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U.S. stock index futures were mostly lower Tuesday as the dollar rose and Treasury yields fell, a scenario reflecting lingering concerns about waning economic activity and the impact on company profits.
How are stocks trading
-
S&P 500 futures
ES00,
-0.31%
fell 12.25 points, or 0.3%, to 3,844.50. -
Dow Jones Industrial Average futures
YM00,
-0.59%
fell 183 points, or 0.6%, to 30,957. -
Nasdaq 100 futures
NQ00,
+0.26%
ticked up 24.50 points, or 0.2%, to 11,908.75.
On Monday, the Dow Jones Industrial Average
DJIA,
fell 164 points, or 0.5%, while the S&P 500
SPX,
declined 1.2% and the Nasdaq Composite
COMP,
dropped 2.3%.
What’s driving markets
After a fleeting rebound off 18-month lows the S&P 500 index touched in mid-June, the mood was again cautious. Traders remain wary about the prospects for corporate profits amid signs of slowing global economic growth and heightened inflation that suggests tighter monetary policy.
“The last 24 hours has seen sentiment become more gloomy once again as investors looked forward to multiple data releases and earnings reports this week that’ll set the stage for some important central bank meetings over the next couple of weeks,” said Jim Reid, at Deutsche Bank.
Big U.S banks will kick off the second quarter earnings reporting season proper in coming days, with JPMorgan Chase
JPM,
and Morgan Stanley
MS,
on Thursday, and Citigroup
C,
and Wells Fargo
WFC,
on Friday.
Expectations are for limited earnings growth. Analysts are forecasting an average 4.3% increase for companies in the S&P 500, which would be the weakest since the end of 2020, according to FactSet.
Three months ago analysts were projecting growth of 5.9%, and the difference reflects building concerns that rampant inflation, and the consequent higher borrowing costs imposed by central banks to counteract it, have hit companies’ top and bottom lines.
In addition, investors must now fret about how a surging U.S. currency may impact earnings as businesses find it more difficult to export goods and services. The dollar index
DXY,
on Tuesday rose 0.5% to 108.52, a 20-year high.
The National Federation of Independent Business said its small-business optimism index fell 3.6 points to 89.5, the lowest level since the first few months of the pandemic in 2020. The index has declined in five of the past six months.
The U.S. 10-year Treasury yield
TMUBMUSD10Y,
eased 7.3 basis points to 2.924% as traders sought the relative safety of government debt. The market was warily eyeing the U.S. consumer price inflation data due for release on Wednesday.
Companies in focus
-
Shares of PepsiCo Inc.
PEP,
-0.82%
rose in premarket trade after the beverage and snack giant reported fiscal second-quarter profit and revenue that were well above expectations, and affirmed its full-year outlook.
Other markets
- Wall Street’s overnight dive left Asian and European bourses on the back foot. Hong Kong’s Hang Seng HK:HSI fell 0.9% and the Nikkei 225 JP:NIK in Japan slumped 1.8% after a measure of inflation hit 9.2%, higher than expected. The Stoxx Europe 600 XX:SXXP lost 0.2%.
- The stronger dollar rippled across markets, pressuring products denominated in the buck. WTI crude CL.1 fell more than 4% to trade below $100 a barrel. Gold GC00 was barely changed at $1732 an ounce.
- Bitcoin BTCUSD once again fell below $20,000, falling 0.7%.
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