Traders on the floor of the New York Stock Exchange
Source: New York Stock Exchange
U.S. equities futures fell Tuesday morning as Wall Street prepared for the heart of the corporate earnings season.
Futures contracts linked to the Dow Jones Industrial Average decreased 50 points. Those in the S&P 500 and Nasdaq 100 were also trading marginally in negative territory.
The futures movement followed a volatile day on Wall Street, which saw the S&P 500 rise 0.4% to a new record after falling more than 1% before the session. The Nasdaq Composite also set a new record at 0.7%, while the Dow Jones Industrial Average fell 37 points, or 0.1%.
Monday’s session was marked by wild fluctuations in sharply short stocks, including GameStop and AMC Entertainment, as retail investors bet against short selling hedge funds. This helped fuel the futures of U.S. equities as Wall Street prepared for the heart of corporate profit seasons amid investors worrying about the stocks diverging from their fundamentals.
Tuesday brings the corporate profits of larger companies with the most impact on market indices. General Electric, Verizon and Johnson & Johnson will present the results before the bell, while tech giant Microsoft will announce its second-quarter tax gains after the bell.
BTIG’s chief equity and derivatives strategist Julian Emanuel told CNBC’s “Fast Money” that the market has risen in recent weeks and that the high level of buying alternatives may make it difficult to earnings reports feed another stage.
“This is the kind of facility that is on the verge of disappointing,” said Emanuel, who cited struggles for other actions despite earnings sticks earlier in the season.
However, the strategy also said that recent sparkling trade may not have reached its peak and could widen broad market indices further.
At the Covid-19 front, health officials and policymakers continued to warn the public about new strains of the virus. Moderna said Monday that its vaccine provides some protection against a variant found in South Africa, while Minnesota officials reported the first confirmed case in the United States of a strain found in Brazil.
Investors are also awaiting the results of other major technology companies and a new Federal Reserve policy statement later this week. Tuesday’s economic statements include data on consumer confidence and house prices.
Tuesday will also be the first negotiation session after Janet Yellen was confirmed as Secretary of the Treasury. The former Fed chair becomes the first women to hold office.