S&P 500 Futures Maintain Stability Amid Declining Treasury Yields

Early on Tuesday, stock index futures in the United States remained relatively stable, maintaining the majority of the previous day’s surge, while Treasury yields experienced a decline.

How are stock-index futures trading

  • The S&P 500 futures, with a 0.26% increase, saw a rise of 2 points to reach 4188.
  • The futures for the Dow Jones Industrial Average, symbolized by YM00, increased by 71 points or 0.2% to reach 33088.
  • The Nasdaq 100 futures, NQ00, increased by 0.13%, but then decreased by 15 points or 0.1% to reach a value of 14402.

The Dow Jones Industrial Average, also known as DJIA, climbed by 511 points, representing a 1.58% increase, reaching a total of 32929. Additionally, the S&P 500, referred to as SPX, grew by 49 points, equivalent to a 1.2% rise, reaching 4167. Lastly, the Nasdaq Composite, known as COMP, gained 146 points, resulting in a 1.16% increase, ultimately reaching 12789.

What’s driving markets

S&P 500 index futures were able to maintain most of Monday’s 1.2% increase from the lowest point in five months, thanks to reduced benchmark borrowing costs.

The 10-year Treasury yield, known as BX:TMUBMUSD10Y, dropped to 4.84%, reaching its lowest point within the past two weeks. This decrease occurred due to a small adjustment in monetary policy made by the Bank of Japan, which resulted in Japanese government bonds becoming less appealing and led to increased interest in U.S. debt. As a result, the U.S. dollar, symbolized by USDJPY, experienced a significant increase and surpassed the value of ¥150.

The announcement on Monday revealed that the U.S. Treasury intends to borrow a smaller amount than anticipated for this quarter, resulting in a decrease in the issuance of bonds. This news also had a positive impact on bond prices. The details of the Treasury’s third quarter refunding program will be disclosed on Wednesday.

In October, there was an unforeseen contraction in China’s manufacturing sector, which could potentially contribute to the decrease in Treasury yields and positively impact market confidence in equities.

The Federal Reserve’s upcoming policy meeting will take into consideration indicators of a weak global economy. It is predicted that during this meeting, the Federal Reserve will decide to maintain its current policy interest rates, which range from 5.25% to 5.50%.

According to Ipek Ozkardeskaya, senior analyst at Swissquote Bank, what will be of utmost importance this week is not a surprising decision or guidance about interest rates, but rather the US debt situation and the Treasury Department’s quarterly announcement on the specifics of the bonds they will issue in order to borrow an additional $776 billion this quarter.

At present, the third-quarter earnings announcements are ongoing. On Tuesday, companies such as Pfizer, Caterpillar, and Amgen will release their results before the stock market opens on Wall Street. Later in the day, Advanced Micro Devices, Paycom Software, and Caesars Entertainment will also report their earnings.

On Tuesday, there will be several updates on the U.S. economy. These include the release of the third-quarter employment cost index at 8:30 a.m. Eastern, the August S&P Case-Shiller home price index at 9 a.m., and the consumer confidence for October at 10 a.m.

Companies in focus

  • Shares of Caterpillar Inc., which makes construction and mining equipment, experienced a decline of 4.1% in premarket trading on Tuesday. This came after initially seeing an increase of up to 4.7%. The company reported a significant beat in profits for the third quarter, attributing it to increased prices and higher volume. However, Caterpillar provided a less impressive sales outlook for the fourth quarter.
  • There was a significant decrease in the stock of JetBlue Airways Corp. during premarket trades after the company issued a warning regarding a larger than anticipated loss in the fourth quarter. Additionally, the company failed to meet analyst predictions for its third-quarter loss and revenue.
  • Pfizer Inc. saw a slight increase of 0.1% in premarket trading on Tuesday. This came after the pharmaceutical company announced a larger-than-predicted loss for the third quarter, with revenue also falling more than anticipated due to a decline in demand for COVID-related products. Despite this setback, Pfizer remains optimistic about its overall performance for the entire year.
  • BP experienced a significant decrease on Tuesday as its profits in the third quarter fell 60%, failing to meet the expectations of analysts. This decline was attributed to a underperformance in the company’s gas trading division.

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