Stock futures were falling markedly in premarket trading Tuesday after shares staged a rally in the previous session.
There wasn’t one clear reason for the turnaround, but rather a combination of at least three things. One is the upcoming budget fight to prevent a government shutdown that has a critical deadline this weekend, with Republicans and Democrats still in a deadlock.
Another is the market digesting yesterday’s inflation numbers, which showed price gains cooling somewhat, but probably not enough to convince the Federal Reserve to cut interest rates any faster. The Fed’s next decision comes next week and it’s widely expected to keep borrowing costs on hold.
And then there’s the trade war sparked by President Donald Trump’s tariffs. It’s escalating after Trump said that “of course” he will respond to the retaliations announced by Canada and the European Union.
Futures tracking the Dow Jones Industrial Average lost 126 points, or 0.3%. Contracts tied to the S&P 500 slumped 0.5%, and those tied to the Nasdaq fell 0.7%. On Wednesday, the S&P and Nasdaq rose 0.5% and 1.2%, respectively, led by large technology stocks.
This “strikes me as a market that simply cannot hold onto any gains at the moment, which should be a big old red flag for any potential dip buyers out there,” said Michael Brown, a strategist at Pepperstone.
Producer price data will be published today and could affect stocks–the figures will have an impact on the Fed’s preferred inflation gauge, the core personal consumption expenditures index. There will also be earnings reports from consumer-facing companies Dollar General and Ulta Beauty.
Bond yields were little changed. The 10-year Treasury was at 4.313% and the two-year note traded at 3.99%.
