S&P 500 Futures Show Resilience as Treasury Yields Slide

On Tuesday, the stock index futures in the United States stayed quite steady, keeping most of the previous day’s significant increase, while the yields on government bonds decreased.

How are stock-index futures trading

• The S&P 500 futures experienced a 0.26% gain, resulting in a 2-point increase to reach 4188.
• The YM00 symbol representing the futures for the Dow Jones Industrial Average rose by 71 points or 0.2% and reached a level of 33088.
• The Nasdaq 100 futures, with the symbol NQ00, rose by 0.13% initially, but later dropped by 15 points or 0.1% to settle at 14402 in value.

The Dow Jones Industrial Average, or DJIA, rose by 511 points, indicating a 1.58% growth, surpassing a total of 32929. Moreover, the S&P 500, also called SPX, experienced a 49-point increase, reflecting a 1.2% uptick, reaching 4167. Finally, the Nasdaq Composite, known as COMP, gained 146 points, leading to a 1.16% rise, ultimately reaching 12789.

What’s driving markets

Thanks to lower benchmark borrowing costs, S&P 500 index futures were able to retain the majority of Monday’s 1.2% rise from the lowest point seen in five months.

The yield of the 10-year Treasury, referred to as BX:TMUBMUSD10Y, fell to 4.84%, marking its lowest level in the last two weeks. This drop can be attributed to a slight change in monetary policy implemented by the Bank of Japan. The adjustment made Japanese government bonds less attractive, causing a rise in interest in U.S. debt instead. As a consequence, the value of the U.S. dollar, represented by USDJPY, saw a notable surge, surpassing the ¥150 mark.

On Monday, it was announced that the U.S. Treasury plans to borrow less money than expected this quarter, leading to a reduction in bond issuance. This announcement also had a positive effect on bond prices. The specifics regarding the Treasury’s refunding program for the third quarter will be revealed on Wednesday.

China experienced an unexpected decline in its manufacturing industry in October. This could potentially lead to a decrease in Treasury yields and have a positive effect on market confidence in stocks.

During the Federal Reserve’s upcoming policy meeting, they will evaluate signals of a struggling global economy. It is anticipated that in this meeting, the Federal Reserve will opt to keep their existing policy interest rates unchanged, which fall within the range of 5.25% to 5.50%.

What will be of greatest significance this week, as stated by Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, is not an unexpected resolution or instruction pertaining to interest rates. Instead, it will be the focus on the US debt circumstances and the quarterly announcement made by the Treasury Department regarding the details of the bonds that will be issued to obtain an additional $776 billion this quarter.

Currently, the declarations about the profits for the third quarter are still underway. On Tuesday, corporations like Pfizer, Caterpillar, and Amgen will unveil their outcomes before the stock market begins trading on Wall Street. Afterwards, Advanced Micro Devices, Paycom Software, and Caesars Entertainment will also disclose their earnings later in the day.

Several updates on the U.S. economy will be available on Tuesday. These updates consist of the third-quarter employment cost index being released at 8:30 a.m. Eastern, the August S&P Case-Shiller home price index at 9 a.m., and the consumer confidence report for October at 10 a.m.

Companies in focus

• The stock of Caterpillar Inc., a company that manufactures equipment for construction and mining, saw a drop of 4.1% during trading before the market opened on Tuesday. This decrease followed an initial rise of up to 4.7%. Caterpillar reported a notable increase in profits for the third quarter, which they credited to higher prices and greater sales volume. However, the company’s sales expectations for the fourth quarter were not as impressive.
• JetBlue Airways Corp. witnessed a notable decline in its stock during premarket trading due to the company’s announcement of a larger than expected loss in the fourth quarter. In addition, the company fell short of analyst expectations for its third quarter loss and revenue.
• Pfizer Inc. experienced a small rise of 0.1% during premarket trading on Tuesday, following the announcement of a bigger-than-expected loss in the third quarter. The company also witnessed a greater decline in revenue than anticipated, as the demand for COVID-related products decreased. Nevertheless, Pfizer remains positive about its overall performance for the whole year.
• On Tuesday, BP saw a considerable drop in its earnings for the third quarter, with profits falling by 60%, which did not meet the anticipated projections of analysts. This decline was primarily due to a lackluster performance in the company’s gas trading unit.