Wall St set to open lower after mixed results from big banks

U.S. stock index were set to open lower on Friday as JPMorgan, Wells Fargo and Citigroup kicked off the fourth-quarter earnings season with a mixed batch of results, while big technology companies extended declines after a bruising selloff.

JPMorgan Chase & Co tumbled 3.9% in premarket trading on reporting weaker performance at its trading arm, even as it beat earnings expectations for the fourth quarter.

Wells Fargo & Co, on the other hand, gained 1.1% after posting a greater-than-expected rise in fourth-quarter profit.

Citigroup Inc fell 4.0% after posting a 26% drop in fourth-quarter profit, but the bank still exceeded analysts’ expectations.

Asset manager BlackRock Inc fell 1.4% after posting fourth-quarter revenue below market expectations.

“The sentiment is pretty sour, even though today officially kicks off the fourth-quarter earnings reporting period … it seems as if inflation continues to be the overriding worry,” said Sam Stovall, chief investment strategist.

Year-over-year earnings growth from S&P 500 companies was expected to be lower in the fourth quarter compared with the first three quarters but still strong at 22.4%, according to data.

The S&P 500 financial sector is up nearly 6% since the start of this year, outperforming the S&P 500, amid expectations of banks benefiting from interest rate hikes by the Federal Reserve and firming Treasury yields.

The financial sector has also benefited from a shift to economically sensitive sectors from growth sectors such as technology and consumer discretionary.

Megacap growth companies including Apple Inc, Amazon.com Inc, Microsoft, Tesla and Meta fell up to 3.3% a day after a selloff triggered by multiple Fed speakers who put talks about inflation and interest rate hikes in focus.

“While the fundamentals are still looking good for tech, the sentiment is bad and there is a good possibility that we could see some additional weakness,” Stovall said.

At 8:35 a.m. ET, Dow e-minis were down 226 points, or 0.63%, S&P 500 e-minis were down 31.25 points, or 0.67%, and Nasdaq 100 e-minis were down 131.25 points, or 0.85%.

Casino operators Las Vegas Sands, MGM Resorts, Wynn Resorts and Melco Resorts advanced between 3.7% and 12% after Macau’s government capped the number of new casino operators allowed to operate to six with an operating period of up to 10 years.

Data showed retail sales tumbled in December as Americans struggled with shortages of goods and an explosion of COVID-19 infections, but that will likely not change expectations that economic growth accelerated in the fourth quarter.

U.S. stock markets will remain shut on Monday on account of a public holiday.

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