By Chris Matthews and Barbara Kollmeyer, MarketWatch
Muted trading activity weighs on bank revenue
U.S. stock-index futures were treading water Monday, as investors parse earnings from Goldman Sachs Group Inc., and Citigroup Inc., which could provide further guidance about the state of the banking sector and the broader economy.
How are benchmarks faring?
Dow Jones Industrial Average futures edged 4 points to 26,401, a loss of 0.1%, while S&P 500 futures ticked less than a point lower to 2,912.50, a decline of 0.1%. Nasdaq-100 futures were off 1.75 points, or less than 0.1%, to 7,650.50.
On Friday (http://www.marketwatch.com/story/dow-set-for-triple-digit-gain-as-china-trade-data-buoys-stock-market-amid-bank-earnings-2019-04-12), the Dow gained 269.25 points, or 1%, to end at 26,412.30, while the S&P 500 index rose 19.09 points, or 0.7%, to finish at 2,907.41. The Nasdaq Composite Index advanced 36.80 points, or 0.5%, to close at 7,984.16.
The S&P and Nasdaq closed higher for the week, while the Dow logged a slight loss.
What's driving the market?
Earnings season comes into fuller swing, though the week will be shortened by the Easter holiday, with results Monday from Goldman(GS) and Citigroup(C) closely watched by market participants.
Both banks showed sharp declines in earnings compared with the first-quarter of last year, but were able to surpass analysts low expectations for quarterly profits. On the revenue front, Goldman fell short of expectations while Citigroup matched, underscoring muted trading and mergers-and-acquisition activity on Wall Street in the first quarter.
Investors were cheered by quarterly results from Dow component JPMorgan Chase & Co., which kicked off a new earnings season early Friday, that came in better than expected (http://www.marketwatch.com/story/jp-morgan-chases-stock-surges-after-profit-revenue-rise-above-expectations-2019-04-12), while Wells Fargo & Co. also posted robust revenue and in-line earnings.
Analysts expect first-quarter earnings numbers for the S&P 500 to suffer the first year-over-year decline in nearly three years (http://www.marketwatch.com/story/risk-of-an-earnings-recession-rises-as-sp-500-profits-to-fall-for-first-time-in-3-years-2019-04-11), as macroeconomic headwinds continue to pull down estimates from analysts.
On Saturday, global financial policy makers meeting for the International Monetary Fund, said they stood ready to "promptly shore up growth" if needed (http://www.marketwatch.com/story/global-policy-makers-say-theyre-willing-to-shore-up-growth-to-avoid-world-slowdown-2019-04-13). While risk forecasts for economic expansion in 2020, remain tilted to the downside, amid concerns centered on trade tensions, policy uncertainty and geopolitical developments.
On the trade front, U.S. Treasury Secretary Steven Mnuchin told reporters over the weekend that the U.S. and China were moving closer to an agreement on trade, with phone discussions between the two countries last week. But he wasn't sure if more face-to-face meetings would be needed. On Sunday, Reuters reported that the U.S. was watering down demands (https://www.reuters.com/article/us-usa-trade-china-exclusive/exclusive-u-s-waters-down-demand-china-ax-subsidies-in-push-for-trade-deal-sources-idUSKCN1RR02X)that China cut down on industrial subsidies as a condition for a trade deal, after encountering strong Chinese opposition.
Federal Reserve policy could also be on trader's minds, after President Trump renewed his attacks (http://www.marketwatch.com/story/donald-trump-the-stock-market-should-be-as-much-as-10000-points-higher-2019-04-14) on the central bank Sunday, criticizing rate increases enacted during the first two years of his administration, as well as the bank's balance sheet reduction program, called qualitative tightening, which is set to end in September.
Federal Reserve Chairman Jerome Powell has repeatedly asserted (http://www.marketwatch.com/story/powell-downplays-recession-fears-in-2019-03-10) the central bank's independence from political influence, while pledging to serve our his four year term, ending in early 2021.
What stocks are in focus?
Shares of Advanced Disposal Services Inc.(ADSW) Waste Management Inc. rose 20.9% in premarket trade after Waste Management Inc.(WM) said it entered into an agreement to buy the rival waste company in a $4.9 billion deal. Waste Management will pay $33.15 a share in cash for Advanced Disposal stock, a 22.1% premium to its Friday closing price.
Shares of Canadian legal cannabis maker Aphria Inc.(APHA.T) fell 12.1% before bell Monday, the after the Canada-based cannabis company swung to a wide third-quarter loss (http://www.marketwatch.com/story/aphrias-stock-tumbles-after-swinging-to-wide-loss-while-revenue-increases-2019-04-15) in the most recent quarter.
Goldman's shares fell 1.9% in premarket action, after the bank reported first-quarter earnings (http://www.marketwatch.com/story/goldmans-stock-gains-as-big-profit-beat-helps-offset-revenue-miss-2019-04-15) that were well above expectations, but revenue figures that fell short.
Shares of Citigroup rose 1% before the bell Monday (http://www.marketwatch.com/story/citigroup-posts-revenue-decline-in-first-quarter-as-profit-tops-estimates-2019-04-15), after the bank surpassed earnings expectations for the first quarter, while reporting a decline in revenue that was in line with analysts' forecasts.
What are the analysts saying?
"Futures are flat following a quiet weekend as markets digest last week's rally," Tom Essaye, president of the Sevens Report, wrote in a Monday morning note to clients.
"Expectations of a U.S./China trade deal continue to rise, with some anticipating an announcement this week...But, as a reminder, the market has already priced in a deal, so the real focus of any announcement will be when tariffs are removed, and the sooner, the better."
What economic data and Fed speakers are ahead?
Factory production in New York state picked up in April versus March (http://www.marketwatch.com/story/empire-state-manufacturing-index-rebounds-in-april-but-growth-still-fairly-subdued-2019-04-15), with the Empire State business conditions index rising from a reading of 10.1 from the previous months' two-year low of 3.7.
Chicago Fed President Charles Evans will appear on CNBC at 8:30 a.m. and give a speech at the New York Association of Business Economists at 1 p.m. Evans is a voter on the Fed's interest-rate setting committee.
At 8 p.m. Boston Fed President Eric Rosengren, also a voter, was set to give a speech at Davidson College in Davidson, N.C.
How are other markets trading?
Stock markets in Asia closed on a mixed note Monday (http://www.marketwatch.com/story/asian-markets-race-to-gains-on-renewed-trade-deal-hopes-2019-04-14), with Shanghai's Composite index and Hong Kong's Hang Seng Index each losing 0.3% on the day. Japan's Nikkei 225 , meanwhile, rose 1.4%. European markets were trading slightly higher (http://www.marketwatch.com/story/europe-stocks-edge-higher-supported-by-banks-2019-04-15), with the Stoxx Europe 600 up 0.1%.
In Commodities markets crude oil futures fell 1%, while gold and the U.S. dollar were each lower Monday.
(END) Dow Jones Newswires
April 15, 2019 09:06 ET (13:06 GMT)
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