What to Expect in the Week Ahead (Banks Earnings; March Inflation Print; FOMC Minutes)
The U.S. Federal Reserve will be watching Wednesday's March inflation print closely for signs that a resilient U.S. economy is reigniting inflation pressures following upside surprises in February and January.
$JPMorgan(JPM.US$, $Wells Fargo & Co(WFC.US$ and $Citigroup(C.US$ are scheduled to report quaterly results on Friday, kicking off Q1 earnings season.$Alphabet-A(GOOGL.US)$ Cloud's annual Next conference is just around the corner, taking place from 9 April to 11 April in Las Vegas. It comes at a pivotal time for Google, which has spent the past year arguing why customers should place their faith in the tech giant's approach to generative AI.
Earnings Preview
JPMorgan, Wells Fargo and Citi have all drawn downward revisions to their first-quarter profit estimates from Wall Street analysts as they prepare to update investors with their latest results in a week.
A small drop in loan activity may take a bite out of profits, while a rise in interest rates may impact net interest income for banks, as they pay out more money to deposit holders. Higher interest rates also push down the value of banks' debt securities, which may also weigh.
The environment for the big banks remains no less complex than it has been in the past year, with both positive and negative factors to consider.
The latest jobs report shows signs of robust economic activity in the U.S. that will benefit banks, expectations for interest-rate cuts that fueled a rally in bank stocks earlier this year have now dimmed.
What to look out for next week on Wall Street are earnings reports from major banks, Delta Air Lines and Constellation Brands.
Signs of stubborn inflation have diminished expectations in recent weeks for how deeply the Federal Reserve will cut rates this year. Stocks rose after another stronger-than-expected employment report on Friday.
$Delta Air Lines(DAL.US$, $Blackrock(BLK.US$, and JPMorgan Chase & Co are among the companies scheduled to release their first quarter results next week. Investors will also be watching for March U.S. consumer price data, expected on April 10.
Analysts expect to see earnings growth of 5% in the first quarter, according to LSEG data. That would be the lowest since the second quarter of 2023.
They expect margins to be squeezed by high interest rates, rising commodity costs, and falling corporate pricing power due to slowing inflation. Earnings grew by 10.1% in the fourth quarter of 2023.
As always, the Fed will loom large in investors' minds. A robust earnings season and expectations of growing price pressures from companies could be seen as further evidence that the economy is too strong for the central bank to cut rates without risking an inflationary rebound.
March U.S. employment numbers backed up that narrative. Nonfarm payrolls increased by 303,000 jobs last month, far above expectations. Futures markets show investors expect the Fed to deliver around 70 basis points of rate cuts this year, compared to 150 basis points they had factored in January.
Yet weaker earnings could indicate cracks in the economy's strength. Some investors believe that could boost the case for the Fed to ease monetary policy.
Sectors Performance
Source: Dow Jones, Market Watch, CNBC, REUTERS
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Tonyco : or in other words " we wanted market crash. why market no crash? me angee!!!!!!"
Zspurr : Fri earning should be very interesting
Dwight Gunn : am I signed up as yet with moomoo