S&P 500, Dow Headed For Lower Open as Big Banks Kick Off Earnings | Inquirer
 
 
 
 
 
 

S&P 500, Dow Headed For Lower Open as Big Banks Kick Off Earnings

/ 09:50 AM January 15, 2021

Wall Street’s main indexes were set to slip on Friday as incoming President Joe Biden’s $1.9 trillion stimulus plan sparked fears of an increase in taxes, while investors parsed quarterly reports from major U.S. lenders and banks.

Shares of JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.

JPMorgan fell 1.7% following a seven-day winning streak that had pushed the stock about 12% higher.

“The bank stocks have been running here for a couple of weeks now, so a lot of good news has already been priced in,” said Dennis Dick, a trader at Bright Trading LLC in Las Vegas.

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Wall Street

Wall Street’s main indexes are set to wrap up the week slightly lower after climbing to record highs recently, driven by growth-sensitive cyclical stocks on bets of a hefty fiscal package and optimism about vaccine distribution.

Biden’s stimulus package proposal, unveiled on Thursday, includes $415 billion to accelerate the distribution of vaccines. Some $1 trillion in direct relief to households, and roughly $440 billion for small businesses and communities particularly hard hit by the pandemic.

Some investors worried that the government would need to fund the spending through tax hikes.

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“Biden’s concern is not the stock market, his concern is Main Street, and that’s a good thing… but that tells you there’s going to be an increase in corporate taxes,” Bright Trading LLC’s Dick said.

Meanwhile, data showed a further decline in U.S. retail sales in December. This is the latest sign the economy lost considerable speed at the end of 2020.

At 08:41 a.m. ET, Dow E-minis was down 161 points, or 0.52%, and S&P 500 E-minis were down 16 points, or 0.42%. Nasdaq 100 E-minis were up 0.5 points, or flat.

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Big Banks

Results from big U.S. banks will set the tone for the fourth-quarter earnings season. Investors will focus on the outlooks of U.S. companies. This is to validate expectations for a strong 2021 rebound in earnings and the economy.

Earnings for S&P 500 companies are expected to decline by 9.5% in the final quarter of 2020 from a year ago. They are still of expectation to rebound in 2021, with a gain of 16.4% projected for the first quarter. This is according to IBES data from Refinitiv.

Exxon Mobil Corp fell 2.7% after a report said the U.S. Securities and Exchange Commission launched an investigation of the oil major. Following a whistleblower’s complaint, the company overvalued a key asset in the prolific Permian shale oil basin.

Spotify Technology SA dropped about 3.7% after Citigroup downgraded its shares to “sell.” Then saying the music-streaming platform’s investments into podcasts have not materially impacted app downloads or premium subscriptions.

Hewlett Packard Enterprise Co rose 1.2% after J.P. Morgan upgraded the enterprise software maker’s stock to “overweight” from “neutral.”

(Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Maju Samuel and Saumyadeb Chakrabarty)

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