Market sentiment rebounds ahead of crucial inflation data and earnings reports, as investors reassess the Federal Reserve’s interest rate trajectory. Following a broad sell-off on Monday, driven by rising Treasury yields and Middle East tensions, US stock index futures regained ground on Tuesday. The S&P 500 E-minis climbed 0.4%, while the Nasdaq 100 E-minis and Dow E-minis rose 0.44% and 0.14%, respectively.
The yield on the 10-year Treasury note remained above 4%, as investors continued to price in a 25 basis point rate cut at the Fed’s November meeting, with a nearly 89% probability. However, bets on no rate change also increased slightly, according to CME FedWatch.
Analysts attribute the rebound to a lack of fresh data on Tuesday, ahead of a busy week featuring key inflation reports and earnings announcements. “The market is in a holding pattern, awaiting guidance from upcoming data releases,” said Fiona Cincotta, senior market analyst at City Index. “A hotter-than-expected inflation reading could quickly unnerve the markets.”
Meanwhile, PepsiCo shares fell 1% after the company reported a surprise drop in third-quarter revenue and cut its annual sales growth forecast. In contrast, Honeywell International shares surged 2.3% on reports of a planned spin-off of its advanced materials business.
US-listed Chinese stocks declined, mirroring losses in domestic markets, as enthusiasm for China’s stimulus measures waned due to a lack of concrete details. Shares of Alibaba Group, JD.com, and PDD Holdings plummeted between 7.4% and 10.2%.
Investors are also keeping a close eye on the impact of category 4 Hurricane Milton and the slew of Fed officials scheduled to speak later in the day, including Raphael Bostic, Susan Collins, and Philip Jefferson. The international trade balance data for August is also due later on Tuesday.
Leave a Reply