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Friday, October 22, 2021

Stock futures fall slightly ahead of earnings and inflation report

U.S. stock futures fell slightly in overnight trading on Tuesday as investors anticipate the start of earnings season and a new inflation report.

Dow futures fell 56 points. S&P 500 futures dropped 0.27% and Nasdaq 100 futures slid 0.36%.

On Tuesday, the major averages fell for the third straight session. The Dow Jones Industrial Average lost 117 points, dragged down by a 1.3% drop in Boeing’s stock. The S&P 500 fell 0.24%. The technology-focused Nasdaq Composite ended just 0.14% lower.

Meanwhile, small-cap stocks outperformed on Tuesday with the Russell 2000 gaining 0.6%.

Heading into Wednesday, investors will be watching for September’s consumer inflation report, which is expected to have flared at the same rapid pace as August.

Economists expect to see a rise of 0.3%, or a 5.3% annualized rate, when the consumer price index is released Wednesday at 8:30 a.m. ET. Excluding energy and food, CPI is forecast to be up 0.3% month-over-month or 4% annualized.

“I think it could come in hot,” said Grant Thornton chief economist Diane Swonk. “It looks like we could get more broad-based inflation. There is supply shock there. You start getting spillover of energy prices and other things.”

Bank earnings kick off on Wednesday with JPMorgan reporting before the bell. Last quarter, the bank beat on the top and bottom lines, boosted by better-than-expected loan losses. The Street expects third-quarter earnings to jump just 2% from the year-ago period.

JPMorgan has traded lower the day of its last four earnings reports, despite beating on the top and bottom lines each time, according to Bespoke Investing group.

Delta Air Lines also reports before the opening bell on Wednesday. Analysts are expecting to see positive earnings per share, after six straight quarters of per-share losses.

“This clearly represents the first quarter of real EPS risk that investors have had to deal with in the COVID recovery, as GDP estimates have collapsed since mid-August on nothing short of historic supply chain issues,” said Tavis McCourt, institutional equity strategist at Raymond James. “However, consensus EPS at the index level has not changed meaningfully, as, remarkably, a greater number of stocks have seen positive earnings revisions since mid-August than negative.”

The Federal Open Market Committee will release the minutes from its September meeting at 2 p.m. on Wednesday. Investors will be looking for clues about timelines surrounding the central bank’s planned taper for its bond-buying program.

— with reporting from CNBC’s Patti Domm.

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