Stock futures rebound following the S&P 500’s 3-day losing streak, Delta shares gain after results

Stocks futures were bouncing Wednesday as Wall Street tried look past the highest inflation in decades and focus on the start of start of first quarter earnings reporting season.

Futures on the Dow Jones Industrial Average rose 30 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures climbed 0.2% and 0.3%, respectively. Those moves come after the S&P 500 and Nasdaq Composite posted their third straight losing session on Tuesday amid March’s CPI showing the highest inflation since 1981.

First quarter earnings reporting season kicks off Wednesday and analysts have tempered their expectations amid rising commodity costs, the war in Ukraine and the lingering pandemic. But earnings for S&P 500 companies are still expected to increase a healthy 4.5% in the period, according to FactSet.

“Given the myriad headwinds faced by companies in the 1st quarter and the year ahead, we think 1Q reporting season has the potential to be a mess,” wrote Lori Calvasina, head of U.S. equity strategy at RBC. “But we also see the potential for it to not be as bad as feared, given the likelihood that buy-side expectations are much lower than official sell-side forecasts – as long as robust assessments of underlying appetite/demand remain in place.”

“For now, we stick with our 5,050 year-end S&P 500 price target,” she added.

Delta, BlackRock, and Fastenal earnings results all topped estimates Wednesday morning and the shares were higher in premarket trading. Delta was the biggest winner so far, gaining 6% as its quarterly loss was less than expected and it forecast a return to profitability for this quarter.

JPMorgan Chase shares were slightly lower in premarket trading after the bank reported mixed results. JPMorgan reported a $524 million hit in the quarter following market upheavals related to Russia sanctions that lowered earnings per share by 13 cents. But JPMorgan managed to report $31.59 billion in revenue for the period, slightly more than expected by analysts. It also reported a new $30 billion buyback program.

“Our sense is that 1Q results will be ‘OK’ relative to expectations and management guidance will be more negative than positive once again,” wrote Chris Senyek, chief investment strategist at Wolfe Research. “As such, we don’t expect earnings trends coming out of 1Q reports to propel equity markets higher. Rather, our sense is that high inflation, Fed tightening, and rising recession risks will remain the key drivers of overall market returns and sector rotation.”

Traders were awaiting the March producer prices report on Wednesday following the hot CPI report that knocked markets on Tuesday. March PPI was expected to climb 1.1% last month, according to economists polled by Dow Jones. The report is due at 8:30 a.m.

Consumer prices surged 8.5% in March, the Labor Department said on Tuesday. The report fueled further concerns of tighter monetary policy from the Federal Reserve, even as core CPI excluding food and energy costs rose 0.3%, slightly below expectations. Some on Wall Street saw this as a sign that inflation may be nearing a peak.

“I think it’s very likely inflation peaked,” Guggenheim Partners Global chief investment officer Scott Minerd told CNBC’s “Closing Bell: Overtime” on Tuesday. “If it didn’t peak in March, we’re in the process of peaking.” 

The 10-year Treasury hit a new three-year high following the report, topping 2.82% before pulling back. On Wednesday, the benchmark rate traded at 2.73%.