By Peter Nurse
Investing.com - U.S. stocks are set to head lower Wednesday, paring recent gains, with weak earnings data from the pivotal banking sector illustrating the impact on the economy from the Covid-19 shutdown.
At 7:30 AM ET (1130 GMT), futures for the S&P 500 traded 48 points, or 0.7%, lower, futures for the Nasdaq down 87 points, or 1%. The Dow futures contract fell 343 points, or 1.4%.
The Dow and S&P cash indices recorded Tuesday their highest closes since March 10, and the Nasdaq since March 6. Stocks are having their best month since October 2011.
Recent gains have been driven by optimism that Western governments are getting a handle on the deadly pandemic, with discussions starting to emerge over when to restart these economies.
But overshadowing this was a warning from the International Monetary Fund on Tuesday that this year would see the weakest global growth since the Great Depression.
First-quarter numbers from the country’s banking giants have shown the trend, starting with JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) Tuesday.
Bank of America (NYSE:BAC) reported a drop of 45% in first-quarter profit and added $3.6 billion to loan loss reserves in the quarter. PNC Financial (NYSE:PNC) and US Bancorp, two more big Main Street lenders, also missed expectations after similar rises in provisions.
Goldman Sachs (NYSE:GS) also missed forecasts with EPS of $3.11 compared to expectations of $3.75. Provisions against credit losses rose to $937 million.
Citigroup (NYSE:C) is still due to weigh in, with analysts looking for earnings of $1.59 per share and revenue of about $19 billion.
March retail sales, at 8:30 AM ET (12:30 GMT),should also confirm a grim picture. The headline figure is expected to have dropped 8%, which would be the largest drop recorded, while core retail sales, which exclude auto sales, are seen posting a drop of 4.8%, according to economists’ forecasts compiled by Investing.com.
Industrial production and manufacturing output will follow at 9:15 AM.
Additionally, the U.S. airline sector will be in the spotlight after the Federal government agreed a $25 billion rescue package for 10 of the country's biggest airlines. American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL), Delta (NYSE:DAL) and Southwest (NYSE:LUV) are among the recipients.
Oil prices were slammed after the International Energy Agency said it expected a record fall in global oil demand of 9.3 million barrels per day in 2020. This would wipe out almost a decade of growth.
U.S. stockpiles of crude are expected to have risen by 11.7 million barrels last week alone, after having risen 30.6 million barrels over the past three weeks.
At 7:30 AM ET, Crude Oil WTI futures traded 2.3% lower at $19.64 a barrel, while the international benchmark Brent contract fell 4.2% to $28.36.
Elsewhere, gold futures fell 0.9% to $1,752.40/oz, while EUR/USD traded at $1.0913, down 0.6%.