US Stock Market

US Stock Index Futures: Investors Cautious Ahead of Powell Testimony after Consumer Inflation Surge

U.S. stock index futures are trading mixed early Wednesday with the benchmark S&P 500 Index and the blue chip Dow Jones Industrial Average heading lower following yesterday’s technical reversal top. The tech-heavy NASDAQ-100 Index, is trading steady-to-better. The catalysts behind the early price action are inflation fears that are being fueled by Tuesday’s consumer prices report that showed inflation last month advanced at its fastest past in nearly 13 years.

At 03:47 GMT, September E-mini S&P 500 Index futures are trading 4357.00, down 4.25 or -0.10%. September E-mini Dow Jones Industrial Average futures are at 34739, down 37 or -0.11% and September E-mini NASDAQ-100 Index futures are trading 14873.25, up 8.25 or +0.06%.

JPMorgan, Goldman Beat the Street, but Still  Close Lower

JPMorgan and Goldman Sachs kicked off earnings season on Tuesday, with both banks beating top and bottom line estimates.

JPMorgan Chase on Tuesday reported second-quarter profit and revenue that exceeded analysts’ expectations as the banking giant release money set aside for loan losses.

Earnings rose $3.78 per share versus the $3.21 per share estimate in a Refinitiv survey of analysts. Revenue came in at $31.4 billion versus the $29.9 billion estimate.

CNBC reported that one key factor driving the results is that after the industry set aside tens of billions of dollars for loan losses last year, banks have been releasing reserves as borrowers have held up better than expected.

JPMorgan dipped 2.6% after the earnings report on Tuesday. Shares of the bank have climbed 24% this year before Tuesday, exceeding the 17% rise of the S&P 500.

Goldman Sachs on Tuesday reported second-quarter earnings that blew past Wall Street expectations, propelled by a strong performance in investment banking amid a robust IPO market.

Earnings rose $15.02 per share versus $10.24 expected by analysts polled by Refinitiv. Revenue was $15.39 billion versus $12.17 billion expected.

Nonetheless, shares of Goldman closed Tuesday more than 1% lower following the earnings release. The stock is already up more than 40% in 2021, as investors anticipated strong results amid the economic comeback from the pandemic.

Looking Ahead to Wednesday

On the earnings front, Bank of America, Citigroup and Wells Fargo are slated to report earnings before the market opens on Wednesday, as are BlackRock, PNC Financial and Delta.

At 12:30 GMT, the U.S. will report its latest Producer Price Index (PPI) figures. The report is expected to show a rise of 0.6% in June. Core PPI is expected to have risen 0.5%. Traders will be looking for a surprise, following the big jump in the CPI.

At 16:00 GMT, Federal Reserve Chairman Jerome Powell is due to testify before Congress. Investors are looking for any change in his dovish stance, following yesterday’s spike in consumer inflation.

A Fed report released Friday, that Chairman Jerome Powell will present to Congress this week, reiterated the central bank’s position that the current inflationary pressures are “transitory.”

If Powell appears even a touch more hawkish, U.S. Treasury yields and the U.S. Dollar could spike higher. This should put pressure on the stock market, especially the high-growth stocks in the NASDAQ Composite. Should Powell remain confident that the current rising inflation is transitory, investors are likely to give him the benefit of the doubt and prices are likely to be underpinned.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.