U.S. Stocks

U.S. Futures Unchanged, Banking Earnings in Focus

U.S. stocks are seen opening largely flat on Wednesday. The corporate earnings season is kicking into full gear and focus is on the key banking sector.

S&P 500 futures traded 2 points, or 0.1%, lower at 07:05 AM ET (1105 GMT). The Dow futures contract gained 10 points, or 0.1%, while Nasdaq 100 futures rose 15 points, or 0.1%. 

These cash indices ended lower on Tuesday. It ended a four-day win streak, with the Dow Jones Industrial Average closing 0.6% lower. 

The S&P 500 fell 0.6% and the Nasdaq Composite off 0.1%. However, they have had no consecutive down days this month.

The banking sector is often seen as an important guage of the strength of the overall economy. On Wednesday, it will be in focus. Q3 earnings from Bank of America, Goldman Sachs, and Wells Fargo are all due. These follow above-estimate earnings from JPMorgan and Citigroup in the previous session.

Outside of the major banks, there are also earnings due. These include United Airlines, on the heels of Delta’s disappointing quarterly update, UnitedHealth and Alcoa.

Headwinds: Vaccine Trials & New Stimulus Bill

With Covid-19 cases continuing to mount, investors still face a number of headwinds. Vaccine trials are facing difficulties and a new stimulus bill remains uncertain.

Next week, the Senate would vote on a targeted $500 billion coronavirus economic aid bill. This was a statement from Senate Majority Leader Mitch McConnell on Tuesday.

However, this is extremely unlikely to pass through the House. Given it’s the type of deal Democrats have considered insufficient in the past.

Meanwhile on economic data, September’s producer price index is the key release on Wednesday. Core PPI, which excludes food and energy, is expected to rise 0.2% on the month. It is rising at a slightly slower pace than the previous month. 

This would duplicate the pattern on consumer prices. It would look like they are normalizing after several months of above-trend gains.

Headline and Core CPI were released on Tuesday, showing an increase of 0.2% month-to-month in September.

In commodities, oil prices fell on Wednesday on concerns that fuel demand will continue to falter.  The rising COVID-19 cases across Europe and in the United States, the world’s biggest oil consumer, cause economic growth to wane.

The OPEC cut its forecast for oil demand in 2021 by 80,000 bpd to 96.84 million bpd in its monthly report on Tuesday. It cited damage was caused by the coronavirus pandemic.

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