(Reuters) – U.S. stock index futures slipped on Tuesday as government bond yields held on to recent highs ahead of retail sales data for July which is expected to show resilient consumer spending and shed more light on the trajectory for U.S. interest rates.
The Commerce Department’s report due at 0830 a.m. ET (1230 GMT) is expected to show retail sales increased 0.4% last month compared to a 0.2% rise in June, likely adding to evidence that the U.S. economy remains on a strong footing.
“All eyes will be on the U.S. retail sales figures later today which could add another piece to the puzzle that determines whether the Fed hikes one more time in 2023 or not,” Lukman Otunuga, senior research analyst at FXTM, said in a note.
“Should price pressures continue to ease and U.S. economic data show signs of weakness, this may eliminate the odds of another hike, especially when factoring in the Fed’s current data dependence stance.”
Rising Treasury yields have pressured equities after data last week showing hotter-than-expected producer inflation stoked concerns that the Federal Reserve could keep rates elevated for longer than previously anticipated.
Still, the S&P 500 and the Nasdaq ended higher in the previous session as Nvidia led gains among megacap growth stocks following a bullish note from Morgan Stanley ahead of the chipmaker’s earnings next week.
On Tuesday, Nvidia was an outlier among major technology and growth stocks, rising 1.7% in premarket trade after UBS raised its price target on the stock.
Shares of Apple, Amazon.com and Alphabet fell between 0.2% and 0.5% with the yield on the 10-year Treasury note at a nine-month high.
Tesla slipped 0.7% after the electric automaker introduced two cheaper versions of its Model S sedan and Model X SUV in the United States.
U.S.-listed shares of Chinese companies JD.Com, Alibaba Group and Bilibili slid between 0.3% and 1.3% following another round of disappointing economic data from China which prompted Beijing to cut key policy rates.
Investors will also monitor comments from Minneapolis Federal Reserve Bank President Neel Kashkari due later in the day for more clarity on the outlook for interest rates.
Traders’ odds of a pause on hikes by the Fed at its September meeting currently stand at 89%, with a majority betting on rates to stay at that level for the rest of the year, according to CME Group’s Fedwatch tool.
At 5:25 a.m. ET, Dow e-minis were down 161 points, or 0.46%, S&P 500 e-minis were down 16.5 points, or 0.37%, and Nasdaq 100 e-minis were down 41.25 points, or 0.27%.
Among other stocks, shares of General Motors fell 1.1% in premarket trade after Berkshire Hathaway cut its stake in the automaker.
(Reporting by Amruta Khandekar; Editing by Maju Samuel)
