U.S. Stock Futures Maintain Momentum as Treasury Yields Drop

Stock Futures Performance

• S&P 500 futures (ES00) rose 2 points to 4188
• Dow Jones Industrial Average futures (YM00) rose 71 points, or 0.2%, to 33088
• Nasdaq 100 futures (NQ00) eased 15 points, or 0.1%, to 14402

The U.S. stock futures market showed mixed results early Tuesday, with most of the previous day's rally being retained despite lower Treasury yields.

Monday's Market Update

On Monday, the Dow Jones Industrial Average (DJIA) experienced impressive growth, rising by 511 points (or 1.58%) to reach 32929. The S&P 500 (SPX) saw an increase of 49 points (or 1.2%) to reach 4167, while the Nasdaq Composite (COMP) gained 146 points (or 1.16%) to hit 12789.

Impact of Lower Benchmark Borrowing Costs

S&P 500 futures managed to hold on to most of the gains made on Monday, thanks to lower benchmark borrowing costs. This helped the market bounce off its five-month lows with a significant 1.2% increase.

The 10-year Treasury yield (BX:TMUBMUSD10Y) fell to 4.84%, nearing the bottom of a two-week range. This drop occurred after a minor adjustment to monetary policy by the Bank of Japan, which made Japanese government bonds less appealing and therefore boosted demand for U.S. debt. As a result, the U.S. dollar (USDJPY) surged above ¥150.

Positive News from the U.S. Treasury

On Monday, it was revealed that the U.S. Treasury plans to borrow less than initially anticipated during this quarter. This led to increased confidence in the bond market, ultimately supporting bond prices. The Treasury is expected to announce its third-quarter refunding program on Wednesday.

A Closer Look at Global Economy, Federal Reserve, and Earnings Season

Manufacturing Contraction in China Adds to Economic Concerns

New data has revealed that manufacturing in China unexpectedly slipped back into contraction in October. This concerning scenario sheds light on the struggling state of the global economy. The Federal Reserve is set to convene for a two-day policy meeting, taking these revelations into consideration. Experts anticipate that the rates will remain unchanged this week, holding steady within the range of 5.25% to 5.50%.

The US Debt Situation Takes Center Stage

While a rate announcement or forward guidance regarding interest rates is not expected to surprise this week, the main focus will be on the US debt situation. The Treasury Department is scheduled to make its quarterly announcement on the size and maturity of the bonds that will be issued to borrow an additional $776 billion this quarter. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, emphasizes that this announcement will significantly impact market sentiment.

Key Earnings Reports and Economic Updates

Moving on to the corporate landscape, several major companies are scheduled to report their third-quarter earnings on Tuesday. These include Pfizer, Caterpillar, Amgen, Advanced Micro Devices, Paycom Software, and Caesars Entertainment. Investors will be keen to analyze these reports for insights into the financial health of these companies and potential market trends.

In terms of economic updates, the third-quarter employment cost index will be released at 8:30 a.m. Eastern time. Following that, at 9 a.m., the August S&P Case-Shiller home price index will be published. Finally, at 10 a.m., the consumer confidence index for October will provide additional information on the current economic climate.

As the market awaits these crucial pieces of information, it remains to be seen how they will shape investor sentiment and influence market dynamics in the coming days.