(Bloomberg) — Stocks posted small moves on a busy earnings day and bonds edged lower as the prospect of less aggressive Federal Reserve interest-rate cuts continued to weigh on markets.
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US futures pointed to a slight drop at the Wall Street open, with Starbucks Corp. retreating in the premarket after pulling guidance for 2025. Traders will be watching for surprises in from Tesla Inc., Boeing Co., Coca-Cola Co. among others after downbeat news from some key American companies on Tuesday. Europe’s Stoxx 600 benchmark ticked lower.
Ten-year Treasuries dropped, lifting the yield two basis points after it topped 4.2% for the first time since July earlier this week. Yields on Japan’s 40-year notes reached the highest in 16 years.
The broader risk-off tone comes as investors pare back bets on rapid policy easing, given signs that the US economy remains robust and concerns about wider fiscal deficits after the presidential election. Most Fed officials speaking earlier this week signaled they favor a slower tempo of rate reductions.
The bond moves have made earnings seem like a “bit of a sideshow,” said James Athey, a portfolio manager at Marlborough. “Shifting growth, the Fed and election expectations have created a bit of a perfect storm for a Treasury market which was a little over its skis in terms of rate cut expectations just a month or so ago.”
The debate about the speed and scale of the Fed’s monetary easing continued, with Bank of America Corp. Chief Executive Officer Brian Moynihan urging Fed policymakers to be measured in the magnitude of interest-rate reductions.
The International Monetary Fund, meanwhile, lowered its global growth forecast for next year and warned of accelerating risks ranging from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession.
Tesla was down 0.6% in US premarket trading, while Boeing shares were trading marginally higher. In other single stocks, Enphase Energy Inc. was down more than 12% as the solar equipment maker forecast disappointing revenue for the fourth quarter.
“Of course Tesla is still one of those stocks which has the potential to get people off their seats,” Athey said. “Discounting any volatility even at the index level after they report would be foolish. Boeing remains in a bad way and so it’s hard to see material good news coming there.”
Corporate Highlights:
A severe E. coli outbreak tied to McDonald’s Corp.’s Quarter Pounders sickened dozens of people in the US. The restaurant chain’s shares dropped more than 10% in postmarket trading before paring losses.
Heineken NV shares rose as volume declines in key markets were offset by higher pricing and the Dutch brewer maintained its guidance.
Arm Holdings Plc is canceling a license that allowed longtime partner Qualcomm Inc. to use Arm intellectual property to design chips, escalating a legal dispute over vital smartphone technology.
Jio Financial Services Ltd., controlled by billionaire Mukesh Ambani, has held talks with Allianz SE to set up an insurance partnership in India as the German firm seeks to scrap two existing joint ventures in the country, according to people familiar with the matter.
Tokyo Metro Co.’s shares rose as much as 47% in their debut, after the company raised 348.6 billion yen ($2.3 billion) in the country’s largest initial public offering since mobile carrier SoftBank Corp. listed in 2018.
China Resources Beverage Holdings Co. gained 14%, showing strong response to one of the city’s biggest initial public offerings this year.
Oil fell as a US industry group signaled a rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East. Gold was steady after climbing to a fresh record.
Key events this week:
Canada rate decision, Wednesday
Eurozone consumer confidence, Wednesday
US existing home sales, Wednesday
Boeing, Tesla, Deutsche Bank earnings, Wednesday
Fed’s Beige Book, Wednesday
US new home sales, jobless claims, S&P Global Manufacturing and Services PMI, Thursday
UPS, Barclays earnings, Thursday
Fed’s Beth Hammack speaks, Thursday
US durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 10:24 a.m. London time
S&P 500 futures fell 0.1%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index fell 0.3%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.1% to $1.0784
The Japanese yen fell 1% to 152.63 per dollar
The offshore yuan was little changed at 7.1392 per dollar
The British pound was little changed at $1.2985
Cryptocurrencies
Bitcoin fell 1.7% to $66,320.84
Ether fell 2.3% to $2,573.03
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.23%
Germany’s 10-year yield was little changed at 2.32%
Britain’s 10-year yield advanced four basis points to 4.21%
Commodities
Brent crude fell 1% to $75.25 a barrel
Spot gold rose 0.1% to $2,752.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
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