Dow Jones Industrial Average futures pointed to a second day of losses to start the new quarter as bond yields increased and traders lowered the odds that the Federal Reserve would cut interest rates in June. Futures tied to the 30-stock Dow fell 208 points, or 0.5%, as shares of UnitedHealth declined. Futures tied to the S&P 500 ticked lower by 0.4%, while Nasdaq 100 futures dipped 0.5%. The second quarter for stocks is off to a rough start as sticky inflation data to end last week and some strong economic data Monday sends yields higher and reduces odds the Fed will cut rates in June. February’s core personal consumption expenditures price index released Friday showed a 2.8% annual increase, about even with December and January’s 2.9% rate and still a ways to go from the Fed’s 2% inflation target. On Monday, the Institute for Supply Management’s manufacturing gauge showed expansion after contracting for 16 straight months. The 10-year Treasury yield was last at 4.34%, the highest in two weeks and almost the highest levels of the year. Odds for a June rate cut based on fed futures trading are now down to about 58.8%, off from about 70% a week ago. The question now is if the momentum to start 2024 can continue if the Fed stands pat on rates. Health insurers slid in the premarket after the Centers for Medicare & Medicaid Services finalized the 2025 rate announcement for Medicare Advantage and prescription drug coverage. In 2025, payments from the government toward these plans are expected to rise 3.7% year over year, unchanged from an earlier proposed rate. Humana lost 9%, while UnitedHealth dropped 4% and CVS Health tumbled 5.5%. The S&P 500 is coming off a 10% gain for the first quarter, its best start to a year since 2019, as investors bet that inflation would come down enough for the Fed to start cutting rates, while the economy keeps growing. The Nasdaq gained 9% in the first quarter on the back of a run in artificial intelligence-related stocks like Nvidia. On the economic front, traders will be looking for the Job Openings and Labor Turnover Survey from February, out Tuesday at 10 a.m. ET. Durable orders for February are also on deck Tuesday morning. The main event this week will be March’s big payrolls report due Friday. The 10-year Treasury note yield rose slightly Tuesday, adding to its gains from the previous session, as traders reassessed the possibility of the Federal Reserve cutting rates in June. The benchmark rate was up 4 basis points at 4.369%, trading at the highest in two weeks and almost the highest levels of the year. The 2-year Treasury note yield was just above flat at 4.722%. Hong Kong stocks led gains in Asia-Pacific markets on Tuesday as Xiaomi shares surged, while investors assessed economic data from South Korea and Australia. The Hang Seng index gained 2.18% as traders returned from a long weekend, with shares of Xiaomi jumping as much as 16% after the consumer electronics company began taking orders on Thursday for its newly launched electric vehicle. China’s CSI 300 index fell 0.42% to end at 3,580.68, snapping a three-day winning streak. South Korea’s Kospi closed 0.19% higher at 2,753.16, but the Kosdaq slid 2.29% to 891.59 after the inflation reading. In Australia, the S&P/ASX 200 climbed slipped 0.14% to 7,886, retreating from fresh all-time highs. Japan’s Nikkei 225 rebounded to close 0.09% higher at 39,838.91, while the broad-based Topix ended 0.25% down at 2,714.45. Oil prices gained in early Asian trading on Tuesday, underpinned by signs of improved demand and escalating Middle East tensions that had sparked a rally in U.S. futures to a five-month high in the previous session. Brent futures for June delivery rose 37 cents to $87.79 a barrel by 0046 GMT. The May contract for U.S. West Texas Intermediate (WTI) crude futures rose 32 cents to $84.03 a barrel. Stronger than expected U.S. and Chinese manufacturing data is lifting prices, Tony Sycamore, a market analyst with IG, wrote in a note. Gold prices rose to a fresh record high on Tuesday as demand from momentum-following funds offset a strong U.S. dollar and the possibility of higher-for-longer U.S. rates. Spot gold rose 0.3% to $2,258.5022 per ounce, after hitting an all-time high of $2,266.59. The bullion has been hitting fresh record highs for three sessions in a row.
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