US stock index futures were little changed on Tuesday morning, after major averages started the week with moderate moves as investors digested a surge in yields.
Futures contracts linked to the Dow Jones Industrial Average gained just 3 points. The S&P 500 and Nasdaq 100 futures contracts both hovered in slightly positive territory.
During regular trading, the Dow fell about 13 points, or 0.04%, for its fourth negative session in the last five. At the day’s high, the 30-stock index gained around 136 points. The S&P 500 ended the day unchanged at 4,682.87. The benchmark hovered between gains and losses during the session, gaining 0.3% at one point, while also trading down 0.21%. The Nasdaq Composite dipped 0.04%. The Russell 2000 was the relative underperformance, down 0.45%.
The move in stocks came as interest rates rose, with the yield on 10-year Treasuries exceeding 1.62% while 30-bear Treasuries surpassed 2%.
Inflation fears are hanging over the market after last month’s consumer price index recorded its biggest annual increase in more than three decades. Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute, said he believed inflation would moderate in 2022, but that “the path to lower inflation [will] start with higher inflation in the first half of the year. “
“The stickiest drivers of inflation are likely to persist, but our baseline scenario is that they won’t outweigh the improvement we expect from transitional elements,” he wrote in a note to clients.
Walmart is kicking off a busy retail earnings week on Tuesday before the market opens, which will give investors a glimpse of what consumers are spending. Home Depot is also releasing a report before the market opens, while Target will release its results on Wednesday.
A series of economic data will be released on Tuesday, including retail sales figures for October. Economists polled by Dow Jones expect sales to jump 1.5% last month, from 0.7% in September. Industrial production figures will also be released, along with the NAHB Housing Market Index survey.
On Monday afternoon, President Joe Biden enacted the bipartisan $ 1,000 billion infrastructure bill. The package includes funding for transport, broadband and utilities.
Major averages come out of their negative first week in six, but stocks are still trading at record highs. As Wall Street strategists look to 2022, some, including Morgan Stanley’s Michael Wilson, believe the picture looks muted.
“With tighter financial conditions and slowing earnings growth, the 12-month risk / reward ratio for broad indices looks unappealing at current prices,” he said in a note to clients on Monday. “However, strong nominal GDP growth should continue to provide many good equity investment opportunities for active managers,” he added. Its base 12-month target for the S&P 500 is 4,400, down 6% from the index close on Monday.