Business

Stock futures flat after Wall Street sell-off, more bank earnings ahead


Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 10, 2022.

Brendan McDermid | Reuters

U.S. stock futures were steady in overnight trading on Tuesday following a sell-off on Wall Street driven by rising bond yields.

The Dow Jones index rose 10 points. S&P 500 futures were up 0.05% and Nasdaq 100 futures were flat.

On Tuesday, the Dow Jones Industrial Average lost more than 540 points, leading to a 7% drop Goldman Sachs‘ share. The Wall Street bank missed analyst expectations for earnings as operating expenses rose 23%.

The S&P 500 fell 1.8%. The Nasdaq Composite, full of rate-sensitive tech stocks, was the relative underperformer, down 2.6%. Nasdaq closed at a three-month low as investors worried about how quickly the Federal Reserve would raise interest rates.

Bond yields continued their year-to-date gains on Tuesday with 10-year Treasuries hitting a peak of 1.87%, a two-year high. The yield in the first 10 years is about 1.5%. Meanwhile, the 2-year interest rate – which reflects short-term interest rate expectations – hit 1% for the first time in two years.

The move comes after a market holiday in the US on Monday, suggesting that investors are bracing for the possibility of a stronger Federal Reserve tightening.

“The two-year yield above 1% is because the bond market agrees with the Fed that there are more rallies to come,” said Ryan Detrick of LPL Financial. “Add those worries with crude selling at $85 a barrel and soaring inflation, and we have the perfect cocktail for a risk-free day.”

The S&P 500 ended the day near the top of its 100-day moving average. Jim Paulsen, chief investment strategist at Leuthold Group, said traders will watch to see if the index holds this level or breaks lower.

“With this week’s mild economic calendar, all eyes will be on key technical support levels, the earnings report and whether bond yields continue to climb to 2% or eventually,” Paulsen said. is mitigating”.

Bank earnings continue Wednesday with reports from Bank of America and Morgan Stanley expected before the bell.

Of the 33 S&P 500 companies that have reported quarterly results, nearly 70% have topped Wall Street expectations.

Procter & Gamble, Bancorp USA, UnitedHealth and United Airlines also reported quarterly earnings on Wednesday.

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