Nasdaq, S&P 500 Futures Slump As Traders Weigh-In Retail Earnings, Uncertain Economic Backdrop

Trading in the index futures suggests stocks may open Tuesday’s session on a markedly negative note, although retail earnings scheduled for the day and a couple of readings on the manufacturing and the services sectors could dictate the market mood. Traders may also keep an eye on the treasury yields as conflicting views emerge about economic activity.

Cues From Past Week’s Trading

U.S. stocks closed the week ended Feb. 17 on a mixed note, impacted by lackluster sentiment amid the economic uncertainties. The S&P 500 Index ended at its lowest level since the end of January and the Nasdaq Composite, despite its weekly advance, settled at a one-week low.

Analyst Color

The first six weeks of 2023 have shown mixed signals, with the Dow Industrials and the S&P 500 Index underperforming the riskier Nasdaq Composite and the Russell 2000 Index, fund manager Louis Navellier said in a note. The risk premium on junk bonds has dropped to the lowest since the second quarter of 2022 and the 10-year Treasury note yield, though rising, was still below 4%, he added.

The analyst also highlighted the breadth of the rally, by pointing out that the S&P Equal-Weighted’s total return has outpaced the overall S&P 500 Index.

Recession fear that is keeping a lid on risk appetite, after all, could be ill-founded. Carson Group’s Ryan Detrick said in a tweet that falling delinquencies, as evident from a recent data point from the New York Federal Reserve, suggest consumers are still vibrant. This does not forebode a recession, given consumer spending accounts for two-thirds of economic activity.

Futures Today

In premarket trading on Tuesday, the SPDR S&P 500 ETF TrustSPY moved down 0.70% to $404.42 and the Invesco QQQ TrustQQQ slumped about 0.82% to $298.70, according to Benzinga Pro data.

Upcoming Economic Data

S&P Global’s manufacturing and services purchasing managers’ indices for February are due at 9:45 a.m. EST. Both PMIs are expected to show that activity, although improving, continued to contract. The manufacturing PMI may have increased from 46.9 to 47.1 in January and the service sector PMI is expected to have edged up 0.3 points to 47.1.

The National Association Of Realtors is scheduled to release the existing home sales report for January at 10 a.m. EST. Sales of already available homes may have risen 2% month-over-month to 4.10 million units.

The U.S. Treasury is set to auction 3-month and 6-month bills at 11:30 a.m., and 2-year notes and 52-week bills at 1 p.m. EST.

See Also: What Are Binary Options

Stocks In Focus

• Meta Platforms, Inc. META rallied over 2% in premarket trading after the company announced paid subscription plan for its Instagram app.
• Nvidia Corp. NVDA fell over 1.40% ahead of its quarterly results.
• Elanco Animal Health, Inc. ELAN, Expeditors International of Washington, Inc. EXPE, Louisian-Pacific Corp. LPX, Medtronic plc MDT, Home Depot, Inc. HD and Walmart, Inc. WMT are among the notable companies reporting ahead of the market open.
• Key companies reporting after the bell include Toll Brothers, Inc. TOL, Palo Alto Networks, Inc. PANW and Coinbase Global, Inc. COIN.

Top Analysts’ Call

• AutoNation, Inc. AN: JPMorgan downgrades stock from Neutral to Underweight and increases price target from $125 to $130.
• General Motors Corp. GM: Tigress Financial reiterates at Strong Buy with an $86 price target.

Commodities, Bonds, Global Equity Markets

Crude oil futures were modestly higher after the past week’s extended slide. A barrel of WTI-grade crude oil traded up 0.54% at $76.75. Meanwhile, the yield on the benchmark 10-year U.S. Treasury hovered above 3.8%.

The Asia-Pacific markets ended Tuesday's session mixed, with the Hong Kong and New Zealand markets leading the slide. The lack of cues from Wall Street overnight in the wake of Monday’s public holiday created indecision among traders in the region. On the other hand, the Chinese and Malaysian markets advanced moderately. The South Korean and Taiwanese markets chalked up small gains.

European stocks declined moderately in late morning trading on Tuesday, as traders reacted to negative manufacturing PMI data from the region.

Read next: US Recession Risk At Its Highest In 40 Years: Why Is The Stock Market Ignoring The Economy?