Stock futures fell Sunday evening as investors braced for a week of major first-quarter earnings reports ahead.
Futures on the Dow Jones Industrial Average lost about 150 points, or 0.4%. S&P 500 futures shed 0.5%. Nasdaq futures were lower by 0.8%.
Bank of America reports quarterly results Monday before the bell. Several Dow blue-chip names report earnings this week, including IBM, Procter and Gamble, Travelers, Dow Inc, Johnson and Johnson, American Express and Verizon.
Technology bellwethers are also set to report quarterly earnings, with Netflix due on Tuesday and Tesla out on Wednesday. Snap reports Thursday. United Airlines, American Airlines and Alaska Air are also on the calendar, as are railroads CSX and Union Pacific.
Investors will be paying close attention to forward guidance, especially for comments on how companies are handling surging costs. March’s consumer price index reading released last week showed an 8.5% increase from a year ago, the fastest annual gain since December 1981
“The odds seem to be long against underlying inflation moderating to an acceptable pace without a significant deceleration of demand growth,” 22V Research’s Gerard MacDonell said in a note 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 jump 5% for the quarter when all S&P 500 companies finish reporting, according to FactSet’s analysis of actual results and future estimates.
“Our belief remains that 2022E EPS likely comes down a bit through earnings season, but likely less than we would have thought a month ago. And the more U.S.-centric and more services-centric the company, the better the EPS outlook is likely to be,” Raymond James’ Tavis McCourt said in a Sunday note.
Despite some better-than-expected results, investors sold stocks last week as they feared higher rates and inflation could darken the outlook for earnings. The S&P 500 fell 2.13% for its second negative week in a row. The Nasdaq Composite lost 2.63%, and the Dow fell 0.8% on the period. U.S. stocks did not trade Friday due to the holiday weekend.
The 10-year Treasury yield last week touched the highest levels in three years above 2.83%, which is weighing on stocks.
Elsewhere, investors will be watching how Twitter trades when the market opens. Twitter announced Friday the board adopted a limited duration shareholder rights plan, often referred to as a “poison pill.” The move comes after billionaire Elon Musk offered to buy the company for $43 billion.
–With reporting by CNBC’s Patti Domm.