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U.S. stock-index futures headed lower on Tuesday, as investors returned from a holiday, but finding few reasons to take equities higher following a brisk, record-setting run-up for the major benchmarks.
Domestic markets on Monday were closed in observance of Martin King Luther Jr. Day.
How are benchmarks faring?
Futures for the Dow Jones Industrial Average YMH20, -0.15% were down 69 points, or 0.2%, at 29,210, those for the S&P 500 index ESH20, -0.28% were off 11.40 points, or 0.3%, at 3,313.50. Nasdaq-100 futures NQH20, -0.35% declined 41.50 points, or 0.5%, at 9,133.
Last week, the Dow DJIA, +0.17%, S&P 500 SPX, +0.39% and Nasdaq Composite Index COMP, +0.34% all posted their best weekly gains since Aug. 30, according to FactSet data.
DJIA, +0.17% The Dow has been up for five of the past six weeks, with a year-to-date return of 2.84%. The S&P 500 has been up for two consecutive weeks, with a year-to-date return of 3.06% and the Nasdaq has risen for six straight weeks, with a year-to-date return of 4.64%.
What’s driving the market?
Quelling some of last week’s record-setting enthusiasm to start this week were fresh concerns about sluggish economic growth outside of the U.S., the start of a presidential Senate impeachment trial and worries that the virus in China could harm its already-weak expansion in Asia.
On Monday, the International Monetary Fund, or IMF, downgraded global economic growth forecast from 3.4% to 3.3% for 2020, with the organization projecting that the U.S. economy projected to grow by 2.0% this year, a cut of 0.1 percentage points compared with the IMF’s October 2019 forecast.
Meanwhile, President Donald Trump’s impeachment trial will technically begin Tuesday, with Sen. Majority Leader Mitch McConnell submitting a proposal, according to Politico, that could result in a speedy trial and Trump possibly being acquitted of wrongdoing.
Read: Fund managers most optimistic on growth in nearly two years as cash at lowest levels since 2013
Markets have largely dismissed impeachment talk because investors see a low likelihood that Trump will be removed from office following a Senate trial.
“While this could continue to absorb an exorbitant amount of media attention, the possibility of Trump actually being impeached is close to zero, as it would require 20-some Republican senators to vote against their party, which is almost unfathomable. Hence, this is a non-event for markets,” wrote Marios Hadjikyriacos, investment analyst at XM, in a daily note.
For his part, Trump touted the U.S. economy’s strength in a speech in Davos, Switzerland, kicking off an important gathering of business leaders at the World’s Economic Forum. “I’m proud to declare that the U.S. is in the midst of an economic boom the likes of which the world has never seen,” Trump said. “America’s economic turnaround has been nothing short of spectacular.”
Investors also were keeping one eye on the coronavirus outbreak, which originated in the city of Wuhan, has sickened more than 200 people, and four have died, according to Chinese state media and health officials. The outbreak of the pathogen was being attributed to sharp declines, mostly in Asian markets. And the World Health Organization was said to be considering declaring an international public health emergency over the virus, as it did with swine flu and Ebola.
“Naturally, people will look at the SARs, [Severe acute respiratory syndrome], epidemic in 2002-03 which occurred mainly in Hong Kong and Southern China as well as infecting travelers from other countries,” wrote analysts at Jefferies in a Tuesday report.
“The speed and scale of the spread of the virus comes ahead of the Chinese Lunar New Year when millions of Chinese travel on the mainland back to their hometowns,” they wrote.
Elsewhere in Asia, the Bank of Japan took no action at its meeting overnight, holding its monetary policy steady.
On Friday, markets finished at records after as December housing starts that showed home constructing rising 16.9%, to annual rate of 1.608 million units, to the fastest pace since 2006.
Which stocks are in focus?
Walt Disney & Co. DIS, -0.54% moved up the launch date for its Disney+ streaming service in Europe to March 24, and set a price 6.99 euros.
Reynolds Consumer Products REYN, +0.00% set terms of its initial public offering Tuesday, to raise up to $1.32 billion and to value the consumer products company at up to $5.07 billion.
Looking ahead, Netflix NFLX, +0.31% will report quarterly results after the closing bell, as willInternational Business Machines Corp. IBM, +0.24%.
How are other markets trading?
In bond markets, the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.54% was at 1.80%.
Crude-oil prices were headed sharply lower, with the cost of a barrel of West Texas Intermediate crude CLG20, -1.23% for February delivery slipping 72 cents, or 1.2%, to $57.86 a barrel on the New York Mercantile Exchange.
The value of the U.S. dollar DXY, -0.12% fell 0.1% relative to a basket of its peers, as measured by the ICE U.S. Dollar Index.
In Europe, the Stoxx Europe 600 SXXP, -0.43% was down 0.4% at 422.20.
Asian stocks tumbled overnight amid the virus-outbreak fears, as the China CSI 300 000300, -1.71% tumbled 1.7%, Japan’s Nikkei 225 NIK, -0.91% declined 0.9% and Hong Kong’s Hang Seng Index HSI, -2.81% fell 2.8%.
