Futures Rise Amid Inflation Data and Upcoming Earnings, According to Reuters

U.S. stock index futures experienced an uptick on Tuesday, recovering from the previous session’s decline as investors look for new insights regarding interest rate direction amid significant inflation data and the impending third-quarter earnings season.

On Monday, all three major indexes experienced a drop of about 1%, impacted by a surge in Treasury yields, rising tensions in the Middle East, and a reassessment of U.S. interest rate expectations, which weighed heavily on equities.

As of 5:35 a.m. ET, E-minis for the S&P 500 were up 20 points, or 0.35%, with similar increases seen in other indexes, including the Nasdaq, which rose 75.75 points (0.38%), and the Dow, gaining 70 points (0.17%).

U.S. Treasury yields saw a slight reduction after reaching highs on Monday, yet the yield on the benchmark 10-year note remained above 4%. This follows strong economic data released last week, which led investors to temper their expectations regarding future interest rate cuts by the Federal Reserve for the remainder of the year.

Traders have assigned an approximately 89% probability to a 25 basis point interest rate cut by the Fed at its November meeting, with a small uptick in expectations for no rate change also noted.

The S&P 500 is projected to show a 3.2% year-over-year increase in earnings per share (EPS) for the third quarter, with six out of its eleven sectors anticipated to report gains, according to Sam Stovall, chief investment strategist at CFRA Research.

Federal Reserve Governor Adriana Kugler expressed support for further interest rate cuts if inflation continues to decrease as expected. Some Fed officials, including John Williams and Alberto Musalem, noted the appropriateness of gradually reducing rates.

Additional Fed representatives, such as Raphael Bostic, Susan Collins, and Philip Jefferson, are set to speak later in the day.

International trade balance data for August is also scheduled for release on Tuesday. Investors remain alert to the potential effects of Hurricane Milton, which has been classified as a category 4 storm.

In individual stock news, shares of Honeywell International surged 2.9% following reports of its plans to spin off its advanced materials division.

Meanwhile, U.S.-listed shares of Chinese companies fell, mirroring losses in domestic equities. The optimism surrounding China’s economic stimulus measures has diminished due to a lack of specific details. Stocks for companies such as Alibaba Group, JD.com, and PDD Holdings saw declines ranging from 8.3% to 10.8%.