Wall Street’s primary indices are set for a cautious start on Tuesday, as concerns grow over escalating tensions in the Middle East. Additionally, US Treasury yields have declined following dovish comments from Federal Reserve officials overnight.
Key figures within the Federal Reserve have suggested that rising long-term U.S. Treasury yields could deter the central bank from making further adjustments to its short-term policy rate.
Following Columbus Day, also recognized as Indigenous Peoples’ Day, the 10-year Treasury yield saw a drop from its 16-year high on Tuesday.
According to CME’s FedWatch tool, traders estimate an 86% probability that interest rates will remain stable in both November and December.
Attention will focus on remarks from several Federal Reserve officials, including Raphael Bostic of Atlanta, Neel Kashkari of Minneapolis, Mary Daly of San Francisco and Board Governor Christopher Waller, throughout the day.
Israel announced the restoration of control over the Gaza border and launched intense airstrikes against the enclave. At the same time, the nation called up hundreds of thousands of reservists.
Israeli media reported a death toll of 900 from Saturday’s Hamas attacks, while Gaza’s Health Ministry stated that Israel’s retaliatory strikes resulted in at least 770 casualties.
“If the conflict remains contained, its impact may be limited. Investors will closely monitor inflation data this week, as well as the start of bank results on Friday,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
On Monday, all three major US stock indexes concluded with gains, with energy stocks leading the rise as tensions in the Middle East stoked supply concerns, consequently boosting crude oil prices.
In the coming week, investors will examine inflation indicators, including the producer price indices and consumer price indices for September, along with the minutes of the Federal Reserve’s September meeting.
Towards the end of the week, prominent US banks JPMorgan Chase, Wells Fargo and Citigroup will release their quarterly reports.
As of 8:40 a.m. ET, the Dow e-minis were up 53 points, or 0.16%, the S&P 500 e-minis were up 2.5 points, or 0.06%, and the Nasdaq 100 e-minis were up 4.5 points, or 0.03%.
Looking at individual stock moves, PepsiCo saw a 0.9% rise after the company revised its annual earnings forecast for the third time this year. Rival Coca-Cola also saw a 0.8% rise.
Truist Financial saw a 4.4% rise following reports of discussions about the possible sale of its insurance brokerage unit to private equity firm Stone Point for approximately $10 billion.
Rivian Automotive advanced 2.9%, boosted by reports that UBS upgraded the electric vehicle maker’s stock from “neutral” to “buy.”
By contrast, Corning faced a 2.7% decline after JP Morgan downgraded shares of the specialty glass maker from “overweight” to “neutral.”
Chip companies Skyworks Solutions and Qorvo saw respective declines of 3.8% and 3.7% following Citigroup’s rating downgrades.
Arm Holdings, following the conclusion of the “quiet period” of its initial public offering, received an upgrade to “buy” ratings, resulting in a 1.7% increase.
Also read: Global stocks with Israel witness drop after Hamas attack