(Reuters) – U.S. stock index futures rose on Tuesday, recovering after a sell-off the previous session, as investors await new clues on the yield path from key inflation data and the third-quarter earnings season starting later this week.
All three major indexes closed around 1% on Monday as a rise in government bond yields, concerns about the impact of rising conflict in the Middle East and a repricing of US interest rate expectations put pressure on stocks.
At 5:35 a.m. ET, the U.S. S&P 500 E-minis were up 20 points, or 0.35%, the Nasdaq 100 E-minis were up 75.75 points, or 0.38%, and the Dow E-minis were up by 70 points, or 0.17%.
U.S. Treasury yields fell slightly from Monday’s highs, although the yield on the 10-year benchmark remained above 4%, as strong economic data last week prompted investors to lower expectations about the scope of rate cuts by cutting the Federal Reserve for the rest of this year. .
Traders priced in a nearly 89% chance of a 25 basis point Fed rate cut at the November meeting. Bets on no rate change also rose slightly during the meeting, according to CME FedWatch.
The S&P 500 is expected to report a 3.2% year-over-year increase in earnings per share (EPS) in the third quarter, “with gains across six of 11 sectors,” said Sam Stovall, chief investment strategist at CFRA Research.
Fed Governor Adriana Kugler said earlier on Tuesday that she supports further rate cuts if inflation continues to decline as she expects.
Some Fed officials, including John Williams and Alberto Musalem, had said Monday that it would be appropriate to cut interest rates over time.
A number of other Fed officials are expected to speak later in the day, including Raphael Bostic, Susan Collins and Philip Jefferson.
International trade balance data for August will also be released later on Tuesday.
Investors were also alert to the impact of Category 4 Hurricane Milton on the markets.
Among individual stocks, shares of Honeywell International rose 2.9% after a report that the company plans to spin off its advanced materials business.
U.S.-listed shares of Chinese companies fell, following losses in domestic stocks, while optimism about China’s stimulus measures waned in the absence of more specific details.
Shares of Alibaba Group, JD.com and PDD Holdings fell between 8.3% and 10.8%.
(Reporting by Lisa Mattackal in Bengaluru; Editing by Shinjini Ganguli)
