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By 06:45 ET (10:45 GMT), the Dow Jones Industrial Average was down 180 points, or 0.5%, S&P 500 traded 27 points, or 0.5%, lower and NASDAQ Composite dropped 105 points, or 0.6%.
JPMorgan Chase (NYSE:JPM stock fell just under 4% after the banking giant forecast full-year income from interest payments below expectations as the industry prepares for widely expected Federal Reserve rate cuts.
Wells Fargo (NYSE:WFC) also dropped 0.6% despite beating revenue expectations, as the lender reported softer-than-expected net interest income numbers.
The health of the banking sector is often be used as a measure of the strength of the economy as a whole, and uncertainty over the Fed’s interest rate outlook is set to hang over the first-quarter earnings season as a whole.
Analysts expect S&P 500 companies in aggregate to report earnings increased 5% in the first quarter from a year earlier, according to LSEG data, a sharp drop from the 10.1% growth seen in the fourth quarter of 2023.
Elsewhere, Roku (NASDAQ:ROKU) stock fell 1.5% after the streaming service provider said on Friday it has identified a second cyber attack that impacted about 576,000 accounts, after disclosing unauthorized access of 15,000 user accounts earlier this year.
The major economic release later Friday will be the Michigan consumer sentiment index for April, but the majority of focus will be on Fed speakers, including Bostic and Daly, as investors search for more information on the U.S. central bank’s future interest rate plans.
Wednesday’s hotter-than-expected CPI release has resulted in investors pricing out the likelihood of a June rate cut, particularly after the strong monthly payrolls report. September is now seen as the likely start date.
Crude prices rose Friday as geopolitical risks, particularly in the oil-rich Middle East, remained elevated, but are set for weekly losses on concerns over U.S. monetary policy.
By 10:45 ET, the U.S. crude futures traded 2.8% higher at $87.42 a barrel, while the Brent contract climbed 2.4% to $91.92 per barrel.
U.S. officials have predicted an attack by Iran against Israel shortly, in retaliation for a suspected Israeli air strike against a top Iranian military commander in Damascus earlier this week.
There remains the risk that Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, is dragged into the conflict between Hamas and Israel in Gaza, potentially hitting crude supplies from the region.
These tensions have overshadowed the International Energy Agency cutting its forecast for oil demand growth this year, by around 100,000 barrels per day to 1.2 million barrels per day, in its latest monthly report, released earlier Friday.
The global energy watchdog said that it expected the pace of expansion to decelerate even further to 1.1 million barrels per day next year “as the post-Covid 19 rebound has run its course.”
