Oct 24, 2023: U.S. stock futures edged higher Tuesday, as bond yields retreated ahead of the release of quarterly earnings from some major tech companies.
By 06:20 ET (10:20 GMT), the Dow Futures contract was up 115 points, or 0.4%, S&P 500 Futures traded 20 points, or 0.5%, higher and Nasdaq 100 Futures climbed 95 points, or 0.6%.
Yields fall back, easing pressure on stocks
The main indices on Wall Street closed in a mixed fashion Monday, as the benchmark 10-year U.S. Treasury yield traded above the closely followed 5% level before falling back. The broad-based S&P 500 fell 0.2% and the blue chip Dow Jones Industrial Average fell 0.6%, while the tech-heavy Nasdaq Composite rose 0.3%.
The benchmark 10-year Treasury yield has continued to drop Tuesday, falling back to 4.835% and easing the pressure on the highly-leveraged tech sector, in particular.
Bill Ackman’s hedge fund Pershing Square Capital Management has covered its bond short position, the billionaire investor posted on Monday, saying it was too risky to remain short bonds at current long-term rates.
MIcrosoft, Alphabet (NASDAQ:GOOGL) top the earnings slate
The earnings season kicks into top gear this week, with around 30% of S&P 500 companies slated to report.
Earnings due from tech giants Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) are Tuesday’s highlight after the closing bell, but there are also numbers from the likes of Coca-Cola (NYSE:KO), Spotify (NYSE:SPOT) and General Motors (NYSE:GM) to study.
About 17% of S&P 500 companies have already reported earnings, and three-quarters of them have posted earnings surpassing analysts’ expectations, according to FactSet.
U.S. composite PMI likely to slow in October
Investors will also be keeping an eye on the release of flash U.S. PMIs, providing clues on the economic picture ahead of the Federal Reserve’s policy-setting meeting next week.
The U.S. composite Purchasing Managers’ Index came in at 50.2 in September, suggesting economic growth largely stagnated. With crude prices rising since then, growth could slow as we head into the fourth quarter.
The news from Europe wasn’t encouraging, as the eurozone’s composite PMI fell to 46.5 in October, down from 47.2 the prior month. This was the lowest reading since November 2020, and outside of the COVID-19 pandemic months it was the weakest since March 2013.
Oil bounces as Gaza diplomacy continues
Crude prices edged higher Tuesday, bouncing after the previous session’s sharp losses, as developments in the Israel-Hamas war and the potential for a wider conflict in this important oil-exporting region remained the dominant theme.
By 06:20 ET, the U.S. crude futures traded 0.5% higher at $85.94 a barrel, while the Brent contract climbed 0.5% to $90.31 a barrel.
The benchmarks tumbled around 3% on Monday as a series of diplomatic missions to Israel and Gaza pushed up hopes over a deescalation in the conflict. This was also accompanied by Hamas agreeing to free some hostages.
However, the situation remains highly fluid with the market seemingly divided over whether the conflict will continue to ease from here or flare up again.
The American Petroleum Institute industry group releases its latest estimate of U.S. inventories later in the session, and crude stockpiles were expected to have risen last week, while distillate and gasoline inventories fell.
The official data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due on Wednesday.
Source Courtesy: Investing.com