Wall Street prepares for major bank earnings and inflation data
Stock futures hold steady as Wall Street prepares for major bank earnings and inflation data
Stock futures showed little movement on Sunday night, following a winning week for major U.S. averages, as investors turned their attention to third-quarter corporate earnings and upcoming inflation reports, CNBC reported. S&P 500 futures climbed 0.12%, Nasdaq 100 futures rose 0.24%, and Dow Jones Industrial Average futures increased by 28 points, or 0.05%.
Tech rally counters rising oil and Treasury yields
Wall Street is coming off a winning week where a rally in tech stocks helped investors shrug off higher oil prices and bond yields. CNBC reported that the Dow and S&P 500 each secured their second positive week out of three, whereas the Nasdaq Composite notched its fourth consecutive week of increases.
Brent crude futures last traded above $104 a barrel, and the 10-year yield last week breached levels not seen since 2002.
Strong expected earnings confront higher borrowing costs
Investors hope the third-quarter earnings season will help stocks power through. John Butters of FactSet projects that the S&P 500 will report a 29.6% increase in earnings for the quarter. This would mark the fourth straight quarter of above-25% earnings growth, driven largely by the strength of the artificial intelligence data center buildout.
Yet analysts note that executive commentary will matter more than headline numbers given uncertainty over how businesses are handling higher fuel and borrowing costs. “Can this company withstand what’s happening?”
Big banks kick off reporting season amid rate test
The reporting season kicks off in earnest this week with the big banks. Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are all scheduled to post results, according to CNBC. Data from Yahoo Finance highlighted that the primary banks on Wall Street commenced the second half of 2026 on the heels of one of their most lucrative six-month stretches in at least a decade, prior to the surge in interest rates.
“A great deal of the recent underperformance for banks has been driven by the dramatic rise in long-term rates,” UBS analyst Erika Najarian recently told clients, as reported by Yahoo Finance. Based on findings from a Truist Securities poll, merely 35% of institutional investors anticipate that bank equities will outperform the broader market, marking a decline from 68% in July and 82% in December.
Gerard Cassidy, head of U.S. bank equity strategy at RBC Capital Markets, told BNN Bloomberg that he expects a steeper yield curve to provide a modest boost to third-quarter net interest margins, with greater benefits arriving in the fourth quarter. While commercial loans linked to the federal funds rate adjust upward right away following rate hikes, banks typically raise the interest paid on deposits at a much more gradual pace.
Inflation data and capital markets activity under scrutiny
Key inflation data is due out during the week, with the September consumer and producer price indexes scheduled for Wednesday and Thursday, respectively. A Reuters poll expects Wednesday’s September CPI report to show a 3.6% rise on an annual basis, with the core measure estimated to increase by a more modest 2.5%.
Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, said that investors will watch how Q3 shaped up following an incredible year for earnings. Northwestern Mutual Wealth Management chief portfolio manager, equities, Matt Stucky added that he is focused on how higher interest rates and energy costs ripple through to consumer spending and capital markets activity.