Futures advance as Treasury yields take a breather; earnings in focus

[October 24, 2023]  By Shubham Batra and Shashwat Chauhan

(Reuters) - Futures tracking Wall Street's main indexes gained on Tuesday as a selloff in U.S. Treasuries eased a day after the benchmark 10-year yield crossed 5%, while investors assessed earnings from General Electric, Coca-Cola and other companies.

General Electric jumped 6.4% in premarket trading after the aircraft engine manufacturer raised its full-year profit forecast.

General Motors added 1.5% after beating third-quarter profit estimates, while 3M gained 4.1% after raising its full-year adjusted profit forecast.

Coca-Cola advanced 1.6% after raising its annual sales forecast.

The yield on the 10-year note was last at 4.8631%, after rising above the 5% mark in the previous session.

"It is too soon to call a directional shift lower in yields and instead we could settle in a range between 4.50% and 5% for the 10-yr until incoming data challenges the readjustment," strategists at Societe Generale said in a note.

"The shift is not driven by new macro insights from the data on the economy or Fed policy and therefore urges caution."

Megacaps including Apple, Tesla, Meta Platforms and Amazon.com rose between 0.3% and 2.2%.

U.S. technology giants are expected to post their strongest quarterly revenue growth in at least a year as their legacy businesses stabilized, with Microsoft and Alphabet scheduled to report results after markets close on Tuesday.

Of the 86 companies in the S&P 500 that have reported earnings so far, 78% have topped analysts' expectations, LSEG data showed. Overall, third-quarter earnings are expected to rise 1.2% year-on-year.

The benchmark index has fallen sharply from its July highs on worries the Federal Reserve could keep its monetary policy restrictive for longer than expected against the backdrop of a still-strong economy, though the index is up nearly 10% this year as of last close.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2023. REUTERS/Brendan McDermid/File Photo

The S&P 500 and the Dow ended lower on Monday, while the Nasdaq managed to eke out gains as Nvidia and Microsoft climbed.

On the data front, investors will closely monitor S&P Global's manufacturing and services Purchasing Managers' Index to assess the strength of the American economy.

The Commerce Department will announce third-quarter GDP on Thursday, which is seen accelerating to 4.3%. Its wide-ranging Personal Consumption Expenditures (PCE) report, due on Friday, is expected to show PCE slipping to 3.4% in September from 3.5% the month before.

The turmoil in the Middle East is also focus as Israel intensified its assault on Hamas in Gaza.

At 6:58 a.m. ET, Dow e-minis were up 143 points, or 0.43%, S&P 500 e-minis were up 22.25 points, or 0.52%, and Nasdaq 100 e-minis were up 86.5 points, or 0.59%.

Nvidia rose 1.5% after Reuters reported the chip giant had quietly begun designing central processing units that would run Microsoft's Windows operating system and use technology from Arm Holdings.

Arm was up 2.6% while Intel was down 0.5%.

Crypto-linked stocks rose for a second consecutive session as Bitcoin jumped to a more than one-year high, lifting shares of Coinbase, Riot Platforms and Marathon Digital between 7.7% and 13.5%.

(Reporting by Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Vinay Dwivedi)

[© 2023 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.