U.S. equity futures stumbled in pre-market trading Tuesday after a rally in tech led stocks higher to start the week. Investors are monitoring the war in Ukraine and bracing for the possibility of new sanctions against Russia.
Contracts on the S&P 500, Dow Jones Industrial and Nasdaq Composite were each down roughly 0.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} ahead of the open after all three benchmarks closed in the green Monday. The Nasdaq — which gained 1.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in the main session — was buoyed by a 27{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} surge in Twitter (TWTR) that came after Tesla (TSLA) CEO Elon Musk revealed he purchased a 9.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} stake in the social media company.
Musk is “speaking with his money by saying that Twitter is an undervalued platform,” MKM Partners’ Rohit Kulkarni told Yahoo Finance Live. “He sees there are things they can do to improve the service, and he’s definitely hinting at a more active role.”
Wedbush Securities analyst and Tesla bull Dan Ives also told Yahoo Finance he predicts Musk will have an active stake in the social media platform over the coming weeks or months, and that his recent snap up of shares was “just the appetizer.”
Separately, Musk’s own company, electric-vehicle giant Tesla, contributed to the gains that propelled a take-off for tech during Monday’s trading session. Shares of the EV carmaker jumped nearly 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} after it reported vehicle delivery figures this weekend that came in higher than the same period last year.
Recession jitters were at bay on Monday after a closely-monitored portion of the Treasury yield curve inverted last week and spooked investors over the possibility of an imminent economic contraction. The phenomenon has a history of predicting a recession, with each of the last eight slowdowns dating back to 1969 preceded by a yield curve inversion. As of Monday morning, the yield on the benchmark 10-year note remained below that on the shorter-term 2-year note.
Still, worries about an economic downturn were not completely off the table for strategists.
Nomura Chief U.S. economist Robert Dent told Yahoo Finance Live he sees the potential for a “mild recession”
“We think that the cumulative risk of a recession between now and the end of 2024 stands at about 35{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a},” he said. “A lot of that is just coming from what we think is going to be this very aggressive response from the Fed to actually get inflation under control and make sure the labor market actually cools down.”
Uncertainty around the crisis in Eastern Europe also continues to be a headwind for investors. JPMorgan CEO Jamie Dimon in his widely-read shareholder letter warned that the war in Ukraine is likely to meaningfully slow the U.S. and global economy. In the U.S. specifically, the bank estimates the U.S. economy will grow roughly 2.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, a downgrade from the institution’s initial GDP forecast of 3{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with larger cuts to forecasts on Russia and Europe’s economic outlooks.
“We do not know what its outcome ultimately will be, but the hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact,” said Dimon, adding that “many more” sanctions could be imposed on Russia and spur further unpredictability.
The European Union addressed apparent war crimes in Ukraine on Monday, indicating in a statement that officials would, “work on further sanctions against Russia” over the country’s targeted attacks on civilians. Some major European officials including Germany’s defense minister said they would support banning Russian natural gas — a move previously excluded from sanctions as Russia supplies about 40{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} of Europe’s gas energy.
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7:50 a.m. ET: US stops Russian bond payments in move aimed to ramp up pressure on Moscow
The United States stopped the Russian government on Monday from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks in a bid to place pressure on Moscow.
Foreign currency reserves held by the Russian central bank at U.S. financial institutions were frozen on Feb. 24 as part of sanctions placed on Moscow for over its invasion of Ukraine.
The U.S. Treasury Department, however, had been permitting the Russian government to use funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.
On Monday, the U.S. government moved to cut off Moscow’s access to the frozen funds as a $552.4 million principal payment on a maturing bond came due.
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7:10 a.m. ET: Stock futures slip, oil rises following Monday’s tech rally
Here were the main moves in futures trading ahead of Tuesday’s open:
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S&P 500 futures (ES=F): -10.50 points (-0.23{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,567.25
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Dow futures (YM=F): -83.00 points (-0.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 34,746.00
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Nasdaq futures (NQ=F): -37.75 points (-0.25{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,126.50
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Crude (CL=F): +$1.28 (+1.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $104.56 a barrel
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Gold (GC=F): -$1.70 (-0.09{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,932.30 per ounce
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10-year Treasury (^TNX): 0.00 bps to yield 2.4120{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}
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6:12 p.m. ET Monday: Futures open little changed after stocks close higher
Here’s where markets were trading ahead of the overnight session on Monday:
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S&P 500 futures (ES=F): -2.25 points (-0.05{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 4,575.75
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Dow futures (YM=F): -14.00 points (-0.04{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 34,815.00
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Nasdaq futures (NQ=F): -9.25 points (-0.06{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to 15,155.00
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Crude (CL=F): +$0.43 (+0.42{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $103.71 a barrel
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Gold (GC=F): +$3.30 (+0.01{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}) to $1,937.30 per ounce
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10-year Treasury (^TNX): +3.5 bps to yield 2.4120{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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