Stock Market Today: Stocks slide on messy bank earnings; oil surges on U.S.-lead Red Sea strikes

U.S. equity futures slipped as investors braced for a host of blue-chip earnings prior to the start of trading that will kick off fourth-quarter reporting season.

Jan 12, 2024 - 19:30

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Stock Market Today: Stocks slide on messy bank earnings; oil surges on U.S.-lead Red Sea strikes

Check back for updates throughout the trading day

U.S. equity futures slipped lower Friday, while oil prices tumbled and the dollar held steady, as investors braced for a host of blue-chip earnings prior to the start of trading that will kick off fourth-quarter reporting season.

Updated at 8:47 AM EST

Factory gate deflation

Producer prices were flat in December, the Commerce Department reported Friday, with core pressures rising just 0.2% on the month and 1.8% from last year.

Key components of the PPI reading feed into the Fed's preferred inflation gauge, the PCE Price Index, and could indicate softer reading when the data is published later this month.

Stocks are paring their earlier declines, with the S&P 500 called 3 points lower and the Dow expected to fall around 115 points. The Nasdaq is called 15 points to the downside.

Updated at 7:52 AM EST

Tesla red thanks to Red

Tesla (TSLA) - Get Free Report shares slumped lower in early Friday trading after it confirmed that attacks on cargo ships in the Red Sea, lead by Iran-backed Houthi militants in Yemen, will likely trigger a parts shortage that will shut its Berlin factory for at least a week.

Updated at 7:10 AM EST

Messy banks

Bank earnings are coming in thick and fast, with JPMorgan (JPM) - Get Free Report missing Street forecasts on its bottom line, thanks in part to a $3 billion FDIC payout for the regional bank rescues. Its record net interest income, however, is giving share a boost, as is its 2024 outlook for expenses.

Citigroup (C) - Get Free Report, meanwhile slipped lower after paying $1.7 billion to the FDIC and taking another $2 billion in charges linked to markets in South America and Russia.

Wells Fargo (WFC) - Get Free Report was also lower as the specter of its asset cap, linked to its fake accounts scandal, will likely act as a break on near-term growth even as it posted stronger-than-expected fourth quarter profits of 86 cents per share.

Stock Market Today

JPMorgan leads a parade of big-bank earnings, including Citigroup and Wels Fargo, with UnitedHealth and Delta Airlines also reporting December-quarter results before the opening bell.

UnitedHealth (UNH) - Get Free Report got the ball rolling with a stronger-than-expected earnings report that included a record $94.4 billion in overall revenue.

Shares in the Dow component declined, however, amid another move higher in its medical-cost ratio, a key component of profitability.

Analysts are looking for collective S&P 500 profits to rise 5.2% from a year earlier to a share-weighted $457.2 billion, with earnings over the whole of 2024 expected to rise by around 11.1% from the previous year.

That outlook is likely to be crucial for markets to extend their late-2023 rally over the coming months. That's because Thursday's inflation report suggested that stubborn price pressures are likely to elongate the Federal Reserve's effort to bring core inflation closer to its preferred 2% target.

A "higher for longer" approach on rates from the Fed is likely to keep Treasury yields elevated over the near term, adding to pressure on stocks that will only abate if fourth-quarter earnings season and the outlook for first-quarter profit meet or exceed Wall Street forecasts.

Away from equities, global oil prices surged higher in overnight trading after the U.S. and the U.K. carried out coordinated military attacks on Iran-backed Houthi rebels in Yemen following a spate of attacks on cargo ships traveling through the Red Sea and into the Suez Canal.

"These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation," U.S. President Joe Biden said in a statement.

Brent crude contracts for March delivery, the global pricing benchmark, were last seen trading $3.16 higher heading into the New York session and changing hands at $80.60 per barrel.

WTI contracts for February delivery, which are more tightly linked to U.S. gasoline prices, jumped $3.05 to $75.07 per barrel.

On Wall Street, futures contacts tied to the S&P 500, which nudged into positive territory for the year on Thursday, are indicating a 6-point opening-bell decline while those linked to the Dow Jones Industrial Average are called 45 points lower.

The tech-focused Nasdaq, which is still down 0.27% for the year, is set to open 48 points lower.

In overseas markets, European stocks were trending higher, with the Stoxx 600 rising 0.8% in early Frankfurt trading, following dovish remarks on inflation from European Central Bank President Christine Lagarde late Thursday.

Speaking on French television, Lagarde said the "hardest part is behind us" with respect to the post-covid inflation surge, adding that "if we are certain that inflation will indeed be at 2%, at that point rates will start to go down."

Overnight in Asia, the Nikkei 225 in Japan extended its recent surge to close at its fourth consecutive 34-year high of 35,577.11 points.