U.S. stock index futures hovered near record highs on Tuesday, pausing after a rally in the previous session as investors focused on major corporate earnings and a much-anticipated Federal Reserve policy decision expected later in the week.
Market participants are entering one of the busiest weeks of the third-quarter earnings season, with at least 172 of the S&P 500 companies scheduled to release results.
Popular names such as UnitedHealth, UPS, Royal Caribbean, D.R. Horton, JetBlue and PayPal, among others, are expected to report before the bell.
The spotlight will be on megacaps later in the week, when Microsoft, Alphabet, Apple, Amazon and Meta are expected to report earnings.
Artificial intelligence has been the bulwark of the bull-market rally on Wall Street that marked its three-year anniversary this month and traders will scrutinize how companies are monetizing the technology as spending continues to grow.
Fed officials will meet later in the day to discuss interest rates and plans to end the central bank’s “quantitative tightening” policy, which Chair Jerome Powell hinted at earlier. The central bank is due to announce its verdict on Wednesday.
The U.S. government has been shut down for nearly a month, delaying crucial economic data and forcing traders to rely on private releases and corporate announcements.
Amazon and Paramount were the latest companies to announce layoffs, according to different sources. Separately, the Conference Board’s consumer confidence report, along with surveys by the Richmond and Texas Federal Reserves, are expected to be released on Tuesday.
Most major brokerages now expect the U.S. central bank to lower borrowing costs by 50 basis points by the year-end.
At 5:44 a.m. ET, Dow E-minis fell 10 points, or 0.02 per cent, S&P 500 E-minis were down 3 points, or 0.04 per cent, and Nasdaq 100 E-minis rose 6.75 points, or 0.03 per cent.
Among top movers, semiconductor licenser Rambus slid 15 per cent after missing quarterly profit expectations.
NextEra Energy gained 2.6 per cent after the energy company reached a nuclear energy deal with Google.
Qorvo jumped 10.2 per cent after a report said rival Skyworks Solutions had held talks in recent months to buy the smartphone chipmaker.
Investors are optimistic that U.S. President Donald Trump will strike a long-awaited trade deal with China during his Asia tour.
Trump has just signed a deal with Japan to mine and process critical minerals and rare earths. U.S.-listed shares of rare earth miners such as Trilogy Metals and NioCorp Developments slipped 1 per cent and 2.6 per cent, respectively, and looked set to extend Monday’s declines after a U.S.-China truce pausing tariffs and export curbs on the minerals.
Optimism around trade deals weighed on safe-havens such as gold and silver that have rallied recently. The declines pressured U.S.-listed shares of precious metal miners such as Gold Fields and Harmony Gold, which lost more than 4 per cent each.
Global shares paused their rally on Tuesday after recent hefty gains even as expectations for a thawing in global trade tensions kept risk appetite keen, while the bull run in tech stocks counted on a bumper round of mega-cap earnings this week.
The likelihood of lower borrowing costs in the U.S. and Canada this week supported bonds, and weighed on the dollar as investors waited to see just how dovish the Federal Reserve might be on the outlook.
Meanwhile, safe-haven gold fell back below $4,000 an ounce as a drop of almost 10 per cent in six sessions squeezed leveraged money out of what were very crowded trades.
“There is a fundamental reason why gold has gone up and that is mostly demand from central banks,” said George Lagarias, chief economist at Forvis Mazars.
“What we’re seeing is a very natural and, dare I say, welcome correction. The market needs to cool off and proceed at a more natural pace,” Lagarias added.
Several global share markets that have recently surged to all-time highs took a breather on Tuesday.
Europe’s STOXX 600 was down 0.2 per cent after hitting a lifetime high on Monday. Major bourses in Frankfurt, Paris and London were little changed on the day.
Spain’s IBEX inched up to touch a new record, its first time at a peak since the onset of the financial crisis in 2007.
Japan’s Nikkei eased 0.6 per cent, having surged 2.5 per cent on Monday as a rally in all things tech lifted it to gains of almost 27 per cent so far this year.
Japan’s new Prime Minister Sanae Takaichi met U.S. President Donald Trump in Tokyo to discuss defence ties, trade and a package of investments in the U.S. in a $550 billion deal struck earlier this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.6 per cent, while Chinese blue chips slipped 0.2 per cent. The Shanghai Composite Index cracked the 4,000 barrier for the first time since mid-2015, although it closed below.
In bond markets, 10-year Treasury yields slipped to 3.98 per cent as investors wait on Wednesday’s Fed meeting. A quarter-point rate cut is considered a done deal, with the real focus on whether the Fed validates market pricing for a December easing as well.
“It is a given that we see a rate cut,” Forvis Mazars’s Lagarias said.
“The questions for me are: will the Fed signal its intentions for December and will we see further dissent towards lower rates apart from Stephen Miran?”
There are also some expectations the Fed will end the rundown of its balance sheet, otherwise known as quantitative tightening.
Canada’s central bank is also expected to cut rates this week, while the European Central Bank and the Bank of Japan are seen holding steady.
The BOJ is likely to debate whether conditions are right to resume rate hikes as worries about a tariff-induced recession ease, but political complications may keep it on hold for now.
The yen strengthened as U.S. Treasury Secretary Scott Bessent called for “sound monetary policy” during a meeting with Japanese counterpart Satsuki Katayama. The dollar was last down 0.6 per cent to 152.05 yen, having stopped short of the recent 153.29 peak on Monday.
The euro nudged up to $1.1648. The dollar index eased 0.1 per cent to 98.69, but remained well within the recent trading range.
In commodity markets, oil prices eased on a Reuters report that eight OPEC+ nations are leaning towards making another modest increase in oil output for December when they meet on Sunday, as Saudi Arabia pushes to reclaim market share.
Brent dropped 1.9 per cent to $64.40 a barrel, while U.S. crude eased 1.8 per cent to $60.23 per barrel.
Reuters
