US equity-index futures retreated Tuesday as traders assessed a mixed bag of corporate earnings against the backdrop of the FederaL Reserve’s ongoing rate-hike campaign. Treasury yields dipped for a second day and the dollar was steady.
(Bloomberg) — US equity-index futures retreated Tuesday as traders assessed a mixed bag of corporate earnings against the backdrop of the FederaL Reserve’s ongoing rate-hike campaign.
Treasury yields dipped for a second day and the dollar was steady.
Futures on the S&P 500 and Nasdaq 100 fluctuated before turning lower after Monday’s strong performance on Wall Street.
Among companies reporting Tuesday, The Coca-Cola Co., General Motors Co. and United Parcel Service Inc. rose in pre-market trading after beat analysts’ earnings estimates, while 3M Co. and General Electric Co.
fell short. Alphabet Inc., Microsoft Corp. and Visa Inc. are among major those still reporting today.
About a fifth of S&P 500 companies had posted third-quarter earnings before today, with more than half outperforming estimates.
Still, investors are concerned the effects of a slowing economy will be felt further down the line, with the Fed set to raise interest rates next week even as output shows signs of flagging.
“What we’ve seen throughout the year is that equity risk premia have really compressed,” Christian Mueller-Glissmann, Goldman Sachs managing director for portfolio strategy, said on Bloomberg TV.
“That makes you more vulnerable if you disappoint on growth, cash flows, et cetera. For now that hasn’t happened really, but all the lead indicators are pointing to risks in this direction.”
The Stoxx Europe 600 Index erased an early advance, with chemicals the worst-performing sector as Linde Plc dropped after proposing to de-list from the Frankfurt exchange.
Banks underperformed as the ECB considers curbing windfall profits from rising interest rates, while HSBC Holdings Plc plunged more than 7% after reporting higher-than-expected charges for possible loan losses.
On the plus side, UBS Group AG buoyed financial services after it exceeded earnings estimates, while technology stocks climbed after software developer SAP SE’s third-quarter revenue beat.
Manufacturing and services data for the US underwhelmed on Monday, indicating Federal Reserve rate hikes are beginning to slow activity.
Fed officials have entered a blackout period ahead of the central bank’s meeting next week, where it’s expected to raise rates 75 basis points. Investors are starting to speculate that the central bank may be approaching the end of its aggressive tightening campaign.
“Investors are getting more confident that inflation will soften as the consumer rethinks massive purchases,” said Edward Moya, a senior markets analyst at OANDA Corp.
“Fed rate-hike expectations will remain volatile, but expectations are growing that a weaker economy will let the Fed pause their tightening after the February policy meeting.”
Analysts are also expecting a jumbo hike of 75 basis points from the ECB on Thursday, even as many economists now reckon a recession has begun in the euro region.
German business confidence improved in October, data showed Tuesday, though remained at depressed levels as Europe’s largest economy heads into a challenging winter.
A gauge of global stocks held a small advance as Chinese shares staged a modest rebound following Monday’s historic selloff.
The offshore yuan fell to the lowest level since trading began a dozen years ago, as President Xi Jinping’s power grab raised concern that concentrated decision-making could weaken growth and destabilize geopolitics.
The decline extended after China’s central bank set the official fixing rate for the currency at the lowest level in 14 years.
“We’re certainly staying away from the Chinese market right now because the political scene is not favorable,” Laila Pence, president of Pence Wealth Management, said in an interview on Bloomberg TV.
“There’s a lot less risk in the US and just as much upside.”
Elsewhere in markets, the British pound gained as Rishi Sunak formally took over as UK prime minister on Tuesday, vowing to “fix” the mistakes made by his predecessor, Liz Truss.
oil slid as traders assessed near-term supply tightness in the crude market and broad appetite for risk assets including commodities.Bitcoin continued to track sideways, holding above $19,000.
Key events this week:
- Earnings due this week include: Apple, Microsoft, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Alphabet, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Intel, McDonald’s, Mercedes-Benz, Merck, Samsung Electronics, Shell, Vale, Visa, Volkswagen
- US Conference Board consumer confidence, Tuesday
- Bank of Canada rate decision, Wednesday
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, Thursday
- Bank of Japan policy decision, Friday
- US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.5% as of 8:07 a.m.
New York time
- Futures on the Nasdaq 100 fell 0.2%
- Futures on the Dow Jones Industrial Average fell 0.6%
- The Stoxx Europe 600 fell 0.1%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $0.9859
- The British pound rose 0.3% to $1.1308
- The Japanese yen was little changed at 148.93 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $19,301.22
- Ether fell 0.2% to $1,348.39
Bonds
- The yield on 10-year Treasuries declined seven basis points to 4.17%
- Germany’s 10-year yield declined eight basis points to 2.25%
- Britain’s 10-year yield declined four basis points to 3.71%
Commodities
- West Texas Intermediate crude fell 1.2% to $83.56 a barrel
- Gold futures fell 0.4% to $1,648.10 an ounce
–With assistance from Richard Henderson, Allegra Catelli and Ryan Vlastelica.
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