MARKET SNAPSHOT: Stocks Poised For Decline As Dow Futures Slide 150 Points
Yield on 10-year bond continues to creep higher
Stocks were poised to decline for 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 slid 188 points, or 0.7%, to 26,237, while those for the S&P 500 index dropped 13.35 points, or 0.5%, to 2,840.25. Nasdaq-100 futures fell 31.5 points, or 0.5%, to 6,961.
The Dow and S&P 500 had their worst day of the year so far on Monday (http://www.marketwatch.com/story/us-stocks-set-to-ease-back-from-records-ahead-of-blockbuster-week-2018-01-29), with each gauge closing down 0.7%, to 26,439.48 and 2,853.53, respectively. The Nasdaq Composite Index 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 shot to 2.695% (http://www.marketwatch.com/story/10-year-treasury-yield-trades-above-27-highest-since-april-2014-2018-01-29), its highest level since April 2014, having touched an intraday high of 2.727%. The yield remained above the 2.7% level 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.
Read: State of the Uniom? Typo forces tickets to be reissued (http://www.marketwatch.com/story/state-of-the-uniom-typo-forces-tickets-to-be-reissued-2018-01-29)
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) is set to report Wednesday, while Apple Inc.(AAPL), Google parent Alphabet Inc. (GOOGL) and Amazon.com Inc. (AMZN) are all expected on Thursday.
Apple iPhone production slowdown: This happens every year, and hits stock every time (http://www.marketwatch.com/story/apple-iphone-production-slowdown-this-happens-every-year-and-hits-stock-every-time-2018-01-29)
Plus: Earnings previews for Apple (http://www.marketwatch.com/story/apple-earnings-forget-taxes-and-batteries-the-1000-iphone-x-remains-the-story-2018-01-26) (http://www.marketwatch.com/story/apple-earnings-forget-taxes-and-batteries-the-1000-iphone-x-remains-the-story-2018-01-26) (http://www.marketwatch.com/story/apple-earnings-forget-taxes-and-batteries-the-1000-iphone-x-remains-the-story-2018-01-26) (http://www.marketwatch.com/story/apple-earnings-forget-taxes-and-batteries-the-1000-iphone-x-remains-the-story-2018-01-26) (http://www.marketwatch.com/story/apple-earnings-forget-taxes-and-batteries-the-1000-iphone-x-remains-the-story-2018-01-26), Facebook (http://www.marketwatch.com/story/facebook-earnings-how-will-news-feed-changes-impact-revenue-2018-01-26), Alibaba (), AMD (http://www.marketwatch.com/story/amd-earnings-mining-for-crypto-gold-more-spectre-details-2018-01-26) (http://www.marketwatch.com/story/amd-earnings-mining-for-crypto-gold-more-spectre-details-2018-01-26), Alphabet (http://www.marketwatch.com/story/alphabet-earnings-google-hardware-push-should-boost-non-advertising-business-2018-01-29) (http://www.marketwatch.com/story/alphabet-earnings-google-hardware-push-should-boost-non-advertising-business-2018-01-29) (http://www.marketwatch.com/story/alphabet-earnings-google-hardware-push-should-boost-non-advertising-business-2018-01-29), Qualcomm (http://www.marketwatch.com/story/qualcomm-earnings-last-peek-before-investors-decide-fate-of-standalone-company-2018-01-29)
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."
"There was nothing particularly igniting the selloff. However there's no doubt that global yields remain too low given strong growth, the likely pick up in US inflation," said a team of strategists at Deutsche Bank led by Jim Reid, in a note to clients.
"Despite the notable rise in 10-year Treasury yields, our US economists believe there is considerable scope for bond yields to rise before they weigh on growth and equities," Reid added.
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 (http://www.marketwatch.com/story/us-economy-keeps-on-truckin-in-early-2018-despite-cold-snap-hiring-dropoff-2018-01-21)
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
Which stocks look like key movers?
Harley-Davidson Inc.(HOG) shares tumbled 7% in premarket after the motorcycle maker posted a sales drop. Pfizer Inc.(PFE) rose nearly 2% after the pharmaceutical group posted stronger-than-expected earnings. Aetna Inc.(AET) slipped nearly 2% after the insurer reported results, while
McDonald's Corp.(MCD) and Corning Inc.(GLW) are still to come.
Electronic Arts Inc.(EA) will report after the regular close of markets.
Apple shares slipped nearly 1% in premarket, after The Wall Street Journal reported (https://www.wsj.com/articles/apple-to-curtail-iphone-x-production-in-the-face-of-weak-demand-1517312098), citing sources, that the company is cutting production for the iPhone X for the quarter ending March 31. A similar report in the Nikkei Asian Review weighed on shares Monday.
Read: The Apple iPhone-production slowdown story is back again (http://www.marketwatch.com/story/apple-iphone-production-slowdown-this-happens-every-year-and-hits-stock-every-time-2018-01-29)
MetLife Inc.(MET) shares fell 8% in premarket after the insurer said Monday that it will postpone earnings and revise prior financial reports (http://www.marketwatch.com/story/metlife-shares-sink-after-postponing-earnings-due-to-unpaid-pensions-2018-01-29) over unpaid pensions.
Opinion:13 stocks these winning stock pickers recommend now (http://www.marketwatch.com/story/13-stocks-these-winning-stockpickers-recommend-now-2018-01-30)
(http://www.marketwatch.com/story/13-stocks-these-winning-stockpickers-recommend-now-2018-01-30)Read:Steve Wozniak says he doesn't trust Elon Musk or Tesla anymore (http://www.marketwatch.com/story/steve-wozniak-says-he-doesnt-trust-elon-musk-or-tesla-anymore-2018-01-29)
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 (http://www.marketwatch.com/story/asia-pacific-markets-slide-after-wall-street-stumbles-2018-01-29) Tuesday.
The ICE U.S. Dollar Index erased an earlier gain and fell 0.3% to 89.055, while gold futures recovered from an earlier dip, rising $3.40 to $1,343.70 an ounce.
Oil futures lost 0.8% to reach $65.06 a barrel (http://www.marketwatch.com/story/us-crude-climbs-as-brent-slips-but-supply-worries-may-prove-a-drag-2018-01-29).
Bitcoin prices were off over 1% to just under $11,000.
(END) Dow Jones Newswires
January 30, 2018 07:27 ET (12:27 GMT)