Futures tied to the DJIA slipped 0.75%, S&P 500 futures dropped 1.15%, and Nasdaq 100 futures shed 1.7%
U.S. stock futures dropped early Tuesday as traders braced for the latest batch of corporate earnings reports and as government bond yields hit Covid-era highs.
Futures tied to the Dow Jones Industrial Average (DJIA) slipped by 256 points at 10:00 a.m. GMT, or 0.75%. S&P 500 futures dropped 1.15%, and Nasdaq 100 futures shed 1.7%.
U.S. markets were closed Monday due to the Martin Luther King holiday.
Treasury yields posted strong gains. The closely watched 2-year yield broke above 1% for the first time since February 2020, the month before the pandemic declaration that sent the U.S. economy into recession.
The 2-year Treasury is seen as gauge of where the Federal Reserve will set short-term borrowing rates.
Rates rose along the yield curve, with the benchmark 10-year note reaching 1.83%, its highest since January 2020.
The shortened trading week will feature quarterly reports from 35 companies in the S&P 500, including Bank of America, UnitedHealth and Netflix. Goldman Sachs is also set to post its most-recent quarterly figures Tuesday before the bell.
Major banks Wells Fargo, JPMorgan Chase and Citigroup kicked off the earnings season on Friday, with the three companies posting better-than-expected profits. However, the market’s reaction to those results was mixed. Wells Fargo shares posted a gain on the back of those results, but JPMorgan Chase and Citigroup declined.
Overall, 26 S&P 500 companies have reported calendar fourth-quarter earnings thus far, according to Refinitiv. Of those companies, nearly 77% posted bottom-line results that beat analyst expectations.
The economic backdrop to the fourth quarter was positive, boding well for profit and revenue growth, UBS Global Wealth Management CIO Mark Haefele said in a note last week. Guidance from companies also looks set to point to continued demand strength in 2022, even if omicron is disrupting some businesses right now.