By Sruthi Shankar and Ankika Biswas
(Reuters) -Wall Street was set for a muted open on Monday ahead of a busy week for earnings, with investors also awaiting key data that could shed light on the U.S. economy and shape the Federal Reserve's monetary policy.
Major technology and growth companies Alphabet (NASDAQ:GOOGL) Inc, Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc, which constitute more than 14% of the value of the benchmark S&P 500, are scheduled to report results this week.
A rally in these stocks has supported Wall Street this year, and investors are waiting to see if the gains can continue amid a gloomy economic outlook.
"Not only must these companies beat, but they must also guide to a re-acceleration of EPS growth in the second quarter and beyond ... that's what the Street is looking for," said Nicholas Colas, co-founder of DataTrek Research.
U.S. stocks have largely held steady through the start of the earnings season as results from big banks came in stronger than expected, allaying concerns about a contagion from the banking crisis in March.
Investors will also be watching out for signs of elevated inflation and an economic slowdown pressuring margins of consumer companies.
Boosting sentiment, Coca-Cola (NYSE:KO) Co gained 2% in premarket trading after the beverage giant beat estimates for quarterly results on resilient demand for its sodas despite multiple price increases.
Of the 90 S&P 500 companies that have reported first-quarter results so far, nearly 77% have topped analysts' profit estimates, as per Refinitiv IBES data. The long-term average beat rate stands at 66%.
Forecasts for earnings have also improved marginally, with analysts expecting a quarterly profit contraction of 4.7% versus a 5.1% decline estimated at the start of April.
Early readings of first-quarter U.S. GDP, personal consumer expenditure index (PCE) for March, consumer confidence numbers for April are among the data scheduled for release this week.
Mixed economic numbers last week cemented bets of another 25-basis-point rate hike by the Fed in May, with money market traders pricing in an 85% chance of such a move, as per CME Group's (NASDAQ:CME) Fedwatch tool.
Meanwhile, U.S. House of Representatives Speaker Kevin McCarthy said the House would vote on his spending and debt bill this week amid lingering concerns that the U.S. government could hit its debt ceiling sooner than expected.
"Based mostly on history, we seem to resolve this before we have a real crisis," said Hugh Johnson, chief economist of Hugh Johnson Economics. "But it's not clear that the House Speaker has a good plan out there and that it's going to be acceptable."
At 8:46 a.m. ET, Dow e-minis were down 41 points, or 0.12%, S&P 500 e-minis were down 2.75 points, or 0.07%, and Nasdaq 100 e-minis were down 1.25 points, or 0.01%.
Bed Bath & Beyond Inc (NASDAQ:BBBY)'s shares tumbled 25.3% as the home goods retailer filed for Chapter 11 bankruptcy protection after it failed to secure funds to stay afloat.
First Republic Bank gained 1.5%. The regional bank, whose shares have sunk 88% this year triggered by the U.S. banking crisis, is set to report results after market closes on Monday.