(Reuters) – U.S. stock index futures slipped on Tuesday as optimism for the Federal Reserve easing monetary conditions next year faded, with markets on edge ahead of remarks from more central bank officials.Thank you for reading this post, don't forget to subscribe!
Following an impressive rally last week as Treasury yields fell, equities have lost momentum in recent days as investors look to Fed policymakers for any indication of resistance against expectations that US interest rates will reach their peak. Awaiting comment.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, dismissed expectations of an early rate cut late Monday, stating that the central bank likely still needs to make further efforts to control inflation.
U.S. Treasury yields also increased from multi-week lows reached in the previous session, adding to the pressure on stocks, prior to a significant bond auction this week that could determine whether there is sufficient demand for U.S. government debt.
The benchmark ten-year Treasury yield last stood at 4.60%, slightly below Monday’s level.
Market participants will be scrutinizing comments from Fed Board Governor Christopher Waller and New York Fed President John Williams on Tuesday for more hints on the central bank’s interest rate trajectory. Fed Chairman Jerome Powell’s comments will make headlines on Wednesday.
Uncertainty regarding the timing of a potential rate cut, as well as some disappointing corporate forecasts for the fourth quarter, have raised doubts about whether stocks can rally at the end of the year.
“Talk of potentially higher-than-anticipated rates, growing signs of a slowing global economy, and increasing recession prospects do not offer a positive outlook for equities at year’s end,” said Ipec Ozkardeskaya, senior analyst at Swissquote Bank.
“Historically, November and December are favorable months for S&P500 stocks. However, this year, the situation is overshadowed by a number of weak guidance and revenue warnings.”
The corporate earnings season is near its end, with most companies in the S&P 500 having already released their third-quarter results.
Uber Technologies is scheduled to report earnings before the market opens, while eBay and Bumble are among the companies set to report earnings late Tuesday.
At 5:18 a.m. ET, Dow E-minis were down 79 points or 0.23%, S&P 500 E-minis were down 10 points or 0.23%, and Nasdaq 100 E-minis were down 29.25 points or 0.19%.
Intel shares rose 0.6% in premarket trading after a report stated that the chip maker was a leading candidate to receive billions of dollars in government funding for secure defense-chip facilities.
(Reporting by Amrita Khandekar; Editing by Maju Samuel)