Stock Futures Dip as Investors Analyze Earnings, Await Business Activity Data

U.S. stock futures edged lower on Tuesday as a number of major companies reported earnings and ahead of key surveys on business activity.
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Futures tied to the S&P 500 slipped 0.3%, pointing to the broad-market index largely holding onto its recent gains. The index gained 1.2% the day before, to close at its highest level since early December. Nasdaq-100 futures retreated 0.5%.
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Stocks have rallied in the past two sessions as investors bet that easing inflation will allow the Federal Reserve to slow the pace of its interest-rate rises and potentially even cut rates later this year. This potential rate cut has caused officials at the central bank to reconsider the size of the rate increase for the meeting next week, The Wall Street Journal reported.
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It's earnings season, and that means big companies are releasing their quarterly results. General Electric, Johnson & Johnson, Danaher, and 3M have all reported, and Microsoft is next up after the market closes. This will be the first earnings report from a major tech company.
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John Roe, head of multiasset funds at Legal & General Investment Management, said that earnings would be the biggest thing this week.
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So far this earnings season, there haven't been any major downgrades to corporate outlooks or to consensus forecasts for the coming year, according to Mr. Roe. This is good news for the economy, as it suggests that a recession may not be imminent.
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GE stock rose in premarket trading after the company reported revenue and profit that beat analyst expectations, driven by strong demand for jet engines and power equipment. 3M, however, fell 5% after the company reported a slowdown in sales and said it would eliminate 2,500 jobs.
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Investors will be closely watching U.S. purchasing managers indexes (PMIs) for clues about the health of the economy. Similar surveys have shown that business activity in the eurozone is on the rise, raising hopes that the global economy could avoid a recession in 2020.
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"The market is looking for confirmation that this rally at the start of the year is sustainable. Every number counts," said Antonio Cavarero, head of investments at Generali Insurance Asset Management.Cavarero went on to say that the market is closely watching economic data to see if the rally can be sustained. He noted that every number is important in this regard.
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On bond markets, the yield for the benchmark 10-year Treasury note declined to 3.504% from 3.522%. Yields usually fall when bond prices rise.
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Oil prices rose, with most actively traded contracts for Brent, the global crude benchmark, gaining 0.4% to trade at $88.54 a barrel.
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Overseas, the pan-continental Stoxx Europe 600 index lost 0.3% in early trading. In Asia, markets in Hong Kong, mainland China and South Korea remained closed for Lunar New Year holidays. Japan’s Nikkei 225 index climbed 1.5% in early trading.