Stock futures fell late on Sunday as investors braced for a week of strong first-quarter earnings reports.
Dow Jones Industrial Average futures lost about 150 points, or 0.4%. S&P 500 futures lost 0.5%. Nasdaq futures were down 0.8%.
Bank of America reports quarterly results on Monday before the bell. Several blue-chip Dow names are reporting gains this week, including IBM, Procter and Gamble, Travelers, Dow Inc, Johnson and Johnson, American Express and Verizon.
Tech benchmarks are also set to report quarterly earnings, with Netflix on Tuesday and Tesla on Wednesday. Snap reports Thursday. United Airlines, American Airlines and Alaska Air are also on the schedule, as are CSX and Union Pacific Railroads.
Investors will pay close attention to forward guidance, especially comments on how companies are managing rising costs. March consumer price index reading released last week showed an increase of 8.5% for a year, the fastest annual gain since December 1981
“The chances of core inflation moderating to an acceptable pace appear high without a significant slowdown in demand growth,” Gerard MacDonell of 22V Research said in a note on Sunday.
Earnings season is off to a decent start with 77% of S&P 500 companies reporting earnings per share above expectations according to FactSet. Seven percent of the benchmark has reported results so far. Analysts believe first-quarter earnings will rise 5% for the quarter when all S&P 500 companies finish reporting, based on FactSet’s analysis of actual results and future estimates.
“Our belief remains that EPS 2022E is likely to come down a bit during earnings season, but probably less than we would have thought a month ago. And the more US-focused and services-focused the company , the better the EPS outlook will be,” Raymond James’s Tavis McCourt said in a Sunday note.
Despite some better-than-expected results, investors sold shares last week as they feared higher rates and inflation could dim earnings prospects. The S&P 500 fell 2.13% for the second consecutive negative week. The Nasdaq Composite lost 2.63% and the Dow Jones dropped 0.8% in the period. US stocks weren’t trading on Friday due to the holiday weekend.
The 10-year Treasury yield last week touched the highest levels in three years above 2.83%, weighing on stocks.
Elsewhere, investors will watch how Twitter trades when the market opens. Twitter announced Friday that the board has adopted a time-limited shareholder rights plan, often referred to as a plan. “poison pill.” The move comes after billionaire Elon Musk offered to buy the company for $43 billion.
—With reporting from CNBC’s Patti Domm.