Wall St set for lower open after inflation data; earnings limit declines By Reuters

By Devik Jain and Shreyashi Sanyal

(Reuters) – Wall Street’s main indexes were set to open lower on Tuesday after a solid rise in consumer prices in June reignited worries about economic growth peaking, while upbeat earnings reports from banks and PepsiCo (NASDAQ:) kept declines at bay.

A Labor Department report showed U.S. consumer prices rose by the most in 13 years last month amid supply constraints and a continued rebound in the costs of travel-related services, while the so-called core CPI surged 4.5% on a year-on-year basis, the largest rise since November 1991, after rising 3.8% in May.

“The headline CPI numbers have shock value, for sure,” said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.

“However, once you realize that a third of the increase is used car prices, the transitory picture becomes more clear … inflation is rising, but things are well behaved and have not changed materially.”

Inflation and positive economic data have dictated Wall Street’s movement since mid-June as investors fear an overheating economy amid a faster reopening could force the Federal Reserve to pare back its ultra-loose monetary policies sooner than expected.

Big banks including JPMorgan Chase & Co (NYSE:) and Goldman Sachs Group Inc (NYSE:) reported higher-than-expected quarterly earnings. Shares of Goldman Sachs rose 1.0%, while JPMorgan slipped 0.5% as it suffered from a well-flagged slowdown from last year’s record-breaking trading results.

PepsiCo Inc jumped 1.3% after raising its full-year earnings forecast, betting on accelerating demand for its sodas in theaters, restaurants and stadiums as COVID-19 restrictions continue easing.

“When you look at the results, these banks have had some blowout numbers,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“I think further and further into the earnings season, if we keep getting good results like what we saw for the first quarter then it will provide a cushion for the market”

June-quarter earnings per share for companies are expected to rise 66%, according to Refinitiv data, with market participants questioning how long Wall Street’s rally would last after a nearly 17% rise in the benchmark index so far this year.

At 9:01 a.m. ET, were down 122 points, or 0.35%, were down 18.5 points, or 0.42% and were down 62.25 points, or 0.42%.

Boeing (NYSE:) Co fell 2.2% after the Federal Aviation Administration said late on Monday some undelivered 787 Dreamliners have a new manufacturing quality issue.

HanesBrands Inc gained 3.2% after Wells Fargo (NYSE:) upgraded the Champion sportswear maker’s stock to “overweight” from “equal weight”.

Conagra Brands (NYSE:) Inc slipped 3.4% after the packaged foods company lowered its full-year profit and margin forecasts.