U.S. stock futures fell on Tuesday after a series of major companies reported earnings and ahead of broadly-viewed surveys of business activity.
Futures linked to the S&P 500 slipped 0.5%, pointing to the broader market index giving back some of its recent gains. It gained 1.2% a day earlier to close at its highest level since early December. Nasdaq-100 futures retreated 0.8%.
Stocks rallied over the past two sessions as investors argued that easing inflation would allow the Federal Reserve to slow interest rates and cut rates later this year. Officials at the central bank are considering a smaller rate hike at next week’s meeting, The Wall Street Journal reported.
Earnings season is in full swing with blue chip companies like General Electric.,
Johnson and Johnson,
and 3M will all report before the opening bell. Microsoft is expected to post earnings after the market close, making it the first of the tech giants to report.
“The big thing this week is earnings,” said John Roe, head of multi-asset funds at Legal & General Investment Management.
So far, this earnings season hasn’t seen a big drop in corporate outlooks, or consensus forecasts for the coming year, Mr. Roe said. “Everybody was worried that it might be an earnings season where we’re going to downgrade, so when you get a period where nothing happens, you get the idea that this is going to push the U.S. into recession,” he said.
GE stock was volatile pre-market, down 0.4% after rising earlier in the morning. The industrial conglomerate reported revenue and profit that beat Wall Street forecasts, led by demand for jet engines and power equipment. Meanwhile, 3M fell 4% premarket after the maker of Scotch tape and Post-it notes reported slowing sales and said it would cut 2,500 jobs.
US purchasing managers’ indexes, at 9:45 am ET, will be examined for another indicator of the economy’s health. Similar surveys showed business activity in the eurozone rose in January, raising the prospect of the global economy avoiding a recession this year.
“The market wants to make sure this rally from the beginning of the year is sustainable. Every number counts,” said Antonio Cavarero, head of investments at General Insurance Asset Management.
In bond markets, the yield on the benchmark 10-year Treasury note fell to 3.504% from 3.522% a day earlier. When bond prices rise, yields fall.
Oil prices were little changed with Brent, the most actively traded contract for international crude, down 0.1% to trade at $88.06 a barrel.
Overseas, the pan-continental STOXX Europe 600 lost 0.5%. In Asia, markets in Hong Kong, mainland China and South Korea remained closed for Lunar New Year holidays. Japan’s Nikkei 225 rose 1.5%.
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