Wall St. set to dip at open as Saudi tensions add to worries
(Reuters) - U.S. stocks were set to open slightly lower on Monday, mirroring global stocks, after growing tensions between Western powers and Saudi Arabia added to worries over rising borrowing costs and the impact of tariffs as the earnings season kicks into gear.
Bank of America (BAC.N) rose 0.91 percent in premarket trading after the second-largest U.S. lender’s profit rose more than expected, boosted by lower costs, and as higher interest rates and lending growth helped offset lower bond trading revenue.
Among the biggest U.S. banks JPMorgan (JPM.N) and Wells Fargo (WFC.N) were up 0.15 percent and 0.56 percent while Citigroup (C.N) and Goldman Sachs (GS.N) were trading flat.
U.S. President Donald Trump has threatened “severe punishment” if it is found that journalist Jamal Khashoggi, who disappeared on Oct. 2, was killed in the Saudi consulate in Istanbul. Saudi Arabia has vowed to retaliate if the West moves to punish the Kingdom.
Investors suspect the latest developments could undermine the leadership of Crown Prince Mohammed bin Salman and has the potential to eventually destabilize the oil-rich kingdom.
“We’ve entered a volatile and erratic phase in the market, primarily driven by accelerating rate concerns,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
“And the Saudi situation adds to this volatility.”
Last week ended on a positive note with the benchmark S&P 500 .SPX rebounding after six sessions of losses. But Wall Street still notched its biggest weekly fall since March.
The clearest picture yet of the impact of the U.S.-China trade war will be the third-quarter earnings season, especially the company forecasts. Profits at S&P companies are expected to have risen 21.5 percent, according to I/B/E/S data from Refinitiv, less than the growth in the past two quarters.
“It’s more about what picture the corporate heads are going to paint instead of the numbers themselves,” said Bakhos.
At 8:45 a.m. ET, Dow e-minis 1YMc1 were down 41 points, or 0.16 percent. S&P 500 e-minis ESc1 were down 4.25 points, or 0.15 percent and Nasdaq 100 e-minis NQc1 were down 21.75 points, or 0.3 percent.
U.S.-listed Chinese stocks were also lower. Alibaba (BABA.N), JD.com (JD.O), Baidu (BIDU.O) and Ctrip.com (CTRP.O) were down between 1.38 percent and 1.71 percent.
Monster Beverage (MNST.O) dropped 2 percent as Evercore ISI downgraded the beverage maker’s shares expecting fitness and sports drink makers to disrupt the market and take share from traditional energy drink companies.
Sears Holdings (SHLD.O) plummeted 33.7 percent after the retailer filed for Chapter 11 bankruptcy, throwing into doubt the future of the company which has withered in the age of internet shopping.
Latest data showed U.S. retail sales barely rose in September as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.
Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta
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