Stock futures were mixed on Tuesday after the Bank of Japan’s announcement that traders feared the end-of-year rally would not bear fruit.
Futures linked to the Dow Jones industrial average fell 5 points, or 0.02%, after earlier falling more than 200 points. S&P 500 futures and Nasdaq 100 futures fell 0.17% and 0.42%, respectively.
The Dow was down more than 162 points, or 0.5%, on Monday. The S&P 500 fell 0.9%, and the Nasdaq Composite lost nearly 1.5%. Stocks are on track to end the month and year in the red, and investors’ hopes for a Santa Claus rally are fading fast.
“Still missing Santa. Get hooked,” says Louis Navellier, founder of growth investment firm Navellier & Associates. “One would like to think that all the bad news is there. No Fed moves until February. We’re not down, but we certainly won’t retrace last week’s losses.”
Fears that the Federal Reserve could push the economy into recession weighed on investors. Last week, the central bank raised its benchmark interest rate by 50 basis points and policymakers hinted that the terminal rate could rise to 5.1%.
With the European Central Bank raising rates and an eye for more hikes last week, other central banks put more pressure on traders in a hawkish manner. Overnight on Tuesday, the Bank of Japan widened its range on 10-year Japanese government bond yields. Securely captures traders from around the world.
“More than 90% of central banks have raised interest rates this year, making the (mostly) global concerted effort unprecedented,” said Lawrence Gillum, fixed income strategist at LPL Financial. “The good news? We think we’re nearing the end of these rate hike cycles, which should ease the headwinds we’ve seen in global financial markets this year.”
A handful of major companies will announce their quarterly results this week ahead of the Christmas break. General Mills will report before noon on Tuesday. Nike and FedEx are set to report after the bell.
In economic data, housing starts data for November is due Tuesday morning. This week promises a lot of insights in the home sector. Sales data for existing homes and new homes will be released on Wednesday and Friday, respectively.
The November personal consumption expenditure report, the central bank’s preferred gauge of inflation, is due on Friday.
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