Futures slip, bank earnings ahead, Powell to speak - what’s moving markets

Investing.com - U.S. stock futures slide, as markets await a host of Wall Street bank earnings and fresh statements from Federal Reserve officials. JPMorgan Chase and Wells Fargo are among a slew of lenders due to report their quarterly returns, which analysts expect will be bolstered by a largely resilient U.S. economy. Gold prices log a new all-time peak, while oil drops, following new developments in U.S.-China trade tensions.

1. Futures drop

U.S. stock futures pointed lower on Tuesday, as investors geared up for the release of a fresh batch of earnings from major Wall Street banks and looked ahead to comments from Federal Reserve Chair Jerome Powell.

By 03:01 ET (07:01 GMT), the S&P 500 futures contract had slid by 47 points, or 0.7%, Nasdaq 100 futures had dipped by 230 points, or 0.9%, and Dow futures had dropped by 197 points, or 0.4%.

The main averages rallied on Monday, recouping much of their losses from the end of the previous trading week, after President Donald Trump appeared to soften his rhetoric on trade tensions with China. Trump had initially threatened to raise tariffs on China to triple-digits over Beijing’s expansion of rare earths export controls, leading to a slump in equities on Friday, although he later seemingly reined in this statement.

U.S. Treasury Secretary Scott Bessent also reiterated that a much-anticipated meeting between Trump and Chinese counterpart Xi Jinping in South Korea later this month remains on track, further bolstering hopes for an easing in the trade spat between the world’s two largest economies.

In individual stocks, shares of advanced chip designer Broadcom spiked by more than 9% after ChatGPT-maker OpenAI announced a financial commitment for up to 10 gigawatts worth of artificial intelligence processors from the company. The agreement poured fresh fuel on to soaring enthusiasm around AI, sending many names linked to the nascent technology higher.

2. Bank earnings ahead

Attention now turns to a parade of returns from Wall Street’s biggest banks this week, which typically kicks off the quarterly corporate reporting season.

Prior to the opening bell, JPMorgan Chase -- the largest U.S. lender -- will post results, along with peers such as Wells Fargo , Goldman Sachs and Citigroup. Rivals Bank of America and Morgan Stanley are due to post their earnings on Wednesday.

The banks are anticipated to deliver mostly solid earnings, powered by a resilient U.S. economy that has supported borrowing activity, buoying consumer and commercial lending divisions. Dealmaking has picked up as well following a stagnant period in the wake of Trump’s sweeping tariff announcements earlier this year, thanks to a mix of easing regulations and expectations for lower interest rates.

Still, observers will likely be keeping tabs on any remarks around the wider outlook, particularly after JPMorgan CEO Jamie Dimon warned of a correction in stocks within the next six months to two years, citing uncertainty around geopolitics, fiscal spending, and global remilitarization.

3. Powell to speak

Traders will likely be monitoring a speech by Fed Chair Jerome Powell at the National Association for Business Economics annual meeting on Tuesday.

Powell is seen "lament[ing]" a dearth of key economic data during an ongoing U.S. government shutdown, which has delayed the publication of several indicators the Fed uses to calibrate monetary policy, analysts at Vital Knowledge said in a note. Media reports have said furloughed government workers have been recalled to get out the September consumer price index, a crucial inflation gauge, but it is unclear when other postponed data points will arrive.

At the moment, markets currently expect the central bank to cut interest rates by 25 basis points at its upcoming gathering on October 28-29, CME’s FedWatch Tool has shown. Last month, the Fed slashed borrowing costs by a similar magnitude, restarting an easing cycle partly aimed at addressing a slowing employment picture.

The shutdown, meanwhile, does not seem to be closing in an imminent resolution, even with the Senate scheduled to come back into session later on Tuesday.

4. Gold notches new high

Gold prices climbed to a fresh record high above $4,100 per ounce, as Fed rate cut bets and renewed trade woes between the U.S. and China spurred a rush into safe-haven assets, while silver also rallied to fresh peaks.

Spot gold traded 0.4% higher at $4,125.35 per ounce by 03:41 ET. U.S. gold futures inched up by 0.1% to $4,138.40/oz. 

The yellow metal has jumped by over 50% so far this year, and exceeded the $4,100 level for the first time ever on Monday.

A confluence of factors, including a murky economic and political outlook, wagers on further Fed borrowing cost drawdowns, central bank purchasing, and strong inflows into gold-linked exchange traded funds have combined to drive up bullion.

5. Oil slips

Oil prices dropped on Tuesday, reversing earlier gains, as concerns swirled around whether the latest flare-up in trade tensions between the U.S. and China will dent global crude demand.

Brent crude futures slipped by 2.2% to $61.94 per barrel by 05:39 ET, while U.S. West Texas Intermediate fell 2.3% to $58.14 a barrel.

Despite the series of conciliatory statements, worries remain that the trade spat could reignite. China has announced sanctions on five U.S.-connected subsidiaries of South Korean shipbuilder Hanwha Ocean, and Beijing and Washington will impose additional port fees on ocean shipping groups -- many of which help transport crude oil.

Elsewhere, global oil supply is anticipated to grow at a faster pace than previously estimated this year and a surplus is tipped to expand even further in 2026 thanks in part to increased OPEC+ output and "subdued" demand, according to a monthly report from the International Energy Agency.

In its Oil Market Report for October, the IEA said that world oil supply is on pace to rise by 3 million barrels per day to 106.1 million bpd in 2025. It had previously forecast a jump of 2.7 million bpd. Next year, supply is seen growing by a further 2.4 mbpd, the IEA added.

Oil supply around the world in September came in at 5.6 million bpd versus a year earlier, much of it stemming from output from the Organization of the Petroleum Exporting Countries and its allies. The producer group, known as OPEC+, has been unwinding some output reductions more rapidly than it had previously planned, raising worries over a global supply glut that has broadly weighed on oil prices year-to-date.