Futures fall as investors prepare for earnings season; Tesla is sinking

(Reuters) – U.S. stock index futures fell on Friday ahead of the start of the third-quarter earnings season after hotter-than-expected September inflation data bolstered expectations for a rate cut by 25 basis points by the Federal Reserve in November.

Tesla shares fell 5.8 percent in premarket trading after the electric vehicle maker unveiled its long-awaited robotaxi but gave no details on how quickly it might ramp up production or face potential roadblocks regulation.

Major financial companies kick off their third-quarter earnings season later in the day. JPMorgan Chase and Wells Fargo each fell about 0.2 percent ahead of scheduled results before the bell.

With major indexes trading around record highs and the benchmark S&P 500 up more than 21% year to date, third-quarter earnings will test whether growth in 2024 can be sustained amid uncertainty over monetary policy, risks geopolitics and the upcoming US presidential election.

Wall Street closed lower on Thursday after a closely watched consumer price index report showed inflation rose more than expected in September, but a rise in jobless claims pointed to potential weakness in the labor market.

However, bets on a 25bps rate cut by the US central bank in November remained intact, with analysts pointing to the impact of Hurricane Helene and an ongoing strike at Boeing as the jitters in jobless claims data.

“Overall, there is relatively little data that could dispel the FOMC’s confidence in inflation returning to its 2 percent inflation target over the medium term,” said Michael Brown, senior research strategist at Pepperstone.

Traders are pricing in about an 84% chance of a 25bp cut at the November meeting and see a slight chance – about 16% – of no change at that meeting, according to CME’s FedWatch.

Meanwhile, Atlanta Federal Reserve President Raphael Bostic said he was open to keeping rates unchanged next month.

Also on deck are producer price index data and the University of Michigan survey of consumer sentiment, as well as speeches from Fed officials Michelle Bowman, Lorie Logan and Austan Goolsbee throughout the day.

At 5:00 a.m. ET, the Dow E-mini was down 48 points, or 0.11%, the U.S. S&P 500 E-mini was down 12 points, or 0.21%, and the Nasdaq 100 E-mini was decreased by 69.75 points, or 0.34%.

Shares in Chinese listed companies lost ground ahead of Beijing’s closely watched fiscal stimulus update on Saturday. Of these, JD.com lost 3 percent, Alibaba Group fell 1.8 percent and PDD Holdings fell 2.7 percent.

(Reporting by Lisa Mattackal in Bengaluru; Editing by Pooja Desai)