U.S. equity futures edged lower Tuesday, while the dollar tested three-month lows against it global peers and Treasury yields held steady, as investors looked to the release of minutes from the Federal Reserve’s November rate decision while tracking the ongoing surge in mega-cap tech stocks.
Record highs for Microsoft (MSFT) – Get Free Report and Nvidia (NVDA) – Get Free Report helped power the Nasdaq to its best closing level in nearly two years, with the tech-focused index now riding a year-to-date gain of around 36.5%. The gains flowed-through into the S&P 500, as well, with the broadest U.S. benchmark notching its best close since August and taking its November gain to around 7.65%.
AI chipmaker Nvidia, in fact, will post its third quarter earnings update after the closing bell with analysts looking for a bottom line of $3.37 per share on revenues of $16.182 billion a near three-fold increase from the same period last year.
Tame bond yields are also a big part of the broader rally, with Treasuries reacting well to a solid auction of $16 billion in 20-year bonds yesterday that drew the highest level of foreign buyers for the paper in more than two years.
Benchmark 10-year notes were marked at 4.412% in early New York dealing, down around 4 basis points from pre-auction levels, while 2-year notes held at 4.913%.
The U.S. dollar index, meanwhile, fell another 0.06% against a basket of its global peers, despite the first official move higher for China’s yuan since July, to trade near a three-month low of 103.336 in overnight dealing.
The moves reflect extended bets on a Fed rate cut by the spring, with the odds of any chance to the current 5.25% to 5.5% range over the next three meetings largely erased by slowing inflation and moderating GDP growth.
Minutes from the Fed’s November meeting, which will be released at 2:00 PM Eastern time, could challenge that consensus, with some analysts expecting language that echoes recent hawkish messaging from policymakers and leaves the door open for one final rate hike.
On Wall Street, stocks are looking at a modestly softer open as liquidity slowly abates into the Thanksgiving holiday, with futures contracts tied to the S&P 500 indicating a 3 point opening bell decline and those linked to the Dow Jones Industrial Average priced for a 46 point pullback. The Nasdaq is called 3 points higher.
In overseas markets, European stocks were hovering near a two-month high in thin Tuesday trading, while Asia shares touched a three-month high before retreating into the close.
Japan Nikkei 225, meanwhile, Asia’s best-performing market, eased 0.1% from the 33-year high it reached yesterday to close at 33,354.14 points.
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