(Reuters) -U.S. stock index futures were marginally lower on Tuesday as investors awaited commentary from Federal Reserve officials through the day to gauge the central bank’s policy stance after the latest downgrade of the United States’ credit rating.
At least seven Fed officials including St. Louis Fed President Alberto Musalem are expected to speak later in the day.
“The hawks are expected to support the current ‘wait-and-see’ approach, with the doves most likely highlighting the recent soft inflation report and the lingering uncertainty from tariffs, despite the recent US-China deal,” Achilleas Georgolopoulos, senior market analyst at XM, said in a note.
Traders currently expect at least two 25-basis-point rate cuts by the end of the year, with the first expected in September, according to data compiled by LSEG.
Fed officials who spoke on Monday were cautious about the ramifications of the latest downgrade of the U.S. government’s credit rating and unsettled market conditions.
Stocks initially fell on Monday while government bond yields jumped as investors assessed the implications of Moody’s downgrading the U.S. sovereign credit rating to “Aa1” from a pristine “Aaa”, citing the government’s $36-trillion outstanding debt and interest.
The S&P 500 swung higher around midday to clock marginal gains – its sixth straight single-day advance – while government bond yields also came off their intraday highs.
Treasury yields continued to decline, with the one on the 10-year Treasury note last down 3.4 bps on Tuesday to 4.44%.
Concerns around ballooning U.S. debt remained in focus, with a vote on President Donald Trump’s sweeping tax-cut bill in the House of Representatives expected sometime this week.
U.S. stocks have had a solid May so far, with the S&P 500 now more than 17% higher than its April lows, when global markets were jolted by President Donald Trump’s reciprocal tariffs on most trading partners.
A pause in the tariffs, a temporary trade truce between the U.S. and China and some tame inflation data have pushed equities higher, although the S&P 500 is still about 3% away from its record highs.
At 05:13 a.m. ET, Dow E-minis were down 63 points, or 0.15%, S&P 500 E-minis were down 20.25 points, or 0.33%, and Nasdaq 100 E-minis were down 96.25 points, or 0.45%.
Most megacap and growth stocks were slightly lower in premarket trading, with Nvidia and Amazon.com down about 0.4% each.
Shares of UnitedHealth continued their recovery after hitting their lowest since April 2020 last week, rising 3%.
Earnings from Dow component Home Depot are scheduled before the bell, while retailer Target is due to report results later in the week.
Of the 460 companies in the S&P 500 that have reported earnings to date, 76.1% have beaten analysts’ earnings estimates.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Pooja Desai)
Comments