Investors Breathe Sigh of Relief as Oil Prices Ease, Shifting Focus to Economic Outlook
US stock futures surged ahead of the opening bell on Tuesday, as a decline in oil prices brought a sense of calm to the markets. The S&P 500 futures rose 0.4%, while the Nasdaq 100 futures climbed 0.5%, driven by a rebound in tech giants. The Dow Jones Industrial Average futures edged up 0.2%, setting the stage for a continuation of the winning trend seen in recent months.
The retreat in oil prices was attributed to easing tensions in the Middle East, while the 10-year Treasury yield briefly dipped after surpassing the 4% mark on Monday. This shift in sentiment lifted some of the “Magnificent 7” stocks, including Amazon, Apple, and Alphabet, which had been battered by negative headlines.
Nvidia, a chip heavyweight, built on its previous day’s gains, buoyed by its partner Hon Hai’s optimistic outlook on artificial intelligence demand. However, the market remains cautious due to dashed hopes for aggressive interest-rate cuts and lingering recession fears, which were fueled by China’s failure to deliver expected stimulus measures.
In a move that rattled global markets, Hong Kong stocks plummeted over 9%, as a stimulus-driven rally in Chinese stocks lost steam. Meanwhile, Federal Reserve policymakers reiterated their commitment to achieving a “soft landing” for the economy, with New York Fed President John Williams expressing confidence in the central bank’s ability to navigate the current landscape.
The upcoming CPI inflation report, due Thursday, will be closely watched for clues on the Fed’s future rate decisions. In corporate news, PepsiCo kicked off earnings season with a surprise drop in quarterly revenue, prompting a downward revision of its 2024 sales growth forecast. The snack and drinks giant’s shares slipped in premarket trading, as CEO Ramon Laguarta cited subdued category performance trends, product recalls, and geopolitical tensions as key challenges.
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