Focus On Corporate Income Decreases With The Future

(Reuters) - U.S. stock index futures retreated on Monday after a strong rally last week, with investors bracing for the first-quarter earnings season to underline the coronavirus-induced damage to Corporate America.

The S&P 500 .SPX ended a holiday-shortened week on Thursday with its biggest weekly percentage gain in more than four decades as the Federal Reserve rolled out trillions of more dollars to backstop businesses.

But the benchmark index remains about 17% below its mid-February record high amid fears of a deep global recession, as the health crisis sparks production halts and mass furloughs.

JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) will kick off the earnings season on Tuesday, with analysts expecting first-quarter earnings at S&P 500 firms to fall 9% compared with a Jan. 1 forecast of a 6.3% rise, according to IBES data from Refinitiv.

“It’s definitely going to be ugly across all sectors, but markets have already priced in a large chunk of this,” said Hussein Sayed, chief market strategist at FXTM.

“Now the question becomes are we witnessing a new bull market or is there still more pain ahead before the rally becomes sustainable?”

With U.S. jobless claims topping a staggering 16 million in the three weeks to April 4 and 42 states imposing strict stay-at-home orders, investors will also be watching for comments about the economic hit beyond the second quarter.

At 7:46 a.m. ET, Dow e-minis 1YMcv1 were down 179 points, or 0.76%, S&P 500 e-minis EScv1 were down 19.25 points, or 0.69% and Nasdaq 100 e-minis NQcv1 were down 46 points, or 0.56%.

Over the weekend, major oil producers agreed to their biggest-ever output cut, but crude prices were subdued on concerns even that would not be enough to head off oversupply with the coronavirus outbreak hammering demand.

Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) rose more than 1%, while Apache Corp (APA.N) jumped 7% in premarket trading.

Gilead Sciences Inc (GILD.O) rose 3% after latest data showed an improvement in the condition of more than two-thirds of severely ill COVID-19 patients following treatment with the drugmaker’s experimental drug.

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