U.S. stocks set to open flat ahead earnings season

By Sweta Singh

(Reuters) - Wall Street looked set to open little changed on Monday as investors gear up for the second-quarter earnings to justify frothy market valuations.

The week marks the beginning of the earnings season and investors will be looking at reports on Friday from big U.S. banks including JPMorgan Chase, Wells Fargo and Citigroup.

In a significant victory for the banking industry, the Fed late last month approved plans from the 34 largest U.S. banks to use extra capital for stock buybacks, dividends and other purposes.

"I think what's happening today is the markets are in a wait-and-see approach ahead of the next big catalyst, which is earnings season," said Adam Sarhan, chief executive officer at 50 Park Investments in Florida.

"The way I see what's happening today is just a little bit of rotation occurring where you're selling leadership and you're buying undervalued, or you're hunting for value."

The three major indexes are trading close to record levels, boosted by strong economic data and robust corporate performance in the first quarter.

Markets closed on a high on Friday after a payrolls report gave investors more confidence in the strength of the U.S. economy.

Nonfarm payrolls increased by 222,000 jobs last month, a report by the U.S. Labor Department showed on Friday. It was the second biggest increase this year and topped economists' expectations for a 179,000 gain.

The dollar climbed to a two-month high against the Japanese yen on Monday as a robust jobs data propped up U.S. Treasury yields.

Federal Reserve Chair Janet Yellen's semi-annual testimony is the key highlight of this week for investors looking for cues on further rate hikes. She will testify on Wednesday and Thursday.

Dow e-minis were down 26 points, or 0.12 percent, with 18,594 contracts changing hands.

S&P 500 e-minis remained unchanged, with 116,746 contracts traded. Nasdaq 100 e-minis were up 4.25 points, or 0.08 percent, on volume of 30,058 contracts.

On the stocks, Abercrombie & Fitch shares were down 13.3 percent at $10.54 premarket after the teen apparel retailer terminated discussion on a potential deal following a review.

Shares of ClubCorp were up 30.5 percent at $17.10 after the owner of private golf and country clubs got a takeover offer from private equity firm Apollo Global Management LLC.

(Reporting by Sweta Singh; Additional reporting by Anya Tharakan in Bengaluru; Editing by Arun Koyyur)