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US STOCKS-Wall St to open flat as weak bank earnings check inflation data cheer

Credit: REUTERS/BRENDAN MCDERMID

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Bank of America profit shrinks on $2.1 billion of charges

UnitedHealth falls on higher-than-expected medical costs

Tesla falls after flagging output hit from Red Sea disruption

US producer prices unexpectedly fall in December

Futures off: Dow 0.33%, S&P 0.08%, Nasdaq 0.08%

Updated at 8:45 a.m. ET/1345 GMT

By Johann M Cherian and Ankika Biswas

Jan 12 (Reuters) - Wall Street's main indexes were poised for a subdued open on Friday after a softer-than-expected inflation report that boosted bets for early rate cuts was overshadowed by weak earnings reports from big banks.

Futures trimmed some losses after a Labor Department report showed the Producer Price Index (PPI) dipped 0.1% on a monthly basis in December, compared with economists' expectations of a 0.1% rise.

The data comes on the heels of Thursday's hotter-than-expected consumer inflation print.

Following the latest data, traders' expectations for a 25-basis-point rate cut in March rose to nearly 71% from 66.3%, as per the CME Group's FedWatch Tool.

"It was a good report, it alleviates some of the concerns about inflation. While it's on the producer level, it'll eventually translate to the consumer level," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Bank of AmericaBAC.N shed 2.1% in trading before the bell on fourth-quarter profit fall as the lender took $3.7 billion in combined charges to refill the FDIC's insurance fund and phase out a loan index.

Wells Fargo's WFC.N fell 1.9% after flagging that 2024 net interest income could be 7% to 9% lower than a year earlier, while CitigroupC.N rose 1.4% even after posting a sharp quarterly loss.

JPMorgan ChaseJPM.N added 2.2% after reporting its best ever annual profit and forecasting higher-than-expected interest income for 2024.

"The banks are very well capitalized, but are also going through the machinations of dealing with an inverted yield curve, less capital markets activity, likely less mortgage loan activity and just going through you know the aftershocks of the pandemic," said Art Hogan, chief market strategist at B Riley Wealth.

The banking sector .SPXBK faced its worst turmoil since the 2008 financial crisis in March 2023, but finished the year with a 7% gain on hopes that the Federal Reserve could commence interest rate cuts in 2024.

Among others that reported results on Friday, Dow component UnitedHealthUNH.N fell 4.7% on higher-than-expected medical costs. The health insurer, however, posted upbeat fourth-quarter profit.

At 8:45 a.m. ET, Dow e-minis 1YMcv1 were down 125 points, or 0.33%, S&P 500 e-minis EScv1 were down 4 points, or 0.08%, and Nasdaq 100 e-minis NQcv1 were down 14.25 points, or 0.08%.

BlackRockBLK.N slipped 0.5% on plans to buy fund manager Global Infrastructure Partners (GIP) in a deal worth $12.5 billion. The asset manager also posted an 8% rise in quarterly profit.

Delta Air LinesDAL.N fell 5.2% after the carrier scaled down its annual profit outlook.

Tesla TSLA.O declined 3.0% after trimming prices of some new China models.

The electric-vehicle maker also said it will suspend most car production at its factory near Berlin, citing an impact due to shifts in transport routes because of attacks on vessels in the Red Sea.

Energy stocks such as Chevron CVX.N, Exxon Mobil XOM.N and Occidental Petroleum OXY.N gained over 1% each, tracking higher crude prices.

Investors will also parse comments by Minneapolis Fed President Neel Kashkari for any clues on the monetary policy trajectory.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Shinjini Ganguli)

((johann.mcherian@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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