Futures slip as investors brace for tech earnings, economic data

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(Reuters) -Wall Street futures slipped on Monday ahead of a busy week for earnings, with investors also awaiting key economic data that could shed light on the U.S. economy and shape the Federal Reserve’s monetary policy.

Heavyweights including Alphabet (NASDAQ:GOOGL) Inc, Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META), whose shares have supported markets this year, are scheduled to report results this week.

“Not only must these companies beat, but they must also guide to a re-acceleration of EPS growth in the second quarter and beyond … that’s what the Street is looking for,” said Nicholas Colas, co-founder of DataTrek Research.

Wall Street has largely held steady through the start of the earnings season as results from the big banks came in stronger than expected, allaying concerns about a contagion from the banking crisis in March.

Focus also remains on signs of inflation and economic slowdown pressuring margins for consumer companies.

Coca-Cola (NYSE:KO) Co gained 1.3% in premarket trading after the beverage giant beat estimates for quarterly results on resilient demand for its sodas despite multiple price increases.

Of the 88 S&P 500 companies that reported results through Friday, nearly 76% beat analysts’ first-quarter profit estimates, as per Refinitiv IBES data, above the long-term average of 66.3%.

Forecasts for earnings have also improved marginally, with analysts now expecting a profit contraction of 4.7% versus a 5.1% decline estimated at the start of April.

Early readings of first-quarter U.S. GDP, personal consumer expenditure index (PCE) for March, consumer confidence numbers for April are among the data scheduled for release this week.

Investors will scrutinize these reports for signs of an economic slowdown after mixed data last week cemented bets of another 25-basis-point rate hike by the Fed in May and tempered expectations of rate cuts later this year.

Most Fed policymakers have reiterated the central bank’s focus to tame spiraling inflation before entering the blackout period until the next policy meeting.

Money market traders have priced in an 85% chance of the Fed hiking rates by 25 bps next month, as per CME Group’s (NASDAQ:CME) Fedwatch tool, while anticipating rate cuts in the latter half of the year.

“Rates are likely going to have to stay at current levels until well into 2024 … that might present a problem for the more highly valued areas of the U.S. market,” said Michael Hewson, chief market analyst at CMC Markets UK.

Investors will also monitor a vote on Republican U.S. House of Representatives Speaker Kevin McCarthy’s spending and debt bill this week amid lingering concerns that the U.S. government could hit its debt ceiling sooner than expected.

At 7:16 a.m. ET, Dow e-minis were down 48 points, or 0.14%, S&P 500 e-minis were down 4.25 points, or 0.1%, and Nasdaq 100 e-minis were down 3.75 points, or 0.03%.

Bed Bath & Beyond Inc (NASDAQ:BBBY)’s shares tumbled 39.4% as the home goods retailer filed for Chapter 11 bankruptcy protection after it failed to secure funds to stay afloat.

First Republic Bank (NYSE:FRC) gained 1.2%. The regional bank, whose shares have sunk 88% this year triggered by the U.S. banking crisis, is set to report results after market closes on Monday.