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Stocks were falling early Tuesday in a week chock full of earnings from the country’s biggest companies. The reason shares are struggling to extend their six-week winning streak could come down to interest rates.
Although the Federal Reserve cut by a bigger-than-usual half point in September, a string of officials have since come forward to say they would prefer smaller cuts for the next few meetings. That’s helped lift yields, which makes bonds more attractive relative to stocks.
Futures for the Dow Jones Industrial Average lost 92 points, or 0.2%, in Tuesday’s premarket. Contracts tied to the S&P 500 fell 0.3%. Futures for the Nasdaq, which includes a lot of technology stocks, were also down 0.3%. The Nasdaq rose yesterday, bolstered by fresh advances from tech giants Nvidia and Apple, but the other two indexes retreated.
“U.S. stocks paused to take stock of six weeks of consecutive gains as traders await the forthcoming barrage of corporate earnings,” said Derren Nathan, head of equity research at Hargreaves Lansdown. “A jump in bond yields weighed heavy on interest rate-dependent sectors with consumer stocks and housebuilders feeling the worst of it.”
About one in five S&P 500 companies report this week. On Tuesday, General Motors, Lockheed Martin, 3M, and Verizon Communications are posting numbers.
The 10-year Treasury yield was trading at 4.216%, compared with 4.1% a day earlier and about 3.73% at the start of October. The two-year yield was at 4.062% compared with 3.62% three weeks ago.
