US STOCKS-S&P 500 set for muted open with focus on earnings, economic data

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Bank of America (BAC), Morgan Stanley (MS) up after higher Q4 profits

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UnitedHealth (UNH) falls on missing quarterly sales estimates

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Rate-cut bets intact after retail sales, jobless claims data

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Futures: Dow down 0.3%, S&P 500 up 0.1%, Nasdaq up 0.3%

(Updates before markets open)

By Johann M Cherian and Sukriti Gupta

Jan 16 (Reuters) - The benchmark S&P 500 was set for a subdued open on Thursday following strong gains in the previous session, as investors assessed softer-than-expected retail sales data and a set of strong bank earnings.

At 8:38 a.m. ET, Dow E-minis were down 138 points, or 0.32%, S&P 500 E-minis were up 0.1% to 5,994.75 points and Nasdaq 100 E-minis were up 60.75 points, or 0.3%.

A Commerce Department report showed

retail sales

increased 0.4% in December, compared with a 0.6% rise economists polled by Reuters had expected.

The number of Americans filing new applications for

unemployment benefits

also increased more than expected last week, but remained at levels consistent with a healthy labor market.

The yield on the benchmark 10-year Treasury note has eased from its 14-month high and was last at 4.674%.

Traders now see the Federal Reserve cutting interest rates by 25 basis points in July, according to data compiled by LSEG. They had all but priced out any reductions for 2025 earlier in the week.

Morgan Stanley (MS) added 2.2% in after the lender said

earnings increased

, fueled by a wave of dealmaking in the fourth quarter, while Bank of America (BAC) edged 0.3% higher in choppy premarket trading. The country's second-largest bank predicted higher

interest income

in 2025.

"A lighter regulatory touch would usher in the ability to raise dividends and to do buybacks for some of the big money setter banks which has been impaired for several years," said Art Hogan, chief market strategist at B Riley Wealth.

However, "some of that positive news was pulled forward yesterday, so you leave little room for more upside (in shares)," Hogan said.

In the previous session, Wall Street's main indexes logged their biggest one-day jump since Nov. 6 after data indicated that underlying inflation was subsiding and three of the country's biggest banks reported bumper results.

The S&P 500 banks index and the regional banks index have outperformed Wall Street's top indexes so far in January, as investors anticipate a favorable business environment for the sector under President-elect Donald Trump. The sentiment was reiterated by bank CEOs on Wednesday.

Of the 28 companies in the S&P 500 that have reported fourth-quarter earnings as of Wednesday, 82.1% have surpassed estimates, according to data compiled by LSEG.

On Capitol Hill, Senate confirmation hearings are underway for Trump's Cabinet picks and Treasury secretary nominee Scott Bessent will face questions on his plans to implement the president-elect's proposals on tariffs, tax-cuts and deregulation at 10:30 a.m. ET.

Dow component UnitedHealth (UNH) dropped 4% after the insurer reported fourth-quarter revenue below estimates.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co rose 5.4% after the company posted a record quarterly profit on surging demand for chips used in artificial intelligence processing.

Other chip stocks Nvidia (NVDA) rose 1.4% and Broadcom (AVGO) added 2.7%. (Reporting by Johann M Cherian, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)