Tuesday March 26th


Dow futures point to gain of 157 points as drop in bond yields stabilizes

U.S. stock index futures were higher Tuesday as a decline in Treasury yields stabilized after a sharp fall recently. At around 8:32 a.m. ET, Dow Jones Industrial Average futures indicated a gain of 157 points at the open. Futures on the S&P 500 and Nasdaq 100 also rose. The benchmark 10-year U.S. yield traded at 2.45 percent a day after reaching its lowest level since December 2017. The decline in the 10-year rate caused a so-called yield-curve inversion as the 3-month Treasury bill rate moved above the benchmark rate. Investors see a yield-curve inversion as a signal that a recession may be on the horizon, so a rise in long-term rates is being viewed as a positive right now. The yield curve inverted amid the release of weak economic data from the U.S. and around the world as well as a downgraded U.S. economic outlook from the Federal Reserve. "There's lots of angst about global economic growth. That's understandable because it has been slowing significantly since early 2018," Ed Yardeni, president and chief investment strategist at Yardeni Research. "Furthermore, we can all observe that ultra-easy monetary and debt-financed fiscal policies aren't as stimulative as policymakers have been hoping." Consumer confidence numbers are due at 10 a.m. ET, while housing starts fell more than 8 percent, widely missing estimates. Building permits, however, fell less than expected. Wall Street closed Monday with small gains. News that the special counsel Robert Mueller did not find evidence that President Donald Trump colluded with Russia in the 2016 presidential race bolstered the markets by removing some uncertainty. Investors were also hopeful that with the Mueller investigation out of the way, Trump will turn his attention to cementing trade deals. Overall, however, concerns regarding the global economy capped market gains. Shares of Bed Bath & Beyond skyrocketed more than 20 percent in the premarket after The Wall Street Journal reported three activist investors are trying to replace the company's entire board of directors. The stock was on pace to post its biggest one-day since 2009. Stocks in Japan bounced back partially on Tuesday after the previous day's heavy losses as concerns over the global economy weighed on investor sentiment. Following its Monday tumble, the Nikkei 225 rose 2.15 percent to close at 21,428.39. The Topix index also added 2.57 percent to end its trading day at 1,617.94. Mainland Chinese shares closed lower, with the Shanghai compositeslipping 1.51 percent to 2,997.10 and the Shenzhen component declining 1.94 percent to 9,513.00. The Shenzhen composite declined 2.176 percent to 1,639.94. In Hong Kong, the Hang Seng index slipped 0.19 percent in its final hour of trading. Over in South Korea, the Kospi closed 0.18 percent higher at 2,148.80. Oil rose further above $67 a barrel on Tuesday as OPEC supply cuts and expectations of lower U.S. inventories outweighed concern about weaker demand due to an economic slowdown. The price of global benchmark Brent crude has risen about 25 percent in 2019, supported by supply curbs by the Organization of the Petroleum Exporting Countries plus allies, and involuntary losses due to U.S. sanctions on Iran and Venezuela. Brent was up 50 cents at $67.71 a barrel at 1003 GMT, not far from its 2019 high of $68.69 reached on March 21. U.S. crude added 72 cents at $59.54. Gold fell on Tuesday, retreating from a near one-month peak hit in the previous session, as equity markets regained some ground following a sharp slide driven by fears of a global slowdown, and bond yields edged up. Spot gold was down 0.6 percent at $1,314.51 per ounce, after hitting its highest since Feb. 28 at $1,324.33 on Monday. U.S. gold futures were down 0.7 percent at $1,314 an ounce.