S&P 500 futures drop ahead of massive week of earnings reports

Stock futures fell Sunday evening as investors braced for a week of upcoming major first-quarter earnings reports.

Futures on the Dow Jones Industrial Average lost about 150 points, or 0.4%. S&P 500 futures fell 0.5%. Nasdaq futures fell 0.8%.

Bank of America announces quarterly results on Monday before the bell. Several prominent names in Dow announced earnings this week, including IBM, Procter and Gamble, Travelers, Dow Inc, Johnson and Johnson, American Express and Verizon.

The tech pioneers are also set to report quarterly earnings, with a Netflix release on Tuesday and a Tesla release on Wednesday. Snap reports Thursday. United Airlines, American Airlines, and Alaska Air are also on the calendar, as are CSX and Union Pacific Railroads.

Investors will pay close attention to future directions, particularly to comments about how companies are dealing with rising costs. The CPI reading for March was released last week showed an 8.5% increase More than last year, the fastest annual gain since December 1981

“The odds are long against moderate core inflation to an acceptable pace without a significant slowdown in demand growth,” 22V Research’s Gerard McDonnell said in a note on Sunday.

Earnings season is off to a good start with 77% of S&P 500 companies reporting above expectations, according to FactSet. Seven percent of the benchmark have reported results so far. Analysts believe first-quarter earnings will jump 5% from this quarter when all S&P 500 companies have finished reporting, according to FactSet’s analysis of actual results and future estimates.

“We still think 2022E EPS will likely drop a bit during earnings season, but it will likely be lower than we thought a month ago. The more US-centric and services focused the company is, the better the EPS outlook is likely to be, Raymond James’s Tavis McCourt said in a note on Sunday.

Despite some better-than-expected results, investors sold stocks last week as they feared higher interest rates and inflation could cloud earnings expectations. The S&P 500 fell 2.13% for the second consecutive negative week. The Nasdaq Composite Index is down 2.63%, and the Dow Jones is down 0.8% during the period. US stocks were not traded on Friday due to the weekend.

The 10-year Treasury yield last week touched a three-year high above 2.83%, which is weighing on stocks.

Elsewhere, investors will be watching how Twitter trades when the market opens. Twitter announced Friday that the board of directors has adopted a limited-term shareholder equity plan, often referred to as a “Poison Pill.” This move comes after billionaire Elon Musk Offered to buy the company for $43 billion.

– With a report by Patti Doom from CNBC.