(Bloomberg) — US equity futures stabilized Friday after a tech-led selloff on Wall Street, with traders now awaiting the next batch of price data as well as earnings reports from some of the biggest banks.
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Apple Inc. and Microsoft Corp. edged higher in premarket trading, while Nasdaq 100 contracts pared an earlier decline that followed a 2.2% plunge for the index on Thursday. Tesla Inc. dropped following news it will postpone its planned robotaxi debut by roughly two months.
As Wall Street giants prepare to start the earnings cycle, investors have been switching to cheaper cyclical stocks including banks and out of tech megacaps. JPMorgan Chase & Co., the first to report, beat estimates for second quarter investment banking revenue. Next up is Citigroup Inc. later Friday, followed by Goldman Sachs Group Inc. on Monday. Morgan Stanley and Bank of America Corp. report Tuesday.
“Expectations are for the rest of the market to close the gap with megacap tech. That means that earnings are broadening out,” Supriya Menon, EMEA head of multi-asset strategy at Wellington Management, said in an interview with Bloomberg TV. “When we look ahead, we see big-cap tech moderating in terms of the earnings they can deliver in the coming quarters.”
Thursday’s inflation data raised bets that the Federal Reserve will be able to cut interest rates soon, with a reduction in September now fully priced in and at least two by year-end.
Despite the latest setback, global stocks are set for their sixth weekly advance, the longest stretch since March, as Fed easing bets aid overall risk sentiment.
Fed Bank of Chicago President Austan Goolsbee described the CPI data as “excellent,” saying the report provided the evidence he’s been waiting for to be confident the central bank is on a path to its 2% goal. Producer price data later Friday will add to the picture.
The Stoxx Europe 600 index rose for a third day, with only one industry sector — technology — in the red as chip makers including ASML Holding NV and ASM International NA followed US peers lower. Telecom stocks led the advance, with Swedish network-equipment maker Ericsson AB surging more than 6% after reporting results that beat analysts’ expectations.
Oil climbed for a third day on signs of stronger demand, and signals the Fed is getting close to its much-anticipated pivot. Gold fell after a sharp rally on Thursday.
Key events this week:
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University of Michigan consumer sentiment, US PPI, Friday
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Citigroup, JPMorgan and Wells Fargo’s earnings, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 7:05 a.m. New York time
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Nasdaq 100 futures fell 0.1%
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Futures on the Dow Jones Industrial Average were little changed
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The Stoxx Europe 600 rose 0.4%
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The MSCI World Index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro rose 0.2% to $1.0891
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The British pound rose 0.4% to $1.2961
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The Japanese yen fell 0.2% to 159.13 per dollar
Cryptocurrencies
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Bitcoin fell 0.8% to $57,101.01
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Ether fell 1.6% to $3,067.27
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.22%
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Germany’s 10-year yield advanced five basis points to 2.51%
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Britain’s 10-year yield advanced seven basis points to 4.14%
Commodities
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West Texas Intermediate crude rose 0.8% to $83.28 a barrel
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Spot gold fell 0.7% to $2,398.66 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Charlotte Yang, Chiranjivi Chakraborty and Richard Henderson.
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