Stocks, futures mixed ahead of earnings, Fed: markets wrap

Stocks and US futures were mixed on Tuesday amid caution in global markets ahead of a hotly anticipated Federal Reserve interest-rate hike.

European energy stocks rallied with oil, while retailers and banks fell after disappointing reports from Walmart Inc. and UBS Group AG. The Stoxx 600 fluctuated as S&P 500 and Nasdaq 100 futures slipped. Stocks in Asia received a fillip from China’s technology sector, with Alibaba Group Holding Ltd. leading the advance as the e-commerce giant plans to seek a primary listing in Hong Kong.

Treasury yields and a dollar gauge were little changed as commodities rallied. Traders are braced for a wave of debt sales and a widely expected 75 basis points Fed rate rise on Wednesday, part of campaign to tackle inflation.

Markets are bracing both for the Fed decision and any policy signals, as well as corporate reports from the likes of Apple Inc. and Alphabet Inc. UBS dropped more than 5% after reporting weaker-than-expected profit in the second quarter, as the global market sell-off kept wealthy clients on the sidelines and institutional investors pulled funds.

Other risks include ongoing disruptions to European gas supplies from Russia as well as China’s Covid curbs and property woes.

For Katerina Simonetti, an adviser at Morgan Stanley Private Wealth Management, the litany of risks exposes the vulnerability of the 6% rebound in global shares from June lows.

“This is most likely a bear market rally and there are significant risks still facing this market,” she said on Bloomberg Television. “We’re probably going to be seeing a lot of choppiness and potentially some further declines in the market before the year end.”

In contrast, Ed Yardeni, president of Yardeni Research, argues the S&P 500’s plunge last month to a 3 666.77 low likely marked the trough of the 2022 equity rout. He cites the resilience in corporate earnings and the still-healthy outlook for consumers and businesses even as the US economy slows.

Here are some key events to watch this week:

• Alphabet, Apple, Amazon, Microsoft, Meta earnings due this week
• US new home sales, Conf. Board consumer confidence, Tuesday
• IMF’s world economic outlook update, Tuesday
• EU energy ministers emergency meeting, Tuesday
• Fed policy decision, briefing, Wednesday
• Australia CPI, Wednesday
• US GDP, Thursday
• Euro-area CPI, Friday
• US PCE deflator, personal income, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 8:25 a.m. London time
• Futures on the S&P 500 fell 0.2%
• Futures on the Nasdaq 100 fell 0.3%
• Futures on the Dow Jones Industrial Average fell 0.3%
• The MSCI Asia Pacific Index fell 0.6%
• The MSCI Emerging Markets Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0227
• The Japanese yen was little changed at 136.57 per dollar
• The offshore yuan was little changed at 6.7562 per dollar
• The British pound was little changed at $1.2048

Bonds

• The yield on 10-year Treasuries declined two basis points to 2.77%
• Germany’s 10-year yield declined three basis points to 0.99%
• Britain’s 10-year yield declined two basis points to 1.92%

Commodities

• Brent crude rose 1.8% to $107.01 a barrel
• Spot gold rose 0.4% to $1 726.70 an ounce