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Market Snapshot: U.S. stock futures point to cautious open after rally to 3-month high

U.S. stock index futures were down slightly Tuesday, but holding near three-month highs following a summer surge as investors assessed earnings reports from major retailers, including upbeat results from Walmart Inc.

What’s happening

S&P 500 futures
ES00,
-0.28%

dipped 7 points, or 0.2%, to 4291.

Dow Jones Industrial Average futures
YM00,
-0.20%

were off 36 points, or 0.1%, at 33,837.

Nasdaq 100 futures
NQ00,
-0.31%

eased 30 points, or 0.2%, at 13,653.25.

Stocks rose Monday, with the Dow
DJIA,
+0.45%

rising 151 points, or 0.5%, while the S&P 500
SPX,
+0.40%

gained 0.4% and the Nasdaq Composite
COMP,
+0.62%

tacked on 0.6%. The S&P was up more than 17% through Monday from its mid-June low, but remains down 10.4% from its Jan. 3 record close.

What’s driving markets

U.S. equity indices are in line for a slightly softer open, though bulls might not be too disheartened. It has been a feature of recent sessions, where in the early going stocks were struggling to hold their ground but eventually gave way to further gains as buyers took firm control.

Such underlying momentum has helped stocks bounce off the 2022 low touched in mid-June, bolstered by hopes that a peak in inflation will allow the Federal Reserve to be less aggressive in hiking borrowing costs.

Read: This stock-market milestone indicates the S&P 500 could be as much as 16% higher one year from today

Poor economic data from China and a miserable survey of U.S. east coast manufacturing released at the start of the week may also provide the Fed with a reason to adopt a less hawkish stance.

Consequently, some of the current session’s caution may reflect wariness ahead of a further update on Fed thinking due Wednesday, when the central bank releases the minutes of its last monetary policy meeting. The U.S. 10-year Treasury yield is
TMUBMUSD10Y,
2.822%

up 1.2 basis points to 2.799%.

“In the U.S. many investors are playing a waiting game, waiting to scour Fed minutes and also waiting for a whole host of retailers to deliver their updates giving us an inkling into where consumers are cutting back and which consumers are managing to tread the inflation heated waters,” said Danni Hewson, financial analyst, at AJ Bell.

Results from major retailers were in focus this week as earnings season hits its final stretch.

Shares of Walmart
WMT,
+0.29%

jumped more than 4% in premarket trade after the discount retail behemoth reported fiscal second-quarter profit and revenue that beat expectations, and raised its full-year outlook. The results come just three weeks after the Dow component issued its second fiscal 2023 profit warning in two months, when the company said inflation had required more markdowns to clear inventory.

Meanwhile, Home Depot Inc.
HD,
-0.09%

shares were lower even after the home improvement retail giant reported fiscal second-quarter profit, record total sales and same-store sales that all rose above expectations and affirmed its full-year outlook.

The big retailers reporting this week, including Target Corp.
TGT,
+0.53%

and Lowe’s Cos.
LOW,
+0.76%

on Wednesday, and Kohl’s Corp.
KSS,
-0.36%

on Thursday, will bring the curtain down on the current reporting season, noted Richard Hunter, head of markets at Interactive Investor.

“For the most part, companies have emerged relatively unscathed from what was expected to be a difficult round of numbers, with outlook comments emanating from boardrooms showing caution rather than despair for the coming months,” said Hunter in a note to clients.

“It is possible that earnings may need to be revised given the current state of the economy for the third quarter, but for the moment corporate news has been relatively positive,” he added.

Stock index futures were little moved after disappointing U.S. housing data that showed U.S. housing starts fell 9.6% in July, while building permits lost 1.3%.

Industrial production data for July is due at 9.15 a.m. Eastern.

Companies in focus

World Wrestling Entertainment Inc.
WWE,
-0.51%

delivered second-quarter results that beat expectations and said it wrapped up a probe of former chief executive Vince McMahon. A special committee identified $19.6 million in unrecorded expenses, which will be paid by McMahon. WWE said it’s revising its previously issued financial statements to record the unrecorded expenses for the years ended 2019, 2020 and 2021, as well as the first quarter of 2021 and 2022. Shares rose 0.5%.

Apple Inc.
AAPL,
+0.63%

laid off 100 contract workers in charge of recruiting, according to Bloomberg. Apple shares were little changed.

How are other assets faring

U.S. WTI oil futures
CL.1,
+0.18%

shook off early weakness to rise 0.6%, trading just below $90 a barrel.

The ICE U.S. Dollar index
DXY,
+0.23%

rose 0.2%, helping to push gold
GC00,
-0.58%

down 0.5% to $1,789 an ounce.

Bitcoin
BTCUSD,
-0.61%

fell 0.5% to $24,020.

Asia markets were mildly mixed and in Europe the Stoxx 600
SXXP,
+0.09%

added 0.3% following Wall Street’s late move to fresh highs.

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