By Devik Jain
(Reuters) – U.S. stock index futures slipped on Friday as optimism over a $1.9 trillion stimulus plan unveiled by incoming President Joe Biden faded with investors turning to quarterly reports from major Wall Street banks.
JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co will unofficially kickoff the fourth-quarter earnings season before the bell and investors will focus on their outlooks to validate expectations for a strong 2021 rebound in earnings and the economy.
Shares of the three banks slipped about 0.6% in premarket trading.
Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.
Biden’s stimulus package proposal, unveiled on Thursday, includes $415 billion to accelerate the distribution of vaccines, some $1 trillion in direct relief to households, and roughly $440 billion for small businesses and communities particularly hard hit by the pandemic.
“There appears to be a some ‘sell-the-news’ price action in equities, given that a lot of the optimism surrounding another injection of US fiscal stimulus had already been priced in ahead of the keenly awaited announcement,” said Han Tan, Market Analyst at FXTM.
Some investors worried that the government will need to fund the spending through tax hikes eventually.
Wall Street’s main indexes closed lower after the Dow and the Nasdaq hit record highs during the session on bets of a hefty package and vaccine distribution.
At 6:35 a.m. ET, Dow E-minis were down 135 points, or 0.44%, S&P 500 E-minis were down 17 points, or 0.44%. Nasdaq 100 E-minis were down 40.75 points, or 0.32%.
Hewlett Packard Enterprise Co rose 1.2% after J.P. Morgan upgraded the enterprise software maker’s stock to “overweight” from “neutral”.
Reporting by Devik Jain in Bengaluru; Editing by Maju Samuel
Our Standards: The Thomson Reuters Trust Principles.