(Reuters) – U.S. stock index futures dipped on Tuesday, with rising bond yields adding pressure as traders braced for retail sales data that will provide more clues on the health of consumers ahead of an anticipated Federal Reserve rate cut later in the week.
The U.S. 10-year Treasury note yield rose back above 4.42%, an over three-week high, as market bets strengthened on a more cautious Fed in 2025.
November retail sales data, due at 8:30 a.m. ET on the day, are expected to rise 0.5% on a monthly basis according to economists polled by Reuters.
Futures pulled back after a fairly strong session on Monday, with the Nasdaq closing at a record high and the S&P 500 gaining ground.
Rate-sensitive megacaps were mixed in premarket trading, with Nvidia down 2.1% and Microsoft dipping 0.4%. Tesla was up nearly 3% after rallying more than 6% in the previous session.
A 25 basis point cut from the Fed on Wednesday is all but priced in, but most see the central bank holding rates at its January meeting, as economic indicators point to continued resilience and inflation remains persistent.
“The consensus expectation is that investors will get the extra holiday gift they want with another quarter-point interest rate cut by the Federal Reserve,” said Joe Gaffoglio, president and CEO of Mutual of America Capital Management
“However, if inflation continues to stay above target in the new year, the markets may be too optimistic on how many cuts the Fed may deliver.”
Still, U.S. stocks remain on track to end December on a positive note with the S&P 500 set for its best year since 2019 with an over 27% year-to-date rise, powered by gains in technology companies, Fed rate cuts and optimism on the impact of President-elect Donald Trump’s corporate policies.
Dow E-minis were down 165 points, or 0.38%, S&P 500 E-minis were down 16.25 points, or 0.27% and Nasdaq 100 E-minis were down 13.75 points, or 0.06%.
Crypto-focused stocks continued to rally as bitcoin surpassed $107,000. Miners Hut 8, MARA Holdings and Riot Platforms all rose more than 2%.
Albertsons Companies rose 1% after multiple brokerages hiked their price targets on the stock with Telsey Advisory Group upgrading it to “outperform” from “market perform.”
(Reporting by Lisa Mattackal in Bengaluru; Editing by Maju Samuel)
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