U.S. stock futures, oil prices and bond yields fell on worries that major economies are headed toward a recession.
Futures for the S&P 500 lost 0.6% Tuesday, a day after the benchmark stocks gauge skidded 1.2%. Contracts for the Dow Jones Industrial Average lost 0.7%. Futures for the technology-focused Nasdaq-100 fell 0.4%.
VIX and VIXmain rose 3.13% and 1.14% separately.
The price of gold slightlyfell 0.01% to around $1,731.5 a troy ounce.
The dollar’s gains pushed the greenback close to parity with the euro. The common currency weakened 0.2% to trade at $1.0018, extending losses fueled by the eurozone’s energy crisis and broader economic travails. It last was worth less than $1 in 2002. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others including the euro, added 0.1%.
In the bond market, the yield on 10-year Treasurys slipped to 2.924% from 2.990% Monday. Yields, which move inversely to prices, have drifted lower since late June on expectations that an economic slowdown would prod the Federal Reserve to pull interest rates back down in 2023.
For now, though, the Fed is intent on pushing rates up in an attempt to tame decades-high inflation. Investors say that campaign, coupled with signs that the U.S. economy is losing momentum, could spell more pain for markets after a rough first half of the year. Adding to the challenges for money managers are China’s struggle to contain Covid-19 and the war in Ukraine.
“There is going to be a recession, but we’re not there yet,” said Philip Saunders, co-head of multiasset growth at Ninety One, an asset manager based in the U.K. and South Africa. “The key thing that is going on is that financial liquidity is retracting.”
Among individual stocks, PepsiCo rose 1.3% premarket after the drinks company said second-quarter profits and revenue beat analyst forecasts.AngioDynamics, a medical-device company, is also due to publish quarterly results before the opening bell.
Earnings season among major U.S. companies will pick up speed later in the week with results due from major financial institutions. Investors will pay particular attention to comments by bank executives on the trajectory of the economy, and to the effects of higher input costs on profit margins.
On the economic front, investors will parse data on sentiment among small U.S. businesses. The figures, due to be published by the National Federation of Independent Business at 6 a.m. ET, are expected to show a small decline in optimism in June.
Commodity markets extended recent losses fueled by concerns that demand for raw materials will ebb as global growth slows. Brent-crude futures, the benchmark in international energy markets, fell 2.2% to $104.21 a barrel. The Organization of the Petroleum Exporting Countries is due to publish its monthly report on supply and demand of oil Tuesday. Traders will be watching for signs that higher prices have knocked fuel consumption.
Copper futures on the London Metal Exchange fell 2.1% to $7,451 a metric ton. The industrial metal,a barometer for the world economy because of its use in construction and heavy industry, has slumped by a fifth over the past month and is 30% below the all-time high of over $10,000 a metric ton recorded in March.
International stocks retreated. The Stoxx Europe 600 lost 0.3%, led lower by shares of tech and real-estate companies. China’s Shanghai Composite Index lost 1%, Hong Kong’s Hang Seng fell 1.3% and Japan’s Nikkei 225 dropped 1.8%.
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