Traders on the New York Stock Exchange
Source: New York Stock Exchange
US stock futures fell on Tuesday morning, with Wall Street gearing up for the center of the corporate earnings season.
Futures contracts linked to the Dow Jones Industrial Average fell 50 points. The S&P 500 and Nasdaq 100 also traded marginally in negative territory.
The movement in the futures followed a volatile day on Wall Street, which saw the S&P 500 rise 0.4% to a new high, after falling more than 1% at the start of the session. The Nasdaq Composite also set a new record of 0.7%, while the Dow Jones Industrial Average fell 37 points, or 0.1%.
Monday’s session was marked by large swings in heavily sold shares, including GameStop and AMC Entertainment, with retail investors betting against short selling hedge funds. This helped fuel US stock futures as Wall Street braced itself for the heart of corporate earnings seasons among investors worried that the stock would deviate from its fundamentals.
Tuesday brings the corporate earnings of larger companies with more impact on market indices. General Electric, Verizon and Johnson & Johnson are expected to release the results ahead of the bell, while tech giant Microsoft will announce its second quarter fiscal earnings after the bell.
BTIG’s chief stock and derivative strategist, Julian Emanuel, said on CNBC’s “Fast Money” that the market movement in recent weeks and the high level of buying bullish options may make it difficult for earnings reports to feed another leg.
“This is the type of scenario that is doomed to disappointment,” said Emanuel, citing difficulties for some other actions, despite the drop in profits earlier in the season.
However, the strategist also said that recent trades may not have peaked and may push market indices even higher.
In front of Covid-19, health officials and lawmakers continued to warn the public about new strains of the virus. Moderna said on Monday that its vaccine offers some protection against a variant found in South Africa, while authorities in Minnesota reported the first confirmed case in the U.S. of a strain found in Brazil.
Investors are also expecting results from other major technology companies and a new Federal Reserve policy statement later in the week. Tuesday’s economic launches include data on consumer confidence and house prices.
Tuesday will also be the first trading session after Janet Yellen’s confirmation as Treasury secretary. The former Fed chairman becomes the first woman to take office.