U.S. stock index futures fell on Tuesday as investors positioned themselves for new economic projections and another large interest rate hike by the Federal Reserve this week to quell decades-high inflation.
The U.S. central bank is widely expected to hike rates by a third-straight 75 basis points on Wednesday, with markets also pricing in a 17% chance of a 100 bps increase and expect terminal rate at 4.5% by March 2023.
Focus will also be on the updated economic projections and dot plot estimates for cues on policymakers' sense of the endpoint for rates and the outlooks for unemployment, inflation, and economic growth.
Market Snapshot
At 7:50 a.m. ET, Dow e-minis were down 94 points, or 0.3%, S&P 500 e-minis were down 15.25 points, or 0.39%, and Nasdaq 100 e-minis were down 59 points, or 0.49%.
Pre-Market Movers
Ford (F) – The automaker’s stock fell 3.7% in the premarket after it warned that quarterly earnings would take a hit of about $1 billion from increased supplier costs and parts shortages. Those factors contributed to a shortfall in finished vehicles ready to sell.
BioNTech (BNTX), Moderna (MRNA) – The vaccine makers are seeing shares fall again this morning, after sliding yesterday on President Joe Biden’s comment that the pandemic was “over.” BioNTech fell 4.4% in premarket trading, with Moderna off by 2.1%.
Change Healthcare (CHNG) – The health care technology firm’s stock rallied 7.5% in premarket action after a federal judge ruled against the Justice Department’s antitrust challenge to UnitedHealth’s (UNH) planned $13 billion acquisition of the company.
Cognex (CGNX) – Cognex shares jumped 4.3% in the premarket after the maker of machine vision systems and sensors raised its current-quarter revenue outlook. The move comes amid a faster-than-expected inventory recovery from a fire at Cognex’s primary contract manufacturer.
Nike (NKE) – Nike lost 2.4% in premarket trading after Barclays downgraded the stock to “equal weight” from “overweight,” noting continued volatility for the athletic footwear and apparel maker in China as well as demand erosion in North America and elsewhere.
Western Digital (WDC) – The disk drive maker’s shares fell 1.6% in the premarket following a downgrade by Deutsche Bank to “hold” from “buy.” Deutsche Bank said the company’s profit and revenue appear to be coming in at the low end of guidance due to deteriorating demand.
Norwegian Cruise Line (NCLH) – Norwegian jumped 2.8% in the premarket after Truist Financial upgraded the stock to “buy” from “hold,” pointing to a decrease in cancellations and subsequent rebookings at lower prices.
Market News
Treasury Two-Year Yields Head for 4% Ahead of Big Fed Rate Hike
Treasury two-year yields are poised to crack above 4% for the first time since 2007, lifted by the Federal Reserve’s steepest tightening cycle in a generation.
The yield on the benchmark short-end note rose as much as 5 basis points to 3.99% on Tuesday, up more than 3 percentage points this year as it heads for the biggest annual increase since 1994.
U.S. Picks Team to Oversee $52.7 Bln in Semiconductor Funding
The Biden administration on Tuesday named a team of senior advisers to oversee $52.7 billion in government funding to boost semiconductor manufacturing and research.
Commerce Department chief economist Aaron "Ronnie" Chatterji will serve as White House Coordinator for CHIPS Implementation at the National Economic Council (NEC) and will manage the work of the CHIPS Implementation Steering Council created by President Biden's chips executive order signed last month.