U.S. Stocks May See Further Downside Amid Higher Treasury Yields

After ending the previous session mostly lower, stocks may see further downside in early trading on Tuesday. The major index futures are currently pointing to initial weakness on Wall Street, with the S&P 500 futures down by 0.4 percent.

Renewed concerns about the outlook for interest rates may weigh on Wall Street following a recent surge by U.S. treasury yields.

The yield on the benchmark ten-year note has jumped to its highest levels in almost three months amid worries about the U.S. fiscal deficit and comments from Federal Reserve officials hinting at gradual rate cuts.

After the Fed slashed interest rates by 50 basis points last month, CME Group’s FedWatch Tool is currently indicating an 87.6 chance of just a 25 basis point rate cut next month.

A steep drop by shares of Verizon (VZ) is also likely to weigh on the Dow, with the telecom giant tumbling by 3.0 percent in pre-market trading.

The slump by Verizon comes after the company reported third quarter earnings that beat analyst estimates but weaker than expected revenues.

Meanwhile, fellow Dow component 3M (MMM) is likely to see initial strength after the industrial conglomerate reported third quarter earnings that exceeded expectations.

Overall trading activity is likely to be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Following recent strength on Wall Street, the major U.S. stock indexes turned in a mixed performance during trading on Monday. While the Dow showed a notable pullback, the tech-heavy Nasdaq managed to end the day in positive territory.

The Dow slid 344.31 points or 0.8 percent to 42,931.60 and the S&P 500 dipped 10.69 points or 0.2 percent to 5,853.98, but the Nasdaq rose 50.45 points or 0.3 percent to 18,540.01.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slumped by 1.4 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 down by 0.6 percent, the French CAC 40 Index is down by 0.3 percent and the German DAX Index is down by 0.1 percent.

In commodities trading, crude oil futures are climbing $0.59 to $71.15 a barrel after jumping $1.34 to $70.56 a barrel on Monday. Meanwhile, after rising $8.90 to $2,738.90 an ounce in the previous session, gold futures are advancing $12 to $2,750.90 an ounce.

On the currency front, the U.S. dollar is trading at 150.87 yen compared to the 150.84 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0813 compared to yesterday’s $1.0815.

Business News