U.S. stock index futures dipped on Wednesday amid rising Treasury yields, as concerns about a less dovish Federal Reserve emerged. Investors are looking ahead to earnings reports from major companies, including Boeing, Coca-Cola, and Tesla, to gauge the economy’s health.
Market Overview
At 5:11 a.m. ET, Dow E-minis fell by 154 points, or 0.36%. The S&P 500 E-minis decreased by 8.25 points, or 0.14%, while Nasdaq 100 E-minis dropped by 44.75 points, or 0.22%.
The rise in U.S. Treasury yields has reached three-month highs, prompting markets to reevaluate the potential for interest rate cuts in the coming months. This follows recent strong economic data.
“It’s clear to cross-asset watchers like us that stocks are finally being pulled downward by the rise in yields that has characterized global bond markets since late September,” said Thierry Wizman, Global FX & Rates Strategist at Macquarie.
Earnings Reports in Focus
Investors are also keeping a close eye on earnings reports. Starbucks experienced a 5.2% drop in premarket trading after the company suspended its annual forecast and reported declines in revenue and profit for its preliminary fourth-quarter results.
Tesla, the first of the “Magnificent Seven” to report results after market close, saw its shares slip by 0.7%. Meanwhile, Coca-Cola and Boeing’s shares remained relatively flat.
In contrast, semiconductor company Texas Instruments saw a 4% increase after reporting third-quarter profits that exceeded forecasts. However, McDonald’s shares fell by 6% due to an E.coli infection linked to its Quarter Pounder hamburgers, which has resulted in one death and multiple illnesses.
Market Outlook
U.S. markets are currently near record highs, but the combination of earnings results, shifting monetary policy, and the upcoming U.S. elections will test the sustainability of the current rally.
So far, only 21% of S&P 500 companies have reported their earnings, but according to LSEG data, 82% of those have exceeded estimates. The Dow Jones and S&P 500 remained largely unchanged, while the Nasdaq managed a slight gain in a volatile previous session.
Investors are also paying attention to the growing possibility of a second Donald Trump administration. Analysts expect that his policies on spending and tariffs could increase the U.S. deficit and inflation.
Additionally, September home sales data and the Fed’s Beige Book are set to be released, while Federal Reserve officials Michelle Bowman and Thomas Barkin are scheduled to speak later in the day.
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