10.15am: US stocks start mixed
US benchmarks started mixed on Tuesday as traders were not sure which way to turn after yesterday’s rally.
The Dow Jones Industrial Average added over 26 points at 31,561, while the S&P 500 shed around six points at 3,895. The Nasdaq shed over 70 to 13,518.
On Monday, Wall Street shares posted the best daily gains in months as global bond yields stopped rising as they have been recently.
On the agenda today is more Fed talk with the US central bank’s governor Lael Brainard slated to speak at 1pm ET and San Francisco Fed president Mary Daly due to talk an hour later.
Michael Hewson, chief market analyst at CMC Markets, said: “The most notable will be permanent Fed board member Lael Brainard whose comments last week almost played down market concerns about the sharp moves higher in long term yields.
“Given recent volatility markets will be looking for a much stronger pushback lest the US central bank loses control of market expectations.”
7.45am: US stocks set to take a breath
US stocks looked set to take a breather on Tuesday, with futures edging lower after a strong rebound on Monday following the recent volatility in both bond and equity markets.
Futures for the Dow Jones Industrials Average were down 65 points, or 0.21%, while S&P 500 futures slipped 0.33%, and Nasdaq-100 futures were off 0.36%.
The S&P 500 posted its biggest gain for nine months on Monday as markets cheered US approval of a third coronavirus (COVID-19) vaccine and the House of Representatives green lit a $1.9 trillion coronavirus relief package.
The focus is currently, however, on US central bank officials for clues as to how monetary policy may shift as the recovery takes hold which will determine the appetite for government bonds. Federal Reserve governor Lael Brainard will speak at another event on Tuesday, although in a speech on Monday, she failed to address the issue.
Fed officials have so far suggested the climb in yields reflects expectations for an economic recovery as the COVID-19 pandemic threat eases with the vaccination program and President Biden’s new economic stimulus package.
The Federal Reserve has injected plenty of cash into the system since the pandemic hit a year ago which has helped subdue returns on bonds and fuel a rally in stock markets. But bond yields jumped last week as prices fell on heightened expectations that interest rates could be set to rise in the near future as the economic recovery takes hold.
The yield on 10-year US Treasury bonds slid to 1.434%, from 1.444% on Monday, marking its third straight session of declines. A related sell-off in European bond markets has also continued to ease.
Most major Asian benchmarks finished lower on Tuesday after an official at the People’s Bank of China said he was worried about risks emerging from inflated asset prices in international financial markets and the domestic property sector, according to analysts at Deutsche Bank.
Four things to watch on Tuesday:
Zoom Video Communications Inc jumped following results after-hours on Monday as the company forecast current-quarter revenue above estimates, as it expects millions of people to continue using its video-conferencing platform.
Target Corp on Tuesday reported a 21% jump in holiday quarter revenue, much higher than analysts’ estimates, as same-day delivery and store pick-up services helped fulfill robust demand for home goods, toys and groceries during the pandemic.
India is ready to offer incentives to ensure Tesla Inc’s cost of production would be less than in China if the carmaker commits to making its electric vehicles in the south Asian country, transport minister Nitin Gadkari told Reuters.
Volvo’s entire car line-up will be fully electric by 2030, the Chinese-owned company said on Tuesday, joining a growing number of carmakers planning to phase out fossil-fuel engines by the end of this decade.
Story by ProactiveInvestors
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