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Stock-index futures pointed slightly lower Tuesday morning, with equity futures indicating a retreat after the three main indexes put in their best daily gains in months during the previous session as global bond yields halted their rise.
How are stock benchmarks performing?
- Futures for the Dow Jones Industrial Average YM00, -0.08% YMH21, -0.08% fell 65 points, or 0.2%, to 31,444.
- S&P 500 futures ESH21, -0.11% ES00, -0.11% were 8.30 points lower at 3,890.50, a fall of 0.2%.
- Nasdaq-100 futures NQ00, -0.16% NQH21, -0.16% retreated 38.75 points, or 0.3%, to 13,241.
On Monday, the Dow DJIA, +1.95% booked its best daily gain since Nov. 9, the Nasdaq Composite Index COMP, +3.01% registered its best day since Nov. 4, while the S&P 500 SPX, +2.38% finished the session with its best daily gain since June 5.
What’s driving the market?
Equity markets looked to take a pause a day after upbeat reports on the strength of the economy and a slight pullback in sovereign bond yields provided some support for risky assets as the outlook for the COVID-19 pandemic improves.
Economically sensitive, cyclical sectors like energy and financials continue to outperform the broader market amid optimism about the coronavirus vaccine rollout.
Last week’s rise in bond yields reflected concerns that the distribution of vaccines from the likes of Johnson & Johnson JNJ, +0.54% and other drugmakers, as well as a likely imminent infusion of fresh government spending, will drive up inflation as well as economic growth in the second half of 2021.
Investors are hoping to garner more guidance from Federal Reserve speakers, with Fed Gov. Lael Brainard slated to speak at 1 p.m. Eastern and San Francisco Fed President Mary Daly is set to talk at 2 p.m.
“U.S. markets look set for a weaker open after yesterday’s sharp rebound ahead of more jawboning from a number of Federal Reserve policy makers later today,” wrote Michael Hewson, chief market analyst at CMC Markets, in a daily research note.
Read: After Australia soothes global market worries, will other central bankers step up?
“The most notable will be permanent Fed board member Lael Brainard whose comments last week almost played down market concerns about the sharp moves higher in long term yields,” the analyst wrote. “Given recent volatility markets will be looking for a much stronger pushback lest the US central bank loses control of market expectations.”
Meanwhile, concerns about bubbles and overvalued parts of the market were a source of concern for Chinese regulators. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank warned at a briefing in Beijing that stock values were disconnected with economic fundamentals in the U.S. and Europe, reported Bloomberg News and Reuters.
Looking ahead, markets may focus on President Joe Biden’s picks to lead the Securities and Exchange Commission, Gary Gensler, and the Consumer Financial Protection Bureau, Rohit Chopra, who will both participate in confirmation hearings before the Senate Banking, Housing and Urban Affairs Committee.
Which stocks are in focus?
- Shares of Target Corp. TGT, +1.44% rallied in premarket trading Tuesday, after the discount retail giant reported fiscal fourth-quarter profit and sales that rose above expectations, boosted by growth in traffic and average ticket and as digital sales more than doubled.
- Hertz Global Holdings Inc. HTZGQ, -5.75% on Tuesday filed a plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware and said it expects to emerge from chapter 11 bankruptcy by early to midsummer.
- AutoZone Inc. shares AZO, +0.82% rose in premarket trade Tuesday, after the car parts maker’s second-quarter earnings blew past estimates.
- Shares of Lumber Liquidators Holdings Inc. LL, +1.94% were indicated down about 1% in premarket trading Tuesday, after the hardwood-flooring retailer reported fourth-quarter profit and sales that beat expectations, while not providing financial guidance given uncertainties resulting from the COVID-19 pandemic.
- Zoom ZM, +9.65% gained nearly 10% in after-hours trading after the video communications company reported fourth-quarter net income of $260.4 million, or 87 cents a share, compared with net income of $15.3 million in the year-ago quarter and revenue hurtled 369% higher to $882.5 million from $188.3 million a year ago.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.435% fell 0.9 basis point to 1.442%. Yields and bond prices move in opposite directions.
- Oil futures edged higher as traders await this week’s meeting of OPEC+ members, with the U.S. benchmark CL.1, +0.35% up 0.5% at $60.94 a barrel. Gold futures GC00, +0.20% edged higher, rising 0.3% to $1,728 an ounce.
- The Stoxx 600 Europe index SXXP, +0.44% and London’s FTSE 100 UKX, +0.53% each rose 0.5%.
- The Shanghai Composite SHCOMP, -1.21% and Hong Kong’s Hang Seng Index HSI, -1.21% each rose 1.2%, while Japan’s Nikkei 225 NIK, -0.86% rose 0.9%.
