Stock futures on Friday were mixed as second-quarter earnings season kicks off with reports from the major banks and as investors awaited a follow-up on the inflation outlook from the wholesale price index for June.
Futures linked to the Dow Jones Industrial Average were up 42 points, or 0.11%, to 40,131, while S&P 500 futures inched up 0.02% to 5,640.75 and futures tied to the tech-heavy Nasdaq were off 0.07% to 20,427.
Stocks ended lower Thursday, snapping the longest winning streak for the S&P 500 in three months. The market moves followed the Commerce Department’s report that the headline Consumer Price Index for the month of June was pegged at an annual rate of 3%, down from the 3.3% pace recorded in May and just inside Wall Street forecasts of a 3.1% reading.
The June reading matched the lowest level since March 2021, although the headline print was also 3% in June of last year.
On a monthly basis, price pressures fell 0.1% from May, in one of the largest declines in more than three years, thanks in part to a 4% decline in gasoline prices.
Bank earnings reports
In a Friday morning note Bloomberg reported that the “shares of the biggest Wall Street lenders are trouncing the broader market this year, with investors expecting bank earnings outlooks to brighten in the coming quarters.
“While net interest income — a key source of revenue for lenders — is expected to drop, investors are focusing on what’s likely to be a rosy view on fee-generating businesses like investment banking.”
Among Friday earnings reports, Wells Fargo (WFC) reported second-quarter net income per share rose to $1.33 from $1.25 in the year earlier quarter. A survey of analysts from Yahoo Finance was looking for $1.29 in the latest quarter.
In a statement Chief Executive Charlie Scharf said that fee-based revenue grew, “offsetting an expected decline in net interest income,” the difference between what a bank takes in on loans and pays out on deposits. Net interest income fell 9% in the quarter.
JPMorgan Chase (JPM) , the nation’s biggest bank by assets, reported net income of $6.12 a share against $4.75 a share in the year-earlier quarter. The latest earnings reflected a $2.04-a-share gain tied to an exchange offer of its Visa common shares. Overall, adjusted net income in Q2 2024 was $4.40 a share. Net interest income rose 4%.
In a statement, Chief Executive Jamie Dimon reiterated a number of risks that the bank sees going forward, including a “dangerous” geopolitical situation.
And despite the Federal Reserve’s progress to reduce inflation, he sees “multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade, and remilitarization of the world. Therefore inflation and interest rates may stay higher than the market expects.”
Citigroup reported that second quarter net income reached $1.52 a share from $1.33 in the earlier quarter. Analysts surveyed by LSEG were expecting profit of $1.39, CNBC reported.
On Wednesday Citigroup was fined $136 million by US Bank regulators regarding violations tied to data quality management and risk controls.
The bank will pay $61 million to the Federal Reserve and $75 million to the Comptroller of the Currency.
Bloomberg reported that Citi didn’t admit or deny the allegations but said it was taking steps to correct the violations.
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