(Reuters) – U.S. stock index futures edged lower on Tuesday after a two-day bounce on Wall Street as investors looked ahead to another round of earnings reports, especially from megacap companies, that could put a recent market rally to test.
Earnings reports from a host of companies including Microsoft and Google-owner Alphabet will offer further clues on the strength of corporate America amid higher Treasury yields and an aggressive Federal Reserve tightening cycle.
Shares of the two companies, which report after market close, were down 0.2% each in early trading.
General Electric Co dropped 3% in premarket trading after the industrial conglomerate reported a 19% drop in adjusted quarterly profit, while General Motors edged 0.9% higher after reaffirming its full-year outlook.
3M slipped 2.6% after the diversified manufacturer reported 4% fall in quarterly revenue, hurt by shrinking overseas earnings due to a stronger dollar and impact from divestitures.
While earnings reports are expected to influence trading decisions this week, U.S. stock markets rose in the past two sessions after signs of economic softness suggested the effects of the Fed’s policy aimed at curbing decades-high inflation were taking root.
Markets are still pricing in a fourth-straight 75 basis point rate hike from the Fed on Nov. 2, but a report from S&P Global that showed a contraction in business activity this month tempered bets of another jumbo-sized raise in December. [FEDWATCH]
So far, the earnings season has been better than expected, with nearly three-quarters of the 99 companies in the S&P 500 having beaten estimates, according to Refinitiv data.
At 6:23 a.m. ET, Dow e-minis were down 154 points, or 0.49%, S&P 500 e-minis were down 17.25 points, or 0.45%, and Nasdaq 100 e-minis were down 30.5 points, or 0.27%.
Warner Bros Discovery Inc fell 0.4% as the newly combined media company said that costs associated with cutting content could reach $2.5 billion.
Shares of Meta Platforms dipped 0.2% after its messaging app WhatsApp stopped working for many people across the world.
Investors will also focus on a report from the Conference Board expected at 10 a.m. ET , which is expected to show consumer confidence declined in October compared to September as rising interest rates take a toll on consumer spending.
(Reporting by Amruta Khandekar in Bengaluru)
