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Bank of America climbs on strong Q2 profit
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Futures down: Dow 0.05%, S&P 0.08%, Nasdaq 0.17%
(Updated at 0742 a.m. ET/ 1142 GMT)
By Bansari Mayur Kamdar and Johann M Cherian
July 18 (Reuters) - U.S. stock index futures slipped on Tuesday as investors digested more earnings reports from top lenders including Morgan Stanley and Bank of America, after the markets rallied last week in anticipation of the results and signs of inflation cooling.
Bank of America rose marginally in premarket trading after the lender posted a 20% surge in second-quarter profit, while Morgan Stanley's shares pared early gains after the bank's profit slipped 18%, hurt by a deal-making drought.
"The markets and the sectors have gotten ahead of themselves and probably some digestion of gains is necessary," said Sam Stovall, chief Investment strategist at CFRA Research, New York.
"Most of the major banks have reported so now the question is what about smaller banks because the smaller banks are more lending focused and as a result of the inverted yield curve, they might not have the kind of net interest income strength."
Some of the largest U.S. banks, including JPMorgan Chase and Wells Fargo, said on Friday they got a profit boost from higher rates, pointing towards a resilient economy.
Bank of New York Mellon fell 1.2% even as the lender posted upbeat quarterly earnings, while PNC Financial Services shed 2.9% after it lowered its forecast for full-year net interest income (NII).
The S&P 500 banks index has fallen 5.2% so far this year, underperforming the S&P 500 index which has notched a 17.8% gain after the biggest banking crisis since 2008 earlier this year took down three lenders and pummeled the sector.
Lockheed Martin inched 0.8% up after the weapons maker raised its annual profit and sales outlook on strong demand for military equipment, stoked by ongoing geopolitical uncertainties.
Overall earnings across industries are expected to decline 8.1% for the quarter, according to Refinitiv data.
At 7:42 a.m. ET, Dow e-minis were down 18 points, or 0.05%, S&P 500 e-minis were down 3.75 points, or 0.08%, and Nasdaq 100 e-minis were down 26.25 points, or 0.17%.
Wall Street has rallied since last week after consumer prices and producer prices data provided evidence that the economy had entered a disinflation phase, stoking hopes that the Federal Reserve will soon end its monetary policy tightening.
Investors are also focused on further signs that inflation is cooling, with the readings on U.S. retail sales and industrial production to be released later on Tuesday.
Pinterest gained 3.3% as Evercore ISI upgraded its rating on the stock to "outperform" and Marvell Technology climbed 1.1% after Bank of America added the chipmaker to its U.S. No.1 list.
(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Nivedita Bhattacharjee and Shinjini Ganguli)
