Futures lower, bank earnings ahead, Tesla’s robotaxi event

Investing.com — U.S. stock futures fall on a batch of big bank earnings, including quarterly numbers from JPMorgan Chase (NYSE: ) and Wells Fargo (NYSE: ). Tesla (NASDAQ: ) is unveiling its new robotaxi offering at a much-anticipated event in Los Angeles, and Warren Buffett’s Berkshire Hathaway (NYSE: ) is dropping its stake in Bank of America below a key threshold.

1. Smaller futures

U.S. futures were below flat on Friday as investors looked to a slew of earnings from big Wall Street banks and weighed fresh data on inflation.

By 03:48 ET (0748 GMT), the contract was down 46 points, or 0.1 percent, down 8 points, or 0.1 percent, and down 37 points, or 0.2 percent.

The major averages closed the previous session in the red after Labor Department figures showed hotter-than-expected price growth in September. First-time claims for jobless benefits last week were also higher than economists had expected.

Both data come as the Federal Reserve tries to create a “soft landing” for the U.S. economy, where once-high inflation is subdued without triggering a sharp decline in the labor market or broader activity. The Fed cut interest rates by 50 basis points last month, arguing it was necessary to help boost job demand at a time of declining inflationary pressures.

Following the data, traders priced in about an 86 percent chance that the central bank would roll out a more traditional 25 basis point rate cut at its next meeting in November, according to CME Group (NASDAQ: ) closely watched FedWatch. Instrument. There was about a 14% chance the Fed would keep borrowing costs unchanged at a range of 4.75% to 5.00%.

2. Bank earnings in advance

Markets will look to earnings from JPMorgan Chase and Wells Fargo on Friday, set to kick off the latest earnings season for the US banking sector.

Lenders are widely expected to report a drop in third-quarter profits, reflecting a potential drop in net interest income due to lower borrowing costs. Net interest income, which measures the difference between what banks pay for deposits and what they earn on loans, has been boosted in recent years after the Fed aggressively raised interest rates to quell skyrocketing inflation.

As a result, lenders’ forecasts will be a major point of interest for investors, especially as the Fed embarks on a possible policy easing cycle following its string of interest rate hikes. More interest rate cuts could reduce net interest income, although it could cause an increase in loans and transactions.

Meanwhile, analysts anticipate that the investment banking units of these companies have been boosted by an increase in the volume of debt issuance and initial public offerings. An increase in market volatility is also seen strengthening trading segments, but earnings are typically slower in the third quarter compared to the previous three-month period, Reuters reported, citing analysts at Moody’s (NYSE: ).

3. Tesla Unveils “Cybercab”

Tesla shares fell in US premarket trading on Friday after the group unveiled its long-awaited “Cybercab” robot-axis, although analysts signaled that CEO Elon Musk offered few answers to crucial questions about the technology.

The Cybercab model, which has no steering wheel or pedals and does not have two seats, will likely go into production before 2027 and be available for less than $30,000, Musk said. However, the tech mogul, who rode into the Los Angeles event in a Cybercab, noted that the service will still have to clear a variety of regulatory hurdles.

Tesla shares have risen since it first announced a “robotaxis day” in April, as Musk estimated that the new deals could boost the company’s valuation to $5 trillion from its current level of just over $748 billion.

“It will save lives,” Musk said, adding that self-driving vehicles will be “ten times” safer than human drivers.

Tesla also showed off a prototype for the “Robovan,” an autonomous vehicle capable of accommodating up to 20 people, as well as an updated model of its humanoid robot, called “Optimus.”

Tesla’s pivot to artificial intelligence and self-driving comes as the company faces a steady decline in sales due to increased competition in China’s top market and sluggish sales in the West.

4. Buffett’s Berkshire Hathaway cuts stake in Bank of America below 10%

Warren Buffett’s Berkshire Hathaway unloaded another batch of its holdings in Bank of America this week, this time taking the stake in the US lender below 10%.

Berkshire sold 9.5 million shares worth just over $382 million this week, a regulatory filing showed on Thursday.

By reducing its stake below 10 percent, Berkshire’s holdings fall below a key Securities and Exchange Commission threshold that would require the Nebraska-based conglomerate to disclose stock purchases and sales within two business days.

That means Bank of America investors will likely have to wait until Berkshire’s quarterly financial reports or stock disclosures to find out if it sold higher.

5. Volatile oil

Oil prices were choppy on Friday, although they remained on pace for a second straight weekly gain, as investors assessed the impact of hurricane damage in the US and tensions in the Middle East.

By 3:47 a.m. ET, the contract was down 1.1% at $78.57 a barrel, while futures (WTI) traded 1.1% lower at $75.05 per barrel.

For the week, both benchmarks headed for gains of around 1%.

In the US, Hurricane Milton cut a destructive path through Florida, leaving millions without power. The destruction could reduce fuel consumption in the world’s largest oil producer and consumer.

In addition, traders weighed in on a potential escalation of conflict in the Middle East, especially if Israel targets Iran’s oil facilities.

(Reuters contributed reporting.)