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U.S. equity futures on Tuesday are mixed as traders mull whether to build on a strong Monday but also consider risks tied to the U.S. economy and to events in the Middle East.
On Monday stocks ended their fourth winning day in a row with the Dow Jones Industrial Average up 0.46%, the S&P 500 up 0.01% and the Nasdaq Composite was down 0.16%. The strength was prompted by hopes that the Federal Reserve would cut interest rates.
At last check futures on the Dow 30 indicated an open almost 37 points higher, the S&P was pegged up 1 point and the tech-heavy Nasdaq was looking at a drop of 23.6 points at the open.
Regarding rates, Thomas Barkin, president of the Richmond Federal Reserve Bank, said he expected high interest rates would slow the economy further and bring inflation to the central bank’s 2% target, Bloomberg reported.
Barkin, who within the Fed has a vote on monetary policy in 2024, said on Monday that the strong U.S. labor market gave the central bank leeway to wait to see that inflation was moving sustainably lower before it cut borrowing costs.
But he also cited the risk that higher housing and services costs would keep broader inflation elevated, Bloomberg reported.
“The full impact of higher rates is yet to come,” Bloomberg quoted him as saying.
Last week, the Federal Reserve left its benchmark interest rate unchanged at a more than two-decade high of a range of 5.25% to 5.5%. It’s been there since last July.
In the Middle East, reports say that Hamas has accepted a cease-fire proposal for the Gaza Strip but Israel’s cabinet has rejected the plan, which came from Qatar and Egypt. Israel said the plan wasn’t in line with what mediators had worked out.
Disney swings to loss; streaming closer to profit
Among notable market movers, Walt Disney (DIS) shares were about 5% lower in the premarket. The entertainment and theme-park giant swung to a fiscal-second-quarter net loss of a penny a share on a GAAP basis from year-earlier earnings of 69 cents a share.
On an adjusted basis, the company reported earnings of $1.21 against year-earlier profit of 93 cents. CNBC reported that LSEG analyst estimates for the group were adjusted earnings of $1.10 a share on revenue of $22.08 billion.
In a statement, Disney attributed the loss to impairments of goodwill, partly offset by higher operating profit within the Entertainment and Experiences groups.
MarketWatch reported that Disney’s streaming business remains unprofitable but is closer to turning around.
The direct-to-consumer streaming business reported an $18 million operating loss in the quarter, narrowed from losses of $216 million loss in the fiscal first quarter and a $659 million loss in the year-earlier fiscal Q2.
Disney’s direct-to-consumer entertainment business posted $47 million of operating profit while the sports DTC business lost $65 million.
