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Saturday, July 31, 2021

Stock Futures Wobble Ahead of Inflation Data and Bank Earnings

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U.S. stock futures wavered, suggesting indexes would hover close to their record levels as investors awaited inflation data and earnings from the nation’s biggest banks.

Futures tied to the S&P 500 edged down 0.1% a day after the broad index climbed to its 39th record closing levels of the year. Dow Jones Industrial Average futures also weakened 0.1% Tuesday, while Nasdaq-100 futures were flat.

Major U.S. stock indexes have climbed higher in recent sessions, lifted by expectations that companies are poised to report strong quarterly earnings and signs that the recovery is continuing. Investors have also grown more reassured that inflation should be a passing phenomenon and the Federal Reserve will keep its accommodative monetary policies in place for now.

“It all has a bit of a goldilocks, not too hot, not too cold feel to it,” said

David Donabedian,

chief investment officer at CIBC Private Wealth, U.S.

Overseas, the Stoxx Europe 600 ticked down 0.1%, pulling back from its record close Monday.

Among individual shares,

Nokia

rose over 6% after the cellphone maker said it expects to lift its 2021 guidance.

Swatch Group

rose over 2% after the company said late Monday that it swung to a profit in the first half of the year.

U.K. banks rose after the nation’s financial services regulator said it was lifting limits on the dividends banks could pay their shareholders.

HSBC,

Lloyds and Natwest all rose between 1% and 2%.

In Asia, indexes rose. In Japan, the Nikkei 225 added 0.5% while in Hong Kong the Hang Seng Index rose 1.6%. In mainland China, the Shanghai Composite Index rose 0.5%.

Data on consumer prices, set to be released at 8:30 a.m. ET, will be closely scrutinized for clues on whether inflation is broadening out into wider sectors of the economy or remains confined to sectors experiencing pandemic-related supply bottlenecks.

Earnings season is set to begin with figures from

JPMorgan Chase

and

Goldman Sachs

Group due ahead of the opening bell. Expectations are high, particularly for the major banks, who are predicted to have benefited from the economic recovery. Investors say they are most interested in what executives say about whether business looks good for the remainder of the year.

PepsiCo,

Conagra Brands

and

First Republic Bank

are also set to release quarterly reports before markets open.

The yield on the benchmark 10-year Treasury note ticked up to 1.365% from 1.362% on Tuesday. Bond yields and prices move in opposite directions.

Yields have weakened over recent months as investors have pivoted out of equities and into the bond market as concerns about the Delta variant of Covid-19 have grown, said Hugh Gimber, a strategist at J.P. Morgan Asset Management. That has helped a resurgence in high growth areas of the stock market such as technology in recent weeks, he added.

“What we have seen over the past few weeks is that the reflation trade has faltered,” said Mr. Gimber. “The equity market is taking its lead from the bond market at the moment.”

In commodity markets, Brent crude, the international oil benchmark rose 0.6% to $75.63 a barrel. Gold prices edged up 0.2%.

Major U.S. stock indexes have climbed higher in recent sessions.



Photo:

Richard Drew/Associated Press

Write to Will Horner at William.Horner@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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