Dow futures slide 150 points, signaling another painful session

A stock selloff looked set to stretch to a second day on Tuesday, as Dow futures tumbled nearly 150 points and futures for other major indexes pointed to losses at the open.

Climbing U.S. bond yields, which imply a rise in borrowing costs, looked set to weigh on stocks in a repeat of Monday’s action.

Investors are looking ahead to the State of the Union address by President Donald Trump, while a busy day for corporate earnings will see big names such as McDonalds Corp. and Pfizer Inc. report.

What are stock futures doing?

Dow Jones Industrial Average futures

YMH8, -0.62%

 slid 146 points, or 0.6%, to 26,285, while those for the S&P 500 index

ESH8, -0.40%

 dropped 10.6 points, or 0.4%, to 2,843. Nasdaq-100 futures

NQH8, -0.44%

 fell 29.4 points, or 0.4%, to 6,963.75.

The Dow

DJIA, -0.67%

 and S&P 500

SPX, -0.67%

 had their worst day of the year so far on Monday, with each gauge closing down 0.7%, to 26,439.48 and 2,853.53, respectively. The Nasdaq Composite Index

COMP, -0.52%

declined 39.27 points, or 0.5%, to 7,466.51, to log its second-worst daily drop this year.

What are the drivers for the markets?

Higher borrowing costs, which weighed on stocks Monday, showed no signs of letting up. Rising bond yields can crimp demand for assets perceived as riskier, such as stocks, particularly when those yields are higher than those of equities.

On Monday, the yield on the benchmark 10-year Treasury

TMUBMUSD10Y, +0.66%

shot to 2.695%, its highest level since April 2014, having touched an intraday high of 2.727%. The yield was higher at 2.717% on Tuesday.

Politics and economics may provide a catalyst for investors, with Trump set to deliver his State of the Union address at 9 p.m. Eastern Time. Ahead of that, the Federal Reserve will begin its two-day policy meeting.

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This week’s earnings rollout, with over 100 S&P 500 names due to report, kicks off in earnest on Tuesday. However, some of the biggest names will come later in the week. Facebook Inc.

FB, -2.12%

 is set to report Wednesday, while Apple Inc.

AAPL, -2.07%

 , Google parent Alphabet Inc.

GOOGL, -0.09%

 and Inc.

AMZN, +1.11%

are all expected on Thursday.

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What are strategists saying?

“Concerns are starting to enter the market that inflation could be catching up and higher interest rates could pour cold water on the bull run,” said Jasper Lawler, head of research at London Capital Group, in a note. “Higher costs of borrowing could potentially put those companies under pressure, which have been relying on cheap money to grow.”

What’s on the economic docket?

Case-Shiller home prices for November are due at 9 a.m. Eastern Time, while the Conference’s Board Consumer Confidence Survey for January is scheduled for release at 10 a.m. Eastern.

Plus: U.S. economy to keep on truckin’ in early 2018 despite cold snap, hiring drop-off

Check out: MarketWatch’s Economic Calendar

Which stocks look like key movers?

McDonald’s Corp.

MCD, -0.33%

 , Aetna Inc.

AET, +0.33%

 , Pfizer Inc.

PFE, +0.03%

 , Harley-Davidson Inc.

HOG, +0.25%

 and Corning Inc.

GLW, -0.38%

 will all report ahead of the open Tuesday. Electronics Arts Inc.

EA, +2.13%

 will report after the regular close of markets.

MetLife Inc.

MET, -0.68%

could come under pressure. The insurer’s shares fell late Monday after the company said it will postpone earnings and revise prior financial reports over unpaid pensions.

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What are other markets doing?

Monday’s Wall Street selloff echoed around the globe, as European stock markets opened lower at the open and Asian equity markets came under pressure Tuesday.

The ICE U.S. Dollar Index

DXY, +0.30%

rose 0.2% to 89.464, while gold futures

GCG8, -0.42%

fell 0.5% to $1,333.60 an ounce.

Oil futures

CLH8, -0.93%

lost more than 1% to reach $64.79 a barrel.


BTCUSD, -1.88%

 prices were off over 1% to just under $11,000.


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