The equity index futures are well in the green this morning, following several days of weak stock market results. Investors are weighing positive earnings outcomes from a few companies, including air carrier United Airlines (UAL), which posted a smaller-than-expected loss. Others, such as insurance provider and Dow-30 component Travelers Companies (TRV), posted weaker-than-anticipated results. Elsewhere, the Biden Administration announced it will call on the U.S. Trade Representative to triple tariffs on steel from China. Overall, the markets are taking most of this news positively and are bidding up stocks, suggesting a stronger start to the trading day. Later today, the Federal Reserve's Summary of Commentary on Current Economic Conditions, most commonly known as the Beige Book, will be released.
The stock market started out choppy yesterday, following a notably weak trading session on Monday. This continued until Tuesday early afternoon, when Federal Reserve Chairman Jerome Powell remarked that interest rates may have to stay higher for longer due to a "lack of further progress so far this year on returning to our 2% inflation goal," which influenced the market movement. Overall, the equity markets largely moved lower, while the 2-year Treasury bond interest rate briefly eclipsed 5.00%. In sum, the S&P 500 fell 10 points (down 0.21%) and the NASDAQ declined 20 points (down 0.12%). However, the Dow Jones Industrial Average finished higher by 64 points (up 0.17%), aided by outperformance from healthcare provider UnitedHealth Group (UNH), which posted better-than-expected first-quarter revenues and earnings. Market breadth was noticeably negative, with decliners outpacing advancers by a 1.8-to-1.0 ratio. Technology stocks were among the best performers, while REITs were among the weakest, hurt by the aforementioned rise in interest rates.
In commodity news, oil prices fell on Tuesday as fears about escalating tensions in the Middle East abated some. Still, oil prices remain higher than just a few weeks ago. Elsewhere, U.S. Treasury bond yields were largely higher, but short-term yields rose the most following Mr. Powell's remarks. The Chicago Board Options Exchange Volatility Index (VIX), a key indicator of market volatility commonly known as the fear index, fell yesterday, but this was from elevated levels that were the highest of 2024.
Several economic reports are slated for release in the days ahead. These include the Philadelphia Fed's Manufacturing Survey, existing home sales, and the U.S. leading economic indicators on Thursday. Additionally, several Federal Reserve Regional Presidents will give remarks on the broader economy and monetary policy in the days ahead. Elsewhere, the pace of new earnings results is picking up. Investors will be watching for the numbers from several large financials, including credit card issuer and Dow-30 component American Express (AXP) on Friday. - John E. Seibert Iii
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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