The US stock futures were slightly down early this morning as the third-quarter earnings season gained momentum.
According to reports, futures tied to the Dow Jones Industrial Average (INDEXDJX: .DJI) lost 46 points, or 0.13%, S&P 500 Index (INDEXSP: .INX) fell 0.13%, and Nasdaq 100 futures were also down 0.12%.
US Stock Futures: Monday’s Optimistic Performance
During Monday’s primary trading session, the major stock averages managed to close in the green, defying expectations as Treasury yields climbed higher. Typically, rising Treasury yields put downward pressure on equities, but in this instance, stocks posted gains. The 10-year U.S. Treasury yield rose by 7 basis points to 4.7% on Monday.
However, it’s crucial to note that this yield is still more than 10 basis points lower than its recent 16-year highs from earlier this month. Small-cap stocks also saw an impressive rally on Monday, with the Russell 2000 rising by 1.6%.
A significant driver of the optimism in the stock market is the ongoing corporate earnings season. A total of 53 companies in the S&P 500, which is about 11% of the index, are scheduled to report their results this week.
Additionally, five companies in the Dow Jones Industrial Average will also release their results. Notable companies reporting on Tuesday include Johnson & Johnson (NYSE: JNJ), Bank of America Corp (NYSE: BAC), Goldman Sachs Group Inc (NYSE: GS), and Lockheed Martin Corp (NYSE: LMT).
Earnings season got off to a strong start with some financial heavyweights posting favorable results. Charles Schwab Corp (NYSE: SCHW) reported strong earnings on Monday, while JPMorgan Chase & Co (NYSE: JPM) did so on Friday. These early positive reports have contributed to an improved market sentiment, despite ongoing concerns surrounding geopolitical issues, particularly the Israel-Hamas conflict.
Geopolitical and Inflation Concerns
Beyond stock futures performance, the Israel-Hamas conflict in the Middle East has raised concerns that tensions in the region may escalate and impact some of the world’s most significant oil producers, notably Iran. These geopolitical concerns, combined with inflation concerns, have cast a shadow over the markets.
However, as George Ball, Chairman at Sanders Morris Harris, pointed out, these concerns represent the “wall of worry” that ascending stock prices typically climb. Market sentiment seems to be cautiously optimistic, even in the face of these challenges.
In addition to the earnings reports on Tuesday, Wall Street will also be keeping a close eye on fresh economic data. Retail sales and industrial production data for September will be released before the opening bell, providing further insights into the state of the economy.
Additionally, October’s housing market index and business leaders’ survey numbers are scheduled to be announced on Tuesday morning, further shaping the market’s outlook. While US stock futures were slightly down on Tuesday, the broader context of the ongoing earnings season, historical performance, and early positive results provide reasons for optimism.