December 1, 2022

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Nasdaq, S&P, Dow futures rise, yields fall in pre-Fed positioning

New York Stock Exchange Opens As Companies Continue To Report 3rd Quarter Earnings

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Stock index futures point to a higher open Tuesday, while yields are down in a reverse of the action in the previous session as the Fed starts its two-day meeting.

Investors are understandably unwilling to lean too far to one side before the FOMC decision and Powell press conference tomorrow.

Nasdaq 100 futures (NDX:IND) +1.1%, S&P futures (SPX) +0.8% and Dow futures (INDU) +0.6% are higher.

The 10-year Treasury yield (US10Y) is down 12 basis points to 3.96% as the 4% level continues to be a battleground. The 2-year yield (US2Y) is down 8 basis points to 4.42%. The dollar index (DXY) is off 0.5%.

“The market is out on pivot watch going into this week’s Fed meeting, but the short lived rates rally following the European Central Bank meeting highlights that sustainable declines in rates also need to see actual declines in inflation,” ING said.

“But the ECB’s experience may also hold a cautionary lesson for US rates markets that already seem primed for the Fed to hint at a slower pace of tightening after this month,” ING economists added. “While the Fed may leave that option on the table, there is still the possibility that in the end the data still fails to provide the Fed with necessary assurance to follow through. A rates rally on a dovishly perceived Fed could still prove short-lived without the underpinnings in the subsequent data.”

On the data front, the October ISM manufacturing PMI hits shortly after the start of trading. Economists predict a small drop to 50, with the employment and prices components ticking up.

It’s also payrolls week and the JOLTS report for September is due, with the forecast for job openings to edge down to 10M.

Among active stocks, Stryker is slumping following an earnings miss.