Wall Street futures fluctuated on Monday, with the S&P 500 and the Nasdaq on track to open higher, as investors geared up for a week packed with corporate earnings and economic data that will likely test stretched stock market valuations.
Dow E-minis were down 80 points, or 0.19%, U.S. S&P 500 E-minis were up 10.25 points, or 0.17%, and Nasdaq 100 E-minis were up 64.75 points, or 0.32%.
Major financial companies kicked off the third-quarter corporate earnings season on a broadly positive note on Friday, with JPMorgan Chase, Wells Fargo and BlackRock rallying after the results.
Their gains propelled the Dow Jones Industrial Average and the benchmark S&P 500 to record closing highs in the previous session.
But with stock valuations stretched – the S&P 500 is trading at 21.8 times forward earnings, versus a long-term average of 15.7 – companies will be forced to justify them and satisfy investors.
“We closed pretty strong on Friday, thanks to the bank earnings results. JPMorgan was clearly the standout, helping the bank index to a pretty impressive 3% overall move and setting a tone of optimism going into a bigger part of earnings season this week,” said Michael James, managing director of equity trading at Wedbush Securities.
“It’s all about getting one’s ducks in a row for the Q3 earnings season.”
Forty-one S&P 500 companies are expected to report results this week, including Bank of America, Citigroup, Johnson & Johnson and Netflix.
Year-over-year third-quarter earnings growth for the S&P 500 is estimated at 4.9%, according to data compiled by LSEG on Friday.
Investors will also watch for crucial economic data, notably the September retail sales figures, due on Thursday, for clues on the financial health of U.S. consumers.
Federal Reserve officials Christopher Waller and Neel Kashkari are scheduled to speak through the day.
While traders have dialled back expectations for an outsized 50-basis-point rate cut at the Fed’s November meeting following a string of strong labour market data, bets on a 25-basis-point reduction have stayed largely intact at around 84%, according to the CME Group’s FedWatch tool.
Planemaker Boeing slipped 2.1% in premarket trading after the company flagged a larger-than-expected Q3 loss on Friday. It said it would cut 17,000 jobs and delay first deliveries of its 777X jet by a year.
Investment bank B. Riley Financial leapt 21.3% after the company said it had agreed to sell its unit, Great American Group, to asset management firm Oaktree Capital in a $386-million deal.
U.S.-listed shares of Chinese firms dropped, with Alibaba down 1.8% and PDD Holdings losing 2.2%, as investors were left guessing on the size of the overall fiscal stimulus China announced on Saturday.
VF Corp fell 3.9% after Wells Fargo downgraded the apparel retailer to “underweight” from “equal weight".
Cryptocurrency-linked stocks such as Coinbase gained 2.6%, Riot Platforms added 3.6% and MicroStrategy was up 5.3%, tracking bitcoin gains.