S&P 500 Futures Show Early Strength, Helped by FedEx and Nike Earnings

The major U.S. stock indexes closed higher on Tuesday, bringing an end to a four day losing streak. The move wasn’t that impressive with some investors saying it was fueled by short-covering due to oversold technical conditions and others calling it position-squaring ahead of the long Christmas holiday weekend.

Some investors also questioned the significance of the rally, given concerns over weak holiday shopping and fears about the Federal Reserve’s plan to keep raising U.S. interest rates. Adding to the negative sentiment was an increase in U.S. Treasury yields, which rose after the BOJ made a surprise tweak to its bond yield control that allows long-term interest rates to rise more.

On Tuesday, the blue chip Dow Jones Industrial Average settled at 32849.74, up 92.20 or +0.28%. The benchmark S&P 500 Index finished at 3821.62, up 3.96 or +0.10% and the tech-heavy NASDAQ Composite closed at 10547.11, up 1.08 or +0.10%.

Sectors on the Move

Among the S&P 500’s 11 major sectors, the energy index gained most, finishing up 1.52% as crude oil prices rose. Contributing to the gains were shares of Chevron Corp, which rose $2.79 or +1.64%.

Of the four sectors that declined, consumer discretionary was the weakest, finishing down 1.13%. Contributing to the losses were shares of Home Depot, which lost $2.49 or -0.78%.

The Dow Jones Transport average closed down 1.3% after underperforming the broader market throughout the session following JPMorgan’s bearish research on transport companies.

Stocks on the Move

Gilead Sciences shares were down 1.91% after announcing its Kite unit would acquire biotech company Tmunity Therapeutics. The company warned the deal could reduce 2023 earnings per share by approximately 18-22 cents.

General Mills dropped 4.00%, despite reporting better-than-expected revenue and profit for the last quarter. The food producer also raised its full-year forecast. Higher prices partially offset increased output costs.

Gold miner Newmont rose 4.43% as the price of gold climbed above $1800. Still, the stock is down more than 22% year to date, on pace for its first annual decline since 2018.

Tesla shares tumbled 8% after at least three brokerages cut the electric vehicle maker’s target price on growing concerns of demand weakness and risk from Chief Executive Elon Musk’s struggles at Twitter.

Treasurys and Economic News

Also on Tuesday, U.S. Treasury prices fell after the BOJ’s shock move, with the benchmark 10-year Treasury yield rising to a three-week high of 3.71%.

Additionally, in economic news, data showed U.S. single-family homebuilding tumbled to a 2-1/2 year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.

Short-Term Outlook

Ahead of Wednesday’s opening, U.S. stock index futures are getting a lift from Nike and FedEx, which rose in after-hours trading.

Nike shares added 12% after the apparel maker beat Wall Street expectations for quarterly earnings and revenue. Meanwhile, FedEx gained 3% as the package delivery giant beat consensus estimates on per-share earnings. The company fell short of expectations for revenue, however.