Sentiment appears to have dipped after a six-session winning streak. Stock futures indicate a modestly lower opening on Tuesday as small and mid-cap earnings reports gain momentum. Reaction to earnings has been mixed, adding to the prevailing uncertainty. The day is expected to be dominated by a series of Federal Reserve speeches. Oil prices are retreating due to mixed China data, and bond yields are slipping.
Stocks traded lacklusterly on Monday as traders took a breather following recent gains. Comments by Federal Reserve Governor Lisa Cook, leaning towards dovishness, encouraged traders to stay invested in stocks. The Fed’s senior loan officer survey results showed decreased loan demand and continued tightening of credit terms by banks in the third quarter, albeit at a slower pace.
The major indices opened higher but quickly reversed their gains and steadily declined through the morning session. In the afternoon, the indices pared their losses, with the Dow Industrials and the S&P 500 Index edging into positive territory in the final minutes of trading. The Nasdaq Composite strongly rebounded into positive territory by late afternoon.
In contrast, the Russell 2000 Index remained below the unchanged mark for most of the session and closed notably lower.
Healthcare and IT stocks were among the best-performing S&P sectors, while energy and real estate stocks weighed down the market.
“It’s likely that we’ll see some profit-taking now that the strong rally has subsided,” said fund manager Louis Navellier.
The fund manager attributed the recent rally to short covering as on a technical basis, the market had become oversold. Another possibility is that for some accounts, tax loss selling is largely taken by the end of October, he said.
“Selling the last week of October and flipping to long for the first week of November has a very consistent winning bet, all part of the generally bullish seasonality of Nov-Dec,” he added.
“Clearly, we’re not in a ‘normal’ year with all the movement by the Fed, the narrow leadership of the Magnificent 7, and the outsized geopolitical situation,” Navellier said.
The seasonal rally has started with gusto, crude oil, and industrial metals rising again, reflecting improving global demand, and the soft landing outlook increasingly becoming the general consensus, he added.
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) slipped 0.36% to $434.10 and the Invesco QQQ ETF (NASDAQ:QQQ) fell 0.31% to $368.07, according to Zenger News Pro data.
Minneapolis Fed President Neel Kashkari, a member of the Federal Open Market Committee, is scheduled to speak at 7:30 a.m. EST.
Chicago Fed President Austan Goolsbe, also a FOMC member, will make a public appearance at 8 a.m. EDT.
The Commerce Department is due to release its trade balance report for September is due to be released at 8:30 a.m. EDT. Economists expect a trade deficit to increase from $58.30 billion to $59.9 billion.
Fed Vice Chair Michael Barr is scheduled to speak at 9:15 a.m. ET.
Fed Governor Christopher Waller will make a public appearance at 10 a.m. ET.
New York Fed President John Williams is due to speak at 12 p.m. ET.
The Energy Information Administration will release its short-term energy outlook report at 12 p.m. ET.
The Treasury will auction three-year notes at 1 p.m. ET.
Dallas Fed President Lorie Logan is scheduled to speak at 1:30 p.m. ET.
The Fed is due to release a report on outstanding consumer credit at 3 p.m. ET. Economists. on average, expect the outstanding consumer credit, to increase by $10 billion in September following a $15.6 billion drop in August.
Alteryx, Inc. (NYSE:AYX) rallied over 17% in premarket trading following the release of its quarterly results.
Among the other stocks moving on earnings are Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Sanmina Corporation (NASDAQ:SANM) (down about 12%), GT), ADTRAN Holdings, Inc. (NASDAQ:ADTN) (down about 10%), Unisys Corporation (NYSE:UIS) (up about 27%), Tripadvisor, Inc. (NASDAQ:TRIP) (up over 10%), RingCentral, Inc. (NYSE:RNG) (up nearly 8%) and Matterport, Inc. (NASDAQ:MTTR) (up about 5.5%).
Celsius Holdings, Inc. (NASDAQ:CELH), Choice Hotels International, Inc. (NYSE:CHH), D.R. Horton, Inc. (NYSE:DHI), Datadog, Inc. (NASDAQ:DDOG), Expeditors International of Washington, Inc. (NASDAQ:EXPD), Fidelity National Information Services, Inc. (NYSE:FIS), The Hain Celestial Group, Inc. (NASDAQ:HAIN) and Uber Technologies, Inc. (NASDAQ:UBER) are among the notable companies reporting before the market open.
Those reporting after the close include Akamai Technologies, Inc. (NASDAQ:AKAM), eBay Inc. (NASDAQ:EBAY), Fidelity National Financial, Inc. (NYSE:FNF), Gilead Sciences, Inc. (NASDAQ:GILD), GoPro, Inc. (NASDAQ:GPRO), H&R Block, Inc. (NYSE:HRB), IAC Inc. (NASDAQ:AC), Occidental Petroleum Corporation (NYSE:OXY), Upstart Holdings, Inc. (NASDAQ:UPST), Lucid Group, Inc. (NASDAQ:LCID) and Rivian Automotive, Inc. (NASDAQ:RIVN).
Crude oil futures fell 1.63% to $79.50 in early European session on Tuesday following Monday’s 0.39% rise. The weakness came on the back of mixed trade data from China, which showed imports unexpectedly rising year-over-year in October, while exports fell more than expected.
The benchmark 10-year Treasury note fell 0.044 percentage points to 4.618% on Tuesday.
Most major markets in Asia closed lower on Tuesday following the uneasy gains notched up by Wall Street overnight and the mixed China trade data. The Taiwanese market, however, notched up a modest gain.
The Reserve Bank of Australia’s board decided to raise interest rates by 25 basis points to 4.35%, in line with expectations.
European stocks traded in a lackluster fashion by late trading on Tuesday.
The cryptocurrency market is seeing mixed sentiment, with Bitcoin (CRYPTO: BTC) down over 1.5% over the past 24 hours.
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