Financial markets displayed caution early Tuesday as U.S. equity futures declined and Treasury yields continued their upward trajectory ahead of the Federal Reserve’s crucial policy meeting in Washington.
The market’s attention is particularly focused on an upcoming November retail sales report from the Commerce Department, scheduled for release at 8:30 am Eastern time. Analysts anticipate a significant rebound in overall consumer spending, projecting a 0.6% increase from October’s $718.9 billion, partly driven by record-breaking
Thanksgiving weekend sales.
In the bond market, the benchmark 10-year Treasury yield reached 4.424% before New York trading began, with market participants closely monitoring the 4.5% threshold as a key technical level. The 2-year Treasury note yield stood at 4.277%.
Monday’s trading session ended with mixed results across major indices. The Nasdaq achieved a new record closing high, powered by strong performances in major technology stocks. However, the Dow Jones Industrial Average extended its losing streak to eight consecutive sessions, marking its longest decline since 2018.
Market sentiment was influenced by November’s S&P Global business activity data, which exceeded expectations and raised concerns about persistent economic strength potentially fueling inflation pressures in early 2024.
Pre-market trading indicated modest declines, with S&P 500 futures suggesting an 11-point drop at the opening bell, while Dow futures pointed to a 125-point decrease. The tech-heavy Nasdaq was positioned for a slight 10-point decline, with notable pre-market activity in shares of Nvidia, Tesla, and Broadcom.
In corporate news, Pfizer shares surged 3.3% in pre-market trading, reaching $26.09, after the pharmaceutical giant released its 2025 financial outlook. The company projects revenues between $61 billion and $64 billion, with adjusted earnings per share ranging from $2.80 to $3.00, slightly surpassing Wall Street’s consensus estimate of $2.88.
International markets also showed signs of caution. European markets experienced weakness, with the Stoxx 600 declining 0.38% in Frankfurt. The German market faced additional pressure as Chancellor Olaf Scholz’s loss in a no-confidence vote potentially sets the stage for February elections.
Asian markets struggled despite reports of China planning a record budget deficit next year to stimulate consumer demand. The MSCI ex-Japan index fell 0.67%, while Japan’s Nikkei 225 dropped 0.24% as investors awaited the Bank of Japan’s upcoming rate decision on Thursday.
The Federal Reserve’s two-day policy meeting, beginning Tuesday, remains the week’s central focus. Markets will closely analyze the Fed’s updated growth and inflation projections, which will accompany Wednesday afternoon’s rate decision. Recent economic indicators suggesting continued robust growth have complicated the central bank’s task of managing inflation while maintaining economic stability.
These market movements reflect broader uncertainty about monetary policy direction and economic growth prospects as 2023 draws to a close. Investors are particularly focused on how the Federal Reserve will balance strong economic data with its inflation-fighting mandate, and how these decisions might impact market dynamics in the early months of 2024.