Traders on the trading floor of the New York Stock Exchange
Source: The New York Stock Exchange
US stock futures fell early Tuesday morning as Wall Street geared up for the heart of corporate earnings season.
Futures contracts linked to the Dow Jones Industrial Average are down 50 points. Those for the S&P 500 and the Nasdaq 100 also traded marginally in negative territory.
The move in futures followed a volatile day on Wall Street, where the S&P 500 rose 0.4% to a new record after falling more than 1% earlier in the session. The Nasdaq Composite also set a new record at 0.7%, while the Dow Jones Industrial Average fell 37 points or 0.1%.
Monday’s session was marked by wild swings in high short stocks, including GameStop and AMC Entertainment, as private investors bet against short-selling hedge funds. This helped fuel US equity futures as Wall Street geared up for the heart of corporate earnings seasons amid concerns that investors were worried about stocks loosening from their fundamentals.
On Tuesday, corporate earnings from larger companies will have more impact on market indices. General Electric, Verizon and Johnson & Johnson are expected to report results before the bell, while technology giant Microsoft will report its second-quarter fiscal results after the bell.
Julian Emanuel, BTIG’s chief equity and derivatives strategist, said on CNBC’s “Fast Money” that the market has moved higher in recent weeks and the high level of buying bullish options could make it difficult for earnings reports to move up another leg. .
“This is the kind of setup that is ready for disappointment,” Emanuel said, referring to the battle for a number of other stocks, despite the fact that earnings were better earlier this season.
However, the strategist also said recent frothy trading may not have peaked and could push broad market indices even higher.
On the Covid-19 front, health officials and policymakers continued to warn the public about new strains of the virus. Moderna said Monday that the vaccine offers some protection against a variant found in South Africa, while officials in Minnesota reported the first US-confirmed case of a strain found in Brazil.
Investors are also waiting for results from other major technology companies and a new policy statement from the Federal Reserve later this week. Tuesday’s economic releases include data on consumer confidence and house prices.
Tuesday will also be the first trading session after Janet Yellen has been confirmed as Treasury Secretary. The former Fed chairman becomes the first woman to hold the position.