Markets hold off as big banks kick off Q2 earnings season

Futures for the S&P 500 and Nasdaq 100 indexes stalled near record highs on Friday as investors awaited earnings reports from JPMorgan, Citigroup and Wells Fargo, which are expected to kick off the second-quarter earnings season.

JPMorgan Chase, the largest U.S. lender, is expected to report a drop in quarterly profit. Analysts predict big banks will set aside more cash to cover bad loans. Shares of JPMorgan and Citigroup fell slightly ahead of the results.

As the S&P 500 and Nasdaq hit new highs, investors are banking on solid earnings growth from companies beyond tech giants like Nvidia to fuel a broader rally. A rotation out of large-cap tech stocks into small-cap stocks sent the Nasdaq down nearly 2% after an unexpected drop in U.S. consumer prices fueled expectations for a September interest-rate cut.

Traders now estimate an 86% chance of a rate cut in September, up from 72% the previous week, based on CME Group’s FedWatch tool. Investors will also be watching June producer price data and the University of Michigan’s consumer survey for further clues on lower inflation.

As of 4:46 a.m., the Nasdaq 100 E-mini was down 9.25 points, or 0.05%, while the S&P 500 E-mini was up 4.75 points, or 0.08%. The Dow E-mini was up 39 points, or 0.1%. Tesla was down 1.4% after UBS downgraded the electric vehicle maker to “sell.”

U.S. regional lender Bank of New York Mellon and industrial goods maker Fastenal are also due to release a report.

(Disclaimer: Based on information obtained from the agency.)