Wall Street drifted toward gains before the market open on Tuesday as more corporate earnings come in, giving investors a break from fretting about if and when the Federal Reserve might cut interest rates.
Futures for the Dow Jones industrials rose 0.6% before the bell, while futures for the S&P 500 inched up 0.2%.
Shares of UnitedHealth Group jumped 7.6% in off-hours trading after the health care giant beat Wall Street’s first-quarter sales and profit targets.
Concert promoter Live Nation tumbled more than 8% after The Wall Street Journal reported that the U.S. Department of Justice was planning to file an antitrust suit next month against the parent company of Ticketmaster.
Live Nation, which merged with Ticketmaster in 2010, has come under increased scrutiny recently following the spectacular breakdown during a sale of Taylor Swift concert tickets in 2022. U.S. lawmakers have openly questioned whether the company should be broken up.
Tesla was on track for a third straight day of declines, falling another 2.6% before the bell. The Elon Musk-run electric car maker posted falling sales in its most recent quarter and announced it was laying off 10% of its workforce Monday. Its shares are down about 35% so far this year.
Dr. Martens shares skidded more than 30% before trading was halted on the London Stock Exchange. The trendy shoemaker on Tuesday forecast that its U.S. revenue would decline by double-digits from a year ago.
Strong corporate earnings have helped offset some of the anxiety hanging over markets about interest rates. Several economic indicators in recent weeks reveal a still-strong U.S. economy, which could keep inflation from falling to a level where the Federal Reserve feels comfortable cutting interest rates. High interest rates and bond yields hurt prices for a broad swath of investments.
The economy and financial markets are in an awkward phase where such strength raises hopes for growing profits at companies but also hurts prospects for easier interest rates from the Federal Reserve. They’re the two main levers that set stock prices, and they’re simultaneously yanking Wall Street in different directions.
Traders want lower interest rates, which can give the overall economy a boost, and much of the U.S. stock market’s run to records recently was built on expectations for cuts.
But strong reports like Monday’s, which showed U.S. shoppers increased their spending at retailers last month by more than expected, have traders broadly forecasting just one or two cuts to rates this year, according to data from CME Group. That’s down from expectations for six or more cuts at the start of this year. Some traders are bracing for potentially no cuts because inflation and the overall economy have remained stubbornly above forecasts this year.
In Europe at midday, Germany’s DAX and the CAC 40 in Paris each declined 1%. In London, the FTSE 100 was down 1.2%.
The Chinese government reported that the economy, the world’s second largest after the U.S., grew at a surprisingly fast 5.3% annual rate in the first quarter of the year. In quarterly terms it expanded at a 1.6% pace.
But while manufacturing and consumer spending were robust in January and February, helped by the Lunar New Year holidays, indicators are less rosy for March. House prices continued to fall and consumer spending slowed, while industrial output also weakened.
“The sky is not blue in China,” Ipek Ozkardeskaya of Swissquote said in a commentary, since such signals hint “that the underlying problems are not going away.”
The Shanghai Composite index lost 1.7% to 3,007.07, while the Hang Seng in Hong Kong lost 2.1% to 16,248.97.
Tokyo’s Nikkei 225 fell 1.9% to 38,471.20 as the dollar continued to gain against the Japanese yen, hitting fresh 34-year highs. By late afternoon the dollar was trading at 154.63 yen, up from 154.27 yen.
The euro rose to $1.0656.
Elsewhere in Asia, Taiwan’s Taiex led the regional decline, falling 2.7%. Markets in Bangkok were closed for Songkran holidays.
In South Korea, the Kospi declined 2.3% to 2,609.63, while Australia’s S&P/ASX 200 fell 1.8% to 7,612.50.
In the oil market, a barrel of U.S. crude for May delivery slipped 34 cents to $85.07 per barrel in electronic trading on the New York Mercantile Exchange. It fell 25 cents to $85.41 on Monday as political leaders urged Israel not to retaliate after Iran’s attack on Saturday involving hundreds of drones, ballistic missiles and cruise missiles.
Brent crude, the international standard, shed 32 cents to $89.78 per barrel. It eased 35 cents to $90.10 per barrel on Monday.
This year’s jump in oil prices has been raising worries about a knock-on effect on inflation, which has remained stubbornly high. After cooling solidly last year, inflation has consistently come in above forecasts in each month so far of 2024.
On Monday, the S&P 500 tumbled 1.2%, following up on its 1.6% loss from last week — its worst since October. The Dow Jones Industrial Average dropped 0.7% and the Nasdaq composite slumped 1.8%.
