U.S. stock futures retreated on 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 stock index futures trading
-
S&P 500 futures
ES00
dipped 25 points, or 0.6%, to 3832 -
Dow Jones Industrial Average futures
YM00
fell 186 points, or 0.6% to 30951 -
Nasdaq 100 futures
NQ00
dropped 80 points, or 0.7% to 11807
On Monday, the Dow Jones Industrial Average
DJIA
fell 164 points, or 0.52%, to 31174, the S&P 500
SPX
declined 45 points, or 1.15%, to 3854, and the Nasdaq Composite
COMP
dropped 263 points, or 2.26%, to 11373.
The S&P 500 closed the previous session off 19.6% from its record close of 4797 hit on January 3, 2022.
What’s driving markets
After a seemingly fleeting rebound off 18-month lows touched in mid-June, the mood was again cautious. Traders remain wary about the prospects for corporate profits amid signs of slowing global growth and heightened inflation that suggest 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 reporting season proper later 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 twenty year high.
“This strong dollar is causing everyone to re-evaluate their portfolios,” tweeted Jim Cramer, the CNBC commentator. “Trying to figure out who gets a pass from a strong dollar and who gets hammered and loses business”.
The U.S. 10-year Treasury yield
BX: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.
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
fell 1.9% to $102.11 a barrel. Gold
GC00
was barely changed at $1732 an ounce and silver
SI00
shed 1.5% to $18.85 an ounce, its cheapest in two years.
Bitcoin
BTCUSD
once again fell below $20,000, easing 2.5% to $19884, to leave the cryptocurrency off more than 70% from its all-time high.
