Dow futures popped on Tuesday, with US stocks eyeing a broader comeback as a wave of earnings reports lifted a market faced with bond yields at multimonth highs and rising tensions in the Middle East.
Dow Jones Industrial Average (^DJI) futures gained 0.6%, coming off a six-session run of losses. Futures on the S&P 500 (^GSPC) and the tech-heavy Nasdaq 100 (^NDX) also revived to hover above the flatline.
Stocks booked sizable losses on Monday as hot retail sales data fueled expectations that interest rates will stay higher for longer this year. Consensus is now for no interest rate cut until September as the strength of the economy gives reason for the Federal Reserve to take its time, though some believe politics could push policymakers to act earlier.
The major US gauges took a more upbeat tone as earnings reports flooded in before the bell. United Health (UNH) shares added almost 7% after the healthcare group beat quarterly profit estimates, even as it said it expects to take a $1.6 billion from a February cyberattack.
Investors were digesting more big bank results: Bank of America (BAC) reported that first-quarter profit dropped 18% year-on-year as a key revenue source weakened, while Morgan Stanley (MS) stock rose as it topped expectations. Elsewhere, BNY Mellon (BK) posted a profit beat while Johnson & Johnson (JNJ) reported a revenue miss. Also on the docket are results from United Airlines (UAL), among others.
Bond yields continued to rise after the 10-year Treasury yield (^TNX) touched 2024 highs on Monday. The yield was up about 5 basis points at around 4.65% early Tuesday.
Escalating tensions in the Middle East were still bubbling in the background, as investors watch for how Israel will decide to respond to Iran’s weekend attack as allies urge military restraint.
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Bring on those Starbucks earnings
Starbucks (SBUX) earnings will be out in a few weeks, and note upon note I have consumed suggest the report could be ugly.
Most of the concern on Starbucks at the moment stems from falling store traffic in the US, in part because prices for what Starbucks sells has gone through the roof. I paid $7 for a venti cold brew at a NYC store a week ago (I have been cutting back trips to Starbucks)!
Bernstein is out this morning with a fresh look at store traffic, and it isn’t pretty.
Starbucks shares year to date: -11.3%.
The ice cold traffic trend at Starbucks. (Bernstein) -
