Markets Pause as Big Banks Kick Off Q2 Earnings Season

Futures tied to the S&P 500 and Nasdaq 100 paused near record levels ahead of major banks reporting their second-quarter earnings. Market expectations include a decline in JPMorgan's profit and a possible rate cut. Investors are looking for signs of robust profit growth beyond tech giants like Nvidia.

Futures tied to the S&P 500 and the Nasdaq 100 indexes paused near record levels on Friday as investors awaited earnings reports from JPMorgan, Citigroup, and Wells Fargo, which are set to jumpstart the second-quarter earnings season.

JPMorgan Chase, the largest U.S. lender, is anticipated to report a decline in quarterly profit. Analysts predict major banks will allocate more funds to cover bad loans. Shares of both JPMorgan and Citigroup saw marginal drops ahead of results.

As the S&P 500 and Nasdaq achieve new heights, investors are hoping for robust profit growth from companies beyond tech giants like Nvidia, enabling a broader market rally. A rotation from large-cap tech stocks to small-caps resulted in a nearly 2% decline in the Nasdaq after an unexpected drop in U.S. consumer prices bolstered expectations for a September interest rate cut.

Traders now estimate an 86% probability of a rate cut in September, up from 72% the previous week, based on CME Group's FedWatch Tool. Investors will also watch producer prices data for June and the University of Michigan's consumer survey for further indications of cooling inflation.

At 04:46 a.m., Nasdaq 100 E-minis fell 9.25 points or 0.05%, while S&P 500 E-minis rose 4.75 points or 0.08%. The Dow E-minis gained 39 points or 0.1%. Tesla saw a 1.4% dip as UBS downgraded the electric vehicle maker to 'sell'.

U.S. regional lender Bank of New York Mellon and industrial supplies maker Fastenal are also scheduled to report.

(With inputs from agencies.)