The Tuesday Market Minute

  • Wall Street futures ease from record highs as Google earnings tame bulls ahead of another active slate of US corporate earnings.
  • The Federal Reserve kicks-off its two-day policy meeting today in Washington with traders pricing in a 95.1% chance of a rate cut Wednesday, but only a 19% chance of a follow-up move in December.
  • GM, Merck, Pfizer and AMD highlight a busy earnings calendar supported by easing U.S.-China trade tensions and improving equity market sentiment. 
  • US equity futures suggest modest opening bell declines on Wall Street ahead of pending home sales data at 10:00 am Eastern Time. 

Market Snapshot

Wall Street futures eased from record highs Tuesday, while global stocks traded mixed amid renewed optimism on U.S.-China trade talks and the expectation of near-term rate support from the Federal Reserve.

The S&P 500 closed at an all-time high of 3,039.42 points last night as gains for Microsoft (MSFT) - Get Report and Apple  (AAPL) - Get Report , as well as a series of stronger-than-expected third quarter earnings reports, boosted markets around the world. The momentum is now likely to rest on the outcome of tomorrow's Fed meeting in Washington, where traders are pricing in a 95.1% probability of a rate cut but only a 19% chance of a follow-up move in December. 

Investors will first need to navigate another active slate of corporate earnings Tuesday, including third quarter updates from General Motors (GM) - Get Report , Merck & Co. (MRK) - Get Report and Pfizer (PFE) - Get Report before the start of trading, chipmaker AMD AMD after the close of trading and the impact of last night's weaker-than-expected earnings from Google parent Alphabet (GOOGL) - Get Report that showed a worrying rise in expenses that offset soaring revenues. 

Still, with just over 20% of the S&P 500 reporting quarterly earnings so far this season, and the collective bottom line on pace to fall around 2% from last year, nearly 80% of companies are beating Wall Street forecasts and the overall performance has topped early expectations of a near 3% slide.

Furthermore, with a fourth quarter earnings rebound of 2.2% in the windscreen, a near-term U.S. China trade deal on the cards and a Fed rate cut all but assured for later this week, equity markets may still have a lot of power behind them heading into the final two months of the year.

Tuesday's open on Wall Street, however, is likely to be muted, with contracts tied to the Dow Jones Industrial Average set for a 23 point decline, based on current futures prices, and the broader S&P 500, which is up 21.24% for the year, priced to dip 4 points from from last night's record close.

Overnight in Asia, the record high close for the S&P 500 and the expectation of easing moves from both the Fed and the Bank of Japan helped lift the Nikkei 225 to a one-year high of 22,974.13 points as stocks in the region powered to their strongest levels in at least three months.

European markets, however, were modestly weaker by mid-day trading as the euro held firm at 1.1093 against the U.S. dollar and energy stocks sagged following weaker-than-expected quarterly profits from oil major BP plc (BP) - Get Report .

The Stoxx 600 Europe slipped 0.4% from yesterday's 21-month high to trade at 397.07 points while Britain's FTSE 100 was marked 0.42% lower as BP shares slumped 2.8% and investors shunned the benchmark following yet another Parliamentary defeat for Prime Minister Boris Johnson as he failed to win backing for a general election after dumping is Brexit legislation upon receiving a third EU exit extension from Brussels.

Away from equities, benchmark 10-year Treasury bond yields held at near four-week highs of 1.845% amid the renewed market optimism, while the U.S. dollar index edged 0.1% higher to 97.86 even as traders extended bets on a Wednesday Fed rate cut. 

Global oil prices eased for a second consecutive session as the dollar booked gains against a basket of six global currencies and traders prepped for the release of API and EIA data on U.S. crude stockpiles today and tomorrow.

Brent crude contracts for December delivery were seen 54 cents lower from Monday's New York close to trade at $61.03er barrel, while WTI contracts for the same month were marked 77 cents lower at $55.04 per barrel.