A trader works on the New York Stock Exchange trading floor during early trading on Aug. 23, 2024.
Michael M. Santiago | Michael M. SantiagoGetty Images
Stock index futures fell on Tuesday, putting Wall Street on track for another drop as support for interest rates overshadowed a promising start to earnings season.
Futures and Dow Jones Industrial Average It fell 193 points, or 0.5%. S&P 500 Index Futures fell 0.5%, while Nasdaq 100 Futures down 0.6%.
During Monday’s trading session, the 30 stocks in the Dow fell more than 344 points, or 0.8%, after rising for three consecutive sessions. this S&P 500 Index decreased by approximately 0.2%, while Nasdaq Index An increase of nearly 0.3%.
Markets continued to heat up in October, with the S&P 500 hitting a record high and extending its year-to-date gains to more than 22%. Tuesday’s session’s decline would be the benchmark’s first consecutive decline since early September.
Uncertainty over the prospect of a rate cut by the Federal Reserve has weighed on markets so far this week, with the 10-year Treasury yield topping 4.20% early on Tuesday after surging 11 basis points in the previous session. Earlier Tuesday, the 2-year Treasury yield climbed to 4.04%. Interest rates have actually risen since the Fed cut them by half a percentage point a month ago. Part of the reason for this measure can be attributed to improving economic data, but part of it is due to pessimism that the Fed will not be so aggressive in cutting interest rates in the future. Minneapolis Fed President Neel Kashkari hinted on Monday that the central bank could build on that to take a more dovish approach.
Earnings season is approaching this week, with about one-fifth of the companies in the S&P 500 due to report results. About 14% of the companies in the composite index have reported results so far, with seven in 10 beating earnings estimates, according to FactSet.
While it’s still early in the season, some on Wall Street worry the bar may be too high for U.S. businesses. Despite the recent pullback in expectations, Megan Horneman, chief investment officer of Verdence Capital Advisors, believes that expectations for 2025 appear unrealistic.
“It’s good to see analysts being realistic about earnings growth in 2025,” she said. “However, given expectations for slower economic growth in 2025, we think 15% earnings growth is still too optimistic.”
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