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U.S. stock futures pointed higher Tuesday, gathering steam after the prior session’s intraday reversal as traders weigh rising interest rates with expectations of growing corporate earnings.
What’s happening
-
Futures on the Dow Jones Industrial Average
YM00,
+0.27%
rose 99 points, or 0.3%, to 36051 -
Futures on the S&P 500
ES00,
+0.42%
added 0.4%, or 20 points, to 4682 -
Futures on the Nasdaq 100
NQ00,
+0.61%
rose 0.6%, or 100 points, to 15708
On Monday, the Dow Jones Industrial Average
DJIA,
ended 163 points, or 0.5%, lower to 36069, while the S&P 500
SPX,
ended just 0.1% lower and the Nasdaq Composite
COMP,
closed fractionally higher.
According to Dow Jones Markets Data, the Nasdaq’s reversal from a 2.7% slide earlier was the strongest intraday reversal since Feb. 28, 2020. The late-day reversal was driven by companies that had seen the worst year-to-date performance, according to Bespoke Investment Group.
What’s driving markets
Markets will be tuned to Jerome Powell’s renomination hearing to continue as chair of the Federal Reserve, as well as speeches from regional Fed presidents throughout the day, with an eye on Wednesday’s inflation data.
Powell is widely expected to be confirmed by the Senate for a second stint leading the Fed.
The minutes from the December Federal Open Market Committee meeting released last week showed the central bank interested in multiple rate hikes this year and reducing its nearly $9 trillion balance sheet, that’s still growing as the previous quantitative easing program is wound down.
The yield on the 10-year Treasury
TMUBMUSD10Y,
ended Monday at the highest level since January 17, 2020. The 10-year yield has surged 28 basis points this year.
“We expect markets to reprice the Fed’s terminal rate, from 1.75% to something more like 2.25%, as growth and inflation exceed the Fed’s targets. This would likely imply a 10-year Treasury yield of 1.85 – 2.00%,” said Brad Tank, chief investment officer – fixed income at Neuberger Berman.
