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U.S. equity futures edged lower in early Tuesday trading, while Treasury yields extended their recent run of gains, as investors looked to a key reading of domestic consumer strength and the start of the Federal Reserve’s two-day policy meeting in Washington.
Stocks ended mixed on Monday, with big gains for megacap tech stocks taking the Nasdaq to a fresh all-time closing high and the Dow Jones Industrial Average extending its daily losing streak to eight, the longest since 2018.
Treasury bond yields were also in focus following a stronger-than-expected reading of business activity from S&P Global over the month of November, which added to concerns that the economy will continue to run hot, and stoke inflation pressures, early into the new year.
The Commerce Department’s reading of November retail sales, due at 8:30 am Eastern time, will likely add to that concern, and possibly the Fed’s near-term outlook for growth and inflation, which will be published tomorrow afternoon alongside its headline rate decision.
The Federal Reserve will begin its two-day policy meeting later this morning in Washington.
Economists are expecting a solid rebound in overall sales, powered in part by record spending over the Thanksgiving weekend, with a headline gain of 0.6% from the final October tally of $718.9 billion.
Benchmark 10-year yields were last marked at 4.424% heading into the start of the New York session, with traders eying a key market inflection point at 4.5%, while 2-year paper was trading at 4.276%
On Wall Street, stocks are looking at a muted open, with futures contacts tied to the S&P 500 suggesting an 11 point opening bell decline and those linked to the Dow priced for a 125 point pullback.
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The tech-focused Nasdaq, meanwhile, is called just 10 points lower with Nvidia (NVDA) , Tesla (TSLA) and Broadcom (AVGO) active in premarket trading.
In overseas markets, Europe’s Stoxx 600 benchmark slipped 0.38% in Frankfurt, with focus on another political crisis in Germany after Chancellor Olaf Scholz lost a no-confidence vote in parliament that will likely lead to a snap election in February.
Overnight in Asia, reports that China is planning a record budget deficit next year in order to stoke consumer demand in the world’s second largest economy failed to lift domestic stocks, and the region-wide MSCI ex-Japan benchmark fell 0.67% into the close of trading.
Japan’s Nikkei 225, meanwhile, ended 0.24% lower in Tokyo with eyes on Thursday’s Bank of Japan rate decision.
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