Wall Street’s main indexes were poised to open lower on Tuesday following a sharp rally in the previous session, as traders scaled back expectations for an early start to interest-rate cuts ahead of key inflation reports due later this week.
Megacap stocks Apple, Alphabet and Amazon.com slipped 0.8% each in premarket trading after steering a more than 2% surge on the tech-heavy Nasdaq on Monday, its best day since November. The benchmark S&P 500 also drew near its highest closing level hit two years ago.
However, Nvidia (NASDAQ: NVDA) bucked the trend with a 0.5% gain after closing at a record high on unveiling new artificial intelligence components.
“Valuations for a lot of those companies (large tech and the magnificent 7) are growing fairly strongly… but revenue growth over the last two to five years has been coming down,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest, who expects them to underperform this year.
Data on consumer and producer inflation, expected on Thursday and Friday, respectively, will be crucial for clues on the Federal Reserve’s monetary policy trajectory.
“The Fed will not be aggressive in cutting rates because inflation will stay somewhat elevated and economic growth will continue to be reasonably strong,” Nolte said.
Also pressuring risky assets, yields on shorter and longer dated U.S. Treasury notes , a reflection of interest rate expectations, ticked over 4%.
Market participants see a 58% chance the Fed could slash rates by at least 25 basis points in March, as per the CME Group’s FedWatch Tool, down from nearly 64% on Monday, following mixed signals from policymakers on the timing of rate cuts.
Atlanta Fed President Raphael Bostic on Monday stressed the need to keep monetary policy tight, while Fed Governor Michelle Bowman retreated from her persistently hawkish view and signaled a willingness to support eventual rate cuts as inflation eases.
On the day at 12 p.m. ET, investors will parse Fed Vice Chair for Supervision Michael Barr’s remarks for his perspectives on the policy outlook.
Also in focus are quarterly earnings on Friday from JPMorgan Chase, Wells Fargo, Bank of America and Citigroup, for insights into the health of corporate America.
Boeing (LONDON: BOE) lost 1.1%, down for the second day as the U.S. National Transportation Safety Board continued its probe into a recent mishap.
Carriers like Delta Air Lines and American Airlines slipped 0.9% each.
At 8:42 a.m. ET, Dow e-minis were down 167 points, or 0.44%, S&P 500 e-minis were down 24.25 points, or 0.51%, and Nasdaq 100 e-minis were down 129 points, or 0.77%.
Juniper Networks surged 20.6% after a source told Reuters Hewlett Packard Enterprise was in talks to buy the networking product maker in a $13-billion deal. The server maker dropped 8.6%.
Jefferies Financial
fell 2.9% after the group reported a smaller-than-expected fourth-quarter profit.
Netflix (NASDAQ: NFLX) dropped 1.7% after brokerage Citigroup downgraded the streaming platform to “neutral” from “buy”.
Ride-hailing platforms Lyft and Uber Technologies dipped 0.5% and 0.6%, respectively, after the U.S. Department of Labor issued a final rule forcing companies to treat some workers as employees and not less expensive independent contractors.
Source: https://finance.yahoo.com/news/us-stocks-wall-st-set-140736188.html
