U.S. stock futures nudged higher Tuesday, recovering ground after an earlier slip, as investors weighed company earnings, signs of stubborn inflation and higher bond yields.
How are stock-index futures trading
S&P 500 futures
rose 9 points, or 0.2%, to 3,997
Dow Jones Industrial Average futures
added 84 points, or 0.2%, to 32,993
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climbed 22 points, or 0.1%, to 12,105
Stocks logged small gains Monday but are on track for February losses. The S&P 500
down 2.3% for the month through Monday’s close, while the Dow
was down 3.5%. The Nasdaq Composite
is down 1% so far in February but remains up 9.6% for the year to date.
What’s driving markets
More evidence that high inflation is proving sticky in developed economies was forcing bond yields higher and pressuring stocks in early action — though equity futures recovered as the day progressed.
Data from France and Spain on Tuesday showed consumer price increases accelerating this month, raising the prospects that the main eurozone inflation numbers for February, due Thursday, will come in hotter than forecast.
Furthermore, U.K. grocery inflation hit 17.1% in the four weeks to mid February, another record high, Reuters reported.
This follows last Friday’s U.S. PCE reading, which also pointed to inflation proving more stubborn than hoped.
Together they raise the chances that the eurozone, U.K. and U.S. central banks may need to raise interest rates by more than expected. Some benchmark German and U.S. government bond yields rose to fresh multiyear highs in response.
This increase in implied borrowing cost was in turn hitting equity futures. The S&P 500 was already in line to end February with a loss amid heightened concerns about tighter monetary policy from the Federal Reserve.
However, as the premarket session progressed in New York, futures rallied into the black, helped by a well-received earnings report from retailer Target
“[S]entiment has buckled sharply in the last two weeks, with most investors firmly in the hawkish Fed camp, expecting higher rates for longer,” said Mark Newton, head of technical strategy at Fundstrat in a note to clients.
“[The S&P 500] looks to be in ‘No-Man’s Land’ currently and requires either a rally back over 4060 to set its course for higher prices to 4325. Conversely, a breach of 3900 would argue for a retest of December 2022 lows,” he added.
U.S. economic updates set for release on Tuesday include the trade balance in goods, retail inventories and wholesale inventories in January. The trade deficit in goods increased 2%, to $91.5 billion, last month. Retail inventories increased 0.3% while wholesale inventories decreased 0.4%.
The Case-Shiller home price index for January will be published at 9 a.m. followed at 10 a.m. by the February consumer confidence report.
Chicago Fed President Austan Goolsbee is due to speak at 2:30 p.m.
Companies in focus
shares are roughly flat after earlier gains and losses in premarket trading on the heels of the retailer’s fourth quarter earnings. Target’s revenue, profit and earnings per share all beat analyst expectations, but its outlook was below FactSet consensus. That includes an expected $1.50 to $1.90 adjusted EPS compared with FactSet consensus of $2.15.
Shares of J.M Smucker Co.
are trading higher in the premarket after earnings results from the consumer and pet foods company. The company beat on its earnings and raised its outlook on earnings per share.