo (WFC) failed to lift the benchmark into the close of trading, but still helped the Dow to its fourth consecutive weekly gain, the best run of advances since October, and steadied nerves as to the impact of last month's collapse of Silicon Valley Bank.
That said, a modest dip in the so-called control group reading of March retail sales, alongside a mixed reading for monthly inflation and a hawkish tone from the March Fed minutes kept Treasury yields running higher last week, with benchmark 2-year notes yields rising to around 4.15% in overnight trading, with 10-year notes pegged at 3.535%.
The CME Group's FedWatch, meanwhile, suggests an 88.2% chance of a 25 basis point Fed rate hike next month in Washington, which would take the Fed Funds rate to between 5% and 5.25%, with the odds of a pause in further increases cemented for the summer months.
The U.S. dollar index, which tracks the greenback against a basket of it global peers, was marked 0.2% higher at 101.75 in overnight trading and touched a one-month high of 134.22 against the yen amid the re-pricing of rate hike risk ahead of an active week for Fed speakers heading into the central bank's traditional pre-meeting quiet period.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500 are priced for a modest 2 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 15 point move to the upside. The tech-focused Nasdaq is priced for a 14 point decline.
Overnight in Europe, the region-wide Stoxx 600 was marked 0.15% higher in early Frankfurt trading, with London's FTSE 100 rising 0.55%
Overnight in Asia, the MSCI ex-Japan index was marked 0.23% higher into the close of trading while the Nikkei 225 added 0.075% for its seventh consecutive session gain in Tokyo.
2. -- Week Ahead: Busy Earnings Week, Housing Data On Deck
Wall Street will focus firmly on the corporate earnings season this week as some 62 S&P 500 companies are set to report first quarter profits amid worries over the impact of stresses in the banking sector and the pressure brought to margins from the recent pullback in inflation.
Tesla (TSLA), Johnson & Johnson (JNJ), Bank of America (BAC), Goldman Sachs (GS), IBM (IBM), AT&T (T) and Netflix (NFLX) are a few of the bluechip names slated to publish March quarter earnings this week, following a better-than-expected series of updates from the banking sector late last week.
Collective S&P 500 profits are forecast to fall 4.8% from last year to around $420.7 billion, according to Refinitiv forecasts, a tally that would confirm the first so-called earnings recession -- defined as two consecutive quarters of contracting profits -- since the Covid pandemic.
Investors are also likely to track developments in the housing sector, with March housing starts and building permits figures due on Tuesday and existing home sales figures expected before the market opens on Thursday. Weekly mortgage data from the Mortgage Bankers' Association is expected at 7:00 am Eastern time on Wednesday following a surprise increase in applications last week as 30-year rates slipped to 6.29%.
3. -- Prometheus Biosciences Soars After $10.8 Billion Merck Takeover
Merck & Co. (MRK) shares moved lower in pre-market trading after the drugmaker agreed to buy autoimmune disease experts Prometheus Biosciences (RXDX) for around $10.8 billion.
Merck said it will pay $200 per share for the San Diego, California-based immunology group, a 75% premium to its Friday closing price, with the aim of bringing its new drug -- which treats ulcerative colitis and Crohn’s disease -- to market sometime next year.
“The agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need," said CEO Robert Davis. "This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade.”
Merck shares were marked 1.22% lower in pre-market trading to indicate an opening bell price of $113.90 each while Prometheus Biosciences soared 70.2% to $194.01 each.
4. -- Netflix 'Love Is Blind' Live Event Scrapped After User Outage
Netflix (NFLX) shares edged higher in pre-market trading after the streaming entertainment group restored service following a late Sunday outage during a live filming of its reality dating show 'Love is Blind'.
The outage, which affected more than 10,000 users, according to Downdetector, ultimately lead Netflix to cancel the streaming event, with the group announcing plans to upload the much-hyped reunion episode at a later date.
The slip-up may prove embarrassing for Netflix as it pushes deeper into live television events as part of its new strategy under chief content officer Bela Bajaria and ahead of its first quarter earnings report after the market closes on Tuesday.
Analysts expect Netflix to post March quarter profits of $2.86 per share on revenues of $8.175 billion. Netflix said earlier this year that it will no longer provide specific guidance on new subscribers adding only that it sees a "modest" increase in new additions and forecast earnings in the region of $2.82 per share and revenues of $8.17 billion.
Netflix shares were marked 0.47% higher in pre-market trading to indicate an opening bell price of $340.22 each.
5. -- Charles Schwab Earnings Up Next As Broker Weathers Bank Sector Storm
Charles Schwab (SCHW) moved higher in pre-market trading ahead of the retail stock broker's first quarter earnings prior to the start of trading.
Schwab is expected to post a bottom line of 90 cents per share, up 17% from last year, on revenues of around $5.13 billion, according to Street forecasts.
Schwab rattled markets in early March when it reported a 28% decline in average margin balances, as well as a 4% fall in total client assets -- to $7.38 trillion -- for the month of February.
The update, which came in the immediate wake of the collapse of Silicon Valley Bank, pounded Schwab shares and raised questions over the security of its deposit base. Rising interest rates also added upward pressure to funding costs that could pressure margins and blunt revenue growth.
Charles Schwab shares were marked 2.32% higher in pre-market trading to indicate an opening bell price of $51.93 each.
