U.S. equity futures traded mixed Tuesday, with investors injecting a note of caution into the markets following last night’s double-set of all-time highs, amid questions over leadership at the Federal Reserve and the pace of inflation heading into the final months of the year.
The S&P 500 closed at an all-time high for the eighth consecutive session last night, extending the longest record run since 1997, as investors added the impact of $1 trillion in fresh government stimulus to their stock valuations, which are already elevated by a stronger-than-expected third quarter earnings season.
With 445 S&P 500 companies reporting so far, collective S&P 500 profits are expected to rise 41.5% from last year to $451.5 billion, with more than more than 80% of updates topping Street forecasts.
Overnight reports that President Joe Biden has interviewed Fed Governor Lael Brainard for the top job at the central bank, which comes open early next year, however, cast a more cautious tone on markets this morning, pulling U.S. Treasury yields lower and peeling back gains for equity futures ahead of factory gate inflation data at 8:30 am and another pre-recorded appearance from Fed Chairman Jerome Powell later in the session.
That was partly offset, however, by news of the pending break-up of iconic industrial giant General Electric GE, which unveiled plans to split into three separate companies, focusing on energy, aviation and healthcare, in what is likely to be the biggest shakeup in its 130 year history.
Futures contracts tied to the Dow Jones Industrial Average are indicating a 27 point opening dip while those linked to the S&P 500 are priced for a 1 point move higher from last night’s record close of 4,701.70 points.
Futures tied to the tech-focused Nasdaq Composite are indicating a 30 point gain thanks in part to pre-market advances for AMD (AMD) – Get Advanced Micro Devices, Inc. Report and Nvidia (NVDA) – Get NVIDIA Corporation Report as well as a pullback in 10-year Treasury note yields to 1.460%.
Nvidia, in fact, jumped 5.5% in pre-market trading after the chipmaker unveiled a new set of tools designed for software professionals developing programs for the so-called ‘metaverse’.
Nvidia will market the tools, known as Omniverse Enterprise, through partners such as Dell Technologies and Lenovo Group, while leveraging its own chips in the development of the kind of three-dimensional world’s expected in metaverse projects from social media giant Facebook FB.
Adjacent to that move was a 55% surge for laser lidar startup Luminar Technologies (LAZR) – Get Luminar Technologies Report, which cut a deal to supply its sensors to Nvidia for its new autonomous vehicle technology platform.
PayPal Holdings (PYPL) – Get PayPal Holdings Inc Report shares also moved lower in pre-market trading after the payments group posted stronger-than-expected third quarter earnings but provided a tepid initial outlook for 2022 profits.
AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Class A Report shares, too, were down nearly 5% after the movie theatre chain posted a narrower-than-expected third quarter loss while cautioning there are “more challenges ahead of us still to be met,”
Robinhood Markets (HOOD) – Get Robinhood Report shares fell 4% after the online trading group reveal a cybersecurity breach that may have affected more than 5 million customers.
Robinhood said the breach was caused by a ‘unauthorized party’ who “socially engineered a customer support employee by phone and obtained access to certain customer support systems” and was able to obtain the email address of 5 million customers, alongside the full names of a different group of 2 million clients.
Away from equities, global crude prices extended gains following the resumption of international travel to the United States this week — triggering bets on renewed jet fuel demand — and the stronger-than-expected October export data from China over the weekend.
WTI futures for December delivery were marked 43 cents higher at $8236 per barrel while Brent contracts for January rose 41 cents to $83.85 per barrel.