Futures slip as Middle East conflict weighs; bank results and data in focus

(Reuters) – Futures for Wall Street’s main stock indexes fell on Tuesday as investors assessed diplomatic efforts to contain the Middle east conflict, while gearing up for a slew of U.S. big bank earnings and economic data for insights into the economic health.

U.S. President Joe Biden is set to make a high stakes visit to Israel on Wednesday, after Washington said Prime Minister Benjamin Netanyahu agreed to let humanitarian aid reach Gazans.

However, a report of Iran’s Supreme Leader Ayatollah Ali Khamenei saying Israeli officials should face trial for their “crimes against Palestinians” sparked some fears of the conflict escalating.

“We had seen some softening in risk aversion on the efforts to de-escalate the crisis, but the Iranian comments suggest that these efforts might ultimately fail,” said Stuart Cole, chief macro economist, Equiti Capital.

“They would not have liked Israel’s improving relations with some Arab countries and therefore they need the conflict to keep going, not only to allow them to attack Israel via their proxy armies but also derail these improving relationships.”

Investors are also awaiting quarterly earnings of Bank of America, Goldman Sachs and Bank of New York Mellon (NYSE:), due before market open, after some major U.S. banks on Friday said higher interest rates boosted profits amid a slowing economy and cautious consumer behavior.

Pharmaceutical giant Johnson & Johnson (NYSE:) and U.S. weapons maker Lockheed Martin (NYSE:) will also detail their quarterly earnings before the opening bell.

“We believe the profits recession is over and the U.S. economy is on track for a soft-ish landing following healthy consumer activity, cooling inflation, and solid growth,” said UBS Global Wealth Management Chief Investment Officer Mark Haefele.

Third-quarter earnings for companies have likely increased 2.2%, up from an estimated rise of 1.3% a week earlier, as per LSEG data.

Investor focus will also be on economic data including retail sales and industrial production for September, due at 08:30 a.m. ET and 09:15 a.m. ET, respectively.

A handful of Federal Reserve officials are also set to speak during the day, including New York’s John Williams, Richmond’s Thomas Barkin, Minneapolis’ Neel Kashkari and Board Governor Michelle Bowman.

At 05:09 a.m. ET, were down 54 points, or 0.16%, were down 6 points, or 0.14%, and were down 19 points, or 0.12%.

NetScout Systems dropped 22.4% in premarket trading after the enterprise software firm lowered 2024 revenue and profit forecast.