By Mark DeCambre, MarketWatch

JPMorgan shares down by more than 2% in premarket action

U.S. stocks on Tuesday were poised to trade flat, pulling back from earlier gains, as investors weighed lackluster results from major U.S. banks, including Dow component JPMorgan Chase, which delivered a rare disappointment on profit and revenue.

How are major benchmarks faring?

Futures on the Dow Jones Industrial Average remained 4 points higher at 23,872, trimming an earlier gain, while S&P 500 futures rose 5 points, or 0.1%, at 2,585.75. Nasdaq-100 futures advanced 33 points to reach 6,578.50, a gain of 0.5%.

On Monday, the Dow slid 86.11 points, or 0.4%, to end at 23,909.84, while the S&P 500 index fell 13.65 points, or 0.5%, to 2,582.61. The Nasdaq Composite Index dropped 65.56 points, or 0.9%, to close at 6,905.92.

Read: The most important skill traders need isn't when to buy--it's when (and what) to sell (http://www.marketwatch.com/story/as-stocks-rally-most-important-skill-traders-need-isnt-when-to-buyits-when-and-what-to-sell-2019-01-12)

What's driving the market?

Optimism over China's new stimulus efforts was dented by JPMorgan Chase & Co's(JPM) fourth-quarter earnings report, which showed the financial behemoth delivering results that fell below consensus analysts' estimates for both profit and revenue. The disappointing earnings come on the heels of Citigroup's weaker-than-expected results, which were fueled by a poor showing in fixed income and currency trading, and may raise concerns about the vitality of the U.S. economy or banks' ability to deal with volatility.

Earlier, the People's Bank of China said they would increase efforts to spur their economy by improving credit availability for smaller companies, cutting taxes, and ramping up infrastructure investments, Beijing officials said Tuesday. The comments come a day after the world's second-largest economy delivered trade data that were poorer-than expected, underlining worries that the country's economy was locked in a downturn that could weight on global expansion amid a protracted tariff spat between China and the U.S.

See:China growth worries flare up again after trade data (http://www.marketwatch.com/story/china-growth-worries-flare-up-again-after-trade-data-2019-01-14)

Separately, investors were also watching an important U.K. parliamentary vote on Prime Minister Theresa May's plan to stage an orderly divorce from the European Union by a March 29 deadline. May faces a likely defeat on her Brexit plan that is likely to inject volatility in local markets and potentially among countries that do business with the United Kingdom.

What are strategists saying?

J.P. Morgan's earnings miss was similar to Citigroup's on Monday, in that it was driven by a large decline in its capital markets operations, rather than lending to households or corporations, Axel Pierron, managing director of capital markets management consultancy Opimas, wrote in a Tuesday-morning note. "The situation is strongly attributable to market conditions, notably in the bond market," he wrote.

"Beijing revealed plans to cut income tax for small businesses in a bid to stimulate the economy. The latest move by the Chinese authorities indicates how keen they are to cushion the slowdown in economic activity," wrote David Madden, market analyst at CMC Markets UK, in a Tuesday research note. "Dealers in Europe are a little on the optimistic side this morning, and UK politics will be in focus this evening as parliament will vote on Theresa May's Brexit deal, but it seems to be very unpopular," he wrote.

What data and Fed speakers are ahead?

The Labor Department will issue the latest reading of the producer-price index at 8:30 a.m. Eastern Time, giving investors a key reading of inflationary pressures facing American businesses.

At the same time, the Federal Reserve will release its Empire State index, a survey of New York State manufacturers.

Tuesday will also feature commentary from several Federal Reserve officials. At 11:30 a.m., Minneapolis Fed president Neel Kashkari will give speech; at 1 p.m. Dallas Fed president Rob Kaplan will participate in a Q&A and Kansas City Fed president Esther George will give a speech at 1:15 p.m. George is the only voting member of the Fed's rate-setting committee, among the three.

Which stocks are in focus?

Shares of UnitedHealth Group Inc. (UNH) traded 0.7% lower in premarket action, even after the health company reported better-than-expected profit and revenue.

Wells Fargo & Co. (WFC) is also slated to release its fourth-quarter results on Tuesday.

J.P. Morgan shares were down 2.8% before the bell.

Shares of Delta Air Lines Inc. (DAL) are down 1.8% in premarket action, even after the company posted (http://www.marketwatch.com/story/delta-air-lines-stock-falls-after-earnings-2019-01-15) better-than-expected fourth-quarter earnings, while meeting Wall Street expectations for revenue.

Sherman Williams Co. (SHW) stock is down 8.3% in premarket action, after the company warned that full-year profits (http://www.marketwatch.com/story/sherwin-williams-shares-slide-75-premarket-after-profit-warning-2019-01-15) have fallen short of guidance and analyst expectations.

Shares of Blue Apron Holdings Inc. are up 11.5% before the bell Tuesday, after the meal-kit company predicted it would reach profitability (http://www.marketwatch.com/story/blue-apron-shares-soar-after-it-says-it-expects-to-be-profitable-on-adjusted-ebitda-basis-2019-01-15) on an adjusted EBITDA basis in the first quarter and full year 2019.

Shares of CVS Health Corp. (CVS) are in focus, after the firm said (http://www.marketwatch.com/story/walmart-to-leave-cvs-caremarks-pbm-networks-2019-01-15) Walmart Inc. (WMT) has decided to leave the CVS Caremark pharmacy benefit management (PBM) commercial and Managed Medicaid networks. CVS shares are down 2.5% in premarket trade.

How are other markets trading?

Asian markets closed broadly higher on Tuesday, with Japan's Nikkei rising 1%, Hong Kong's Hang Seng index adding 2% and The Shanghai Composite index advancing 1.4%.

In Europe, stocks traded mixed, with the Stoxx Europe 600 virtually unchanged, while the FTSE 100 is up 0.1%.

Crude oil was on the rise Tuesday, up 1.3% and adding to the 12.7% increase in prices since the beginning of the year. Gold prices were virtually unchanged at $1,291 per ounce, while the U.S. dollar was rising 0.3%.

 

(END) Dow Jones Newswires

January 15, 2019 08:22 ET (13:22 GMT)

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