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Stocks futures were falling early Wednesday in a busy week for company earnings.
Futures for the Dow Jones Industrial Average lost 132 points, or 0.3%. Contracts tied to the S&P 500 were also falling 0.1%. Futures for the technology-heavy Nasdaq were also down 0.1%. All three indexes fell slightly in yesterday’s session.
Some of the names reporting today include Tesla, Coca-Cola, AT&T, and T-Mobile. Earnings on Tuesday were mixed–General Motors, GE Aerospace, and Philip Morris were better than expected, while Starbucks and Texas Instruments disappointed investors.
The backdrop for all the results is changing expectations for Federal Reserve interest rates. While borrowing costs will continue to fall after last month’s big half-point reduction, it looks like the descent will take longer than expected, and interest rates may not end up as low as previously thought. All other things being equal, that’s not great for stocks, because it makes higher-yielding bonds more attractive by comparison.
“Caution is reigning on financial markets amid growing expectations that borrowing costs might come down slower in the U.S.,” wrote Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Political uncertainty and the threat of conflict spreading in the Middle East is also keeping investors a little more wary.”
The 10 year Treasury yield was up slightly 4.229%, compared with 4.21% a day earlier and about 3.73% at the start of October. The two-year yield was at 4.059 compared with 3.62% three weeks ago.
