US stock futures fell early Tuesday as Treasury yields rose and traders waited for corporate earnings season to resume.
How to trade stock index futures
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S&P 500 futures ES00,
-0.57%
It fell 23 points, or 0.5%, to 4,793 -
Dow Jones Industrial Average Futures YM00,
-0.46%
It lost 144 points, or 0.4%, to 37,648 -
Nasdaq 100 Futures NQ00,
-0.75%
It fell 115 points, or 0.7%, to 16,854
The Dow Jones Industrial Average (DJIA) fell 118 points, or 0.31%, to 37,593, on Friday, while the S&P 500 index increased four points, or 0.08%, to 4,784, and the Nasdaq Composite Index gained 3 points, or 0.02%, to 4,784. 14,973.
What drives the markets?
US investors returned from the extended holiday weekend – after the Martin Luther King Jr. holiday – in a cautious mood, with stock index futures falling as traders eyed benchmark borrowing costs (BX:TMUBMUSD10Y) to rise towards 4%.
US Treasuries were trying to catch up to Monday's jump in German bond yields BX:TMBMKDE-10Y after European Central Bank Governing Council member Robert Holzmann said in an interview in Davos that persistent inflation could prevent the ECB from cutting interest rates this year.
Although Holzman is a well-known monetary hawk, his response to market hopes for quick rate cuts in 2024 is consistent with recent attempts by Federal Reserve officials to dampen expectations about how quickly the US central bank will also ease policy this year.
“I feel that the first quarter of this year will be characterized by the realization that it is too early for central banks to cut interest rates unless something very bad happens – like another banking crisis, or a real estate crisis, or another debt crisis,” said Ipek Ozkardskaya, senior analyst at Swissquote Bank. : “The cheerleader.”
Fed Governor Christopher Waller will speak on the economic outlook and monetary policy at 11 a.m
At the same time, rising tension in the Middle East raises fears that the disruption of shipping through the Red Sea could increase inflationary pressures.
Stephen Innes, managing partner at SPI Asset Management, noted that despite recent air strikes against them, Yemen's Houthis have said they will continue to attack ships in and around the Red Sea. “The risk that is not surprising is that it is a bit unstable this morning,” he added.
Besides the monetary policy debate and geopolitical turmoil, investors will also be watching the resumption of the 2023 Q4 earnings season.
Companies reporting earnings on Tuesday include Goldman Sachs GS,
morgan stanley ms,
and PNC Financial Services PNC,
Before the opening bell rings on Wall Street, followed after the close by Interactive Brokers IBKR,
and Pinnacle Financial Partners PNFP,
“We enter the fourth-quarter earnings season with a weak corporate earnings outlook but relatively high valuations, balanced by the fulcrum of expected Fed rate cuts and lower long-term interest rates,” Nicholas Colas, co-founder of DataTrek Research, said in a recent note. .
“A wide range of expected results by sector should keep overall market volatility low as we see companies report results. Although this is not the usual setup for a significant market rally over the next four to six weeks, it should “It should be enough to keep stocks rising.”
U.S. economic updates scheduled for Tuesday include the Empire State manufacturing report for January, scheduled for release at 8:30 a.m. ET.
