Wall St indexes set for breather after rally as focus shifts to earnings

By Niket Nishant and Utkarsh Hathi

April 15 (Reuters) – Wall Street’s main indexes were poised for a subdued open on Wednesday as investors paused after a recent rally to take stock of the latest developments in the Middle East conflict and a fresh batch of corporate earnings.

Equities have found support this week on hopes that Washington and Tehran could return to the negotiating table to end the war.

The resilience suggests that war-weary investors are ready to rotate into risk assets at the slightest indication of a de-escalation.

“The market is cautiously optimistic that we can get back to peace with Iran. And thus far, the earnings have been very good,” said Art Hogan, chief market strategist at B. Riley Wealth.

The benchmark S&P 500 index is nearing its first intraday record high since the conflict erupted. The S&P 500 and the tech-heavy Nasdaq have recouped all their losses since the war began.

New catalysts, however, may be needed to sustain the momentum in stocks.

“We’re going to need more concrete evidence now that the folks that want to get together and talk about peace are able to accomplish something before the deadline of this ceasefire,” Hogan said.

At 08:23 a.m. ET, Dow E-minis were up 12 points, or 0.02%, S&P 500 E-minis rose 0.5 point, or 0.01%, while Nasdaq 100 E-minis lost 26 points, or 0.1%.

Some analysts have warned that as stocks climb, they could become more vulnerable to sharp reversals if developments in the Middle East do not match the optimistic assumptions many are pricing in.

“U.S. equities appear to be looking through risks still being priced in commodity markets,” BofA Global Research analysts said.

The International Monetary Fund cut its outlook for global growth on Tuesday, citing the war-driven energy price spikes, and warned that an extended conflict could push the world to the brink of a recession.

BANK RESULTS IN SPOTLIGHT

Another packed day for earnings from financial heavyweights will be in focus as investors look for signs of how companies are navigating the impact of the war.

Bank of America shares rose 1% in premarket trading after the second-biggest U.S. lender reported growth in its first-quarter profit.

Wall Street heavyweight Morgan Stanley’s shares added 2.5% after it also reported a jump in first-quarter profit.

So far this week, banks have said U.S. consumers are financially healthy and that pipelines for initial public offerings and deals should remain robust unless the conflict drags on for much longer.

Oil prices gained slightly on Wednesday, remaining 31% above pre-war levels.

Traders will also tune in to the remarks from Federal Reserve Governor Michael Barr and Fed Vice Chair for Supervision Michelle ​Bowman later in the day.

Among other stock movers, Nike rose 2.8% after CEO Elliott Hill bought additional stock in the company.

Broadcom advanced 2% after Meta extended its custom chips deal with the firm.

Snap’s shares rose nearly 7% after the social media company said it would lay off about 1,000 employees.

(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Rashmi Aich and Shilpi Majumdar)