Stock futures in the United States have dropped for the first time on Tuesday, with the dollar holding gains against its global peers as a result of a recent rise in Treasury bond rates, which investors are looking for, as well as tech and industrial earnings that might unravel fears over Federal Reserve rate hikes and China's lockdown.
Stocks gained a positive start late yesterday as safe-haven trading lowered bond rates which move in the opposite direction prices from multi-year highs while the tech industry found support for Elon Musk's $44 billion take-private deal to buy the social media group Twitter () -.
That momentum slowed down in Asia markets, which secured modest gains despite the ongoing Covid infection in China that might trigger lockdown order in Beijing and is likely to keep supply chains disrupted across a number of industries while lowering inflation pressures in the coming months.
"Elon Musk's acquisition of Twitter is a good sentiment-driven and short-term resurgence from market concerns, such as inflation, geopolitical concerns, and the Federal Reserve," said George Ball, the chairman of Sanders Morris Harris, a Houston-based investment firm with $4.9 billion in assets under management.
"The declines in the stock market are fueled by higher interest rates, as investors reassess how much they're willing to pay for certain stocks," he added, adding that "while Covid's supply chains might derail supply chains right now, they'll have little impact on markets over the long-term."
In mid-day Frankfurt trading, European markets improved by a solid set of blue-chip earnings and decreased regional currencies, while in Asia the MSCI ex-Japan index added 0.4 percent.
Stateside's benchmark 10-year note yields slowed to 2.789% in overnight trading, while the dollar index, which tracks the greenback against a string of six global currencies, dipped to 101.867 in two years.
With General Electric GE, United Parcel Service () -, 3M () - and PepsiCo () reporting before the bell, tech giants Microsoft () - and Google () updating investors at the end of the session, a substantial batch of earnings is expected to both drive pre-market trading and keep investors cautious.
Futures linked to the Dow Jones Industrial Average are looking at a 150 point opening bell drop on Wall Street, while investors linked to the S&P 500 are priced for a 20 point drop.
Following the pre-market earnings parade, General Electric fell 3.44%, despite CEO Larry Culp's prediction that revenue would likely come in at the lower end of the industrial group's prior forecast.
UPS, meanwhile, jumped 2.3 percent after achieving stronger-than-expected first-quarter earnings, and has announced plans to double its annual share buybacks to $2 billion.
After a mixed set of first quarter earnings that included increased productivity, 3M surpassed 0.77% into the green.
PepsiCo on the other hand fell 0.3 percent after disappointing first quarter earnings, despite the fact that the Frito Lay snack division continues to drive growth.