Futures Pointing To Initial Weakness On Wall Street

Following the mixed performance seen during the previous session, stocks are likely to move mostly lower in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 136 points.

Technology stocks may lead an initial move to the downside, with the Nasdaq futures tumbling by 1.5 percent amid a continued advance by treasury yields.

Extending the upward move seen since last week’s announcement from the Federal Reserve, the yield on the benchmark ten-year note has reached its highest levels in three months.

The increase in treasury yields, which move opposite of bond prices, comes as the Fed has signaled plans to begin scaling back its asset purchases in the near future.

Also contributing to the continued advance by yields, Federal Reserve Chair Jerome Powell will warn members of the Senate Banking Committee about upside risks to inflation during testimony this morning.

In prepared remarks, Powell predicted inflation will remain elevated in the coming months before moderating.

“As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors,” Powell said.

He added, “These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal.”

Powell warned supply bottlenecks, hiring difficulties, and other constraints could prove to be greater and more enduring as the economic reopening continues, posing upside risks to inflation.

“If sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal,” the Fed chief said.

Shortly after the start of trading, The Conference Board is scheduled to release its report on consumer confidence in the month of September. The consumer confidence index is expected to tick up to 114.8 in September from 113.8 in August.

U.S. stocks ended on a mixed note on Monday, with investors largely making cautious moves as they looked ahead to remarks from several Fed officials, including Chair Jerome Powell, and continued to keep an eye on the developments surrounding debt-laden China Evergrande.

The Dow, which rose to 35,061 by mid-morning, closed with a gain of 71.37 point or 0.2 percent at 34,869.37. The S&P 500, moved between 4,436.19 and 4,457.30 before settling with a loss of 12.37 points or 0.3 percent at 4,443.11, while the Nasdaq settled at 14,969.97, losing 77.73 points or 0.5 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index edged down by 0.2 percent, while China’s Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index is just below the unchanged line, the German DAX Index is down by 1 percent and the French CAC 40 Index is down by 1.5 percent.

In commodities trading, crude oil futures are climbing $0.49 to $75.94 a barrel after jumping $1.47 to $75.45 a barrel on Monday. Meanwhile, after inching up $0.30 to $1,752 an ounce in the previous session, gold futures are slumping $19.30 to $1,732.70 an ounce.

On the currency front, the U.S. dollar is trading at 111.62 yen compared to the 111.00 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1673 compared to yesterday’s $1.1695.

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