Futures U.S. stock markets fell on Tuesday, suggesting that major indices will widen losses as investors assess the profits and sales prospects of blue companies.
Futures tied to the S&P 500 and the Dow Jones Industrial Average retreated nearly 0.5%, pointing to a second day of losses after the opening bell. Nasdaq-100 futures, very heavy on technology, fell 0.4%.
Investors are looking for first-quarter earnings for companies and their outlook for the rest of the year to assess whether stock valuations are justified. Strong U.S. economic data has boosted expectations and fueled recent support that has left major indices close to record highs. Rising levels of Covid-19 infection in some countries and signs that the vaccine launch may be faltering are now moderating this optimism.
“All of these company stock prices are near or close to record highs and we see a lot of people taking money off the table,” said Michael Hewson, chief market analyst at CMC Markets. “There is a general lack of momentum.”
Before the opening bell, United Airlines fell 2.2% after showing lower-than-expected results during the first quarter. Tesla fell 1% more. The carmaker fell 3.4% on Monday after a fatal crash that hit one of its vehicles.
Investors entered the profit season of companies with high expectations, especially for economically sensitive stocks, such as banks and retail, which will earn more from the reopening of the economy.
“Companies are doing even better than expected, which in many ways is shocking, but that’s also one of the reasons the market is at an all-time high,” said Andrew Slimmon, CEO and portfolio manager of Morgan Stanley Investment Management. “Profit season validates what the actions of many companies already say.”
Lockheed Martin and Abbott Laboratories are among the companies scheduled to report their profits before the market opens. Netflix NFLX 1.45%
its results are expected to be published after the markets close.
Investors also monitor the bond market.
Photo:
Courtney Crow / Associated Press
“The only risk is that overall expectations are so high that they will be very difficult to meet,” said Seema Shah, chief strategist at Principal Global Investors. “We are entering a territory – both with income and economic data – where it will be very difficult to have positive surprises.”
Investors are also monitoring the bond market, with yields rising for the third day in a row. Ten-year U.S. Treasury yields rose to 1.622% from 1.599% on Monday. Yields increase as prices fall.
Dogecoin, the cryptocurrency created as a joke, expanded its earnings after rising more than 8,000% this year. It rose more than 7 percent to 42 cents, according to CoinDesk. Some online forum users have said they plan to raise the cryptocurrency to $ 1 on Tuesday, in what some have called “Doge Day.”
In commodity markets, Brent crude, the international benchmark for oil, rose 1.3 percent to $ 67.93 a barrel.
Abroad, the Stoxx Europe 600 pancontinental fell 0.6%.
In Asia, major stock market indices mixed at the close of trading. The Japanese Nikkei 225 fell almost 2%, while the Hong Kong Hang Seng rose 0.1%. The Shanghai composite index fell 0.1%.
Write to Will Horner to [email protected]
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