MARKET SNAPSHOT: U.S. Stock Futures Edge Lower, Threaten To Snap Dow's Three-day Win Streak

By Mark DeCambre, MarketWatch

Investors eye Home Depot earnings for signs of consumer health

U.S. stocks looked set for modest losses Tuesday morning as investors contend with worries about the strength the of the U.S. economy and quarterly reports from the some of the last remaining major companies, including Dow-component Home Depot, which could offer some clues about the health of the American consumer.

How are the major benchmarks faring?

Futures for the Dow Jones Industrial Average fell 28 points, or 0.1%, at 26,104, those for the S&P 500 fell 2.45 points, or 0.1% to 2,921, while Nasdaq-100 futures lost 4 points, or 0.1%, to reach 7,723.25.

On Monday, the Dow rose 249.78 points, or 1%, to end at 26,135.79, while the S&P 500 index added 34.97 points, or 1.2%, to close at 2,923.65. The Nasdaq Composite Index advanced 106.82 points, or 1.4%, to finish at 8,002.81.

A fourth consecutive gain for the Dow and the S&P 500 would represent those indexes' longest since the period ended July 15.

Read:Stock-market investors rattled by bond market's 'warning shot' -- here's what's next (http://www.marketwatch.com/story/stock-market-investors-rattled-by-bond-markets-recession-warning-heres-whats-next-2019-08-17)

What's driving the market?

U.S. equity futures were treading water on Tuesday, with investors digesting earnings (http://www.marketwatch.com/story/home-depot-warns-lumber-prices-possible-tariffs-to-weigh-on-sales-2019-08-20) from Home Depot Inc.(HD), which warned that lumber price deflation, as well as the impact of possible tariffs, will impact its fiscal year sales.

The report from the home-improvement giant highlights that Sino-American trade tensions remain a headwind for U.S. corporations. Although Home Depot said it still sees earnings rising 3.1% for the year, it now says annual sales will rise 2.3% and comparable-store sales will rise 4%. Analysts had forecast earnings-per-share growth of 2.1% on sales growth of 2.8%.

Home Depot earnings come a day after the Commerce Department said it has given Chinese telecom giant Huawei Technologies Co. Ltd. another 90-day reprieve during which it can continue to do business with American companies, without the granting of case-by-case licenses that would otherwise be needed, after the Commerce Department added it to its "entity list" in May (http://www.marketwatch.com/story/stock-futures-slip-after-trump-appears-to-crack-down-on-chinas-huawei-2019-05-16).

Meanwhile, President Donald Trump late Monday leveled fresh criticism against the Federal Reserve, asking that the central bank consider deeper cuts to key interest rates, of around 1%. Trump did, however, declare the U.S. economy in good shape, despite the trade clash with China, which economists, strategists and many executives from American companies highlight as a problem for business planning, one that could throw the U.S. into a recession. "We're doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money," Trump said on Monday.

Stock-market investors have been focused on what the bond-market has been communicating about the overall health of the economy. Bond prices rise as yields fall and a yield curve inversion that briefly occurred last week added to concerns about the health of the market. Such inversions, where the shorter-dated yields rise above their longer-dated counterparts, have coincided with the past seven recessions in the months or years following its occurrence.

"We see a mixed trading session as the movement in yields suggest the bond market is not convinced of the administrations pitch to dampen recession fears," said Peter Cardillo, chief market economist at Spartan Capital Securities in a Tuesday research note.

The 10-year Treasury note's yield stood at 1.565%, while the 2-year Treasury note yielded 1.525% early Tuesday.

Looking ahead, investors will watch for comments from Fed officials later in the day, including San Francisco Federal President Mary Daly, who will speak at 4 p.m. at an online question-and-answer session, and Federal Gov. Vice Chairman for Supervision Randal Quarles, who is slated to speak at 6 p.m.

Those speeches come ahead of minutes from the most recent Fed gathering on July 31, which concluded with the first interest-rate cut in more than a decade. A gathering of central bankers in Jackson Hole (http://www.marketwatch.com/story/investors-might-be-disappointed-in-feds-message-from-jackson-hole-2019-08-16) that starts on Thursday will also be in focus.

Check out: Stocks could fall another 8% as 'Trump put' and 'Fed put' expire, says Morgan Stanley's Mike Wilson (http://www.marketwatch.com/story/the-fed-trump-puts-have-expired-says-morgan-stanleys-mike-wilson-leaving-stocks-vulnerable-to-another-8-decline-2019-08-19)

(END) Dow Jones Newswires

August 20, 2019 07:26 ET (11:26 GMT)

Home Depot (NYSE:HD)
Historical Stock Chart
From Mar 2024 to Apr 2024