Tuesday January 25th

U.S. stock market index futures fell Tuesday as market volatility continued after the major indexes on Monday notched one of the biggest comebacks in history. Futures contracts tied to the Dow Jones Industrial Average lost about 260 points, or 0.8%. S&P 500 futures dropped 1.5%, while Nasdaq 100 futures fell 2%. The yield on the benchmark 10-year Treasury note rose Tuesday, pressuring Nasdaq 100 futures and technology shares in the premarket. The Dow on Monday rallied from a more than 1,100-point loss to close up higher and snap a six-day losing streak. The Nasdaq Composite reversed a 4.9% decline from earlier in the day to finish positive — its biggest rebound since 2008. The S&P 500 also rallied from major losses to close up. History shows a sharp intraday comeback for the Nasdaq Composite does not typically signal the end of the sell-off, but rather marks volatility seen at the start of a down period, according to Bespoke Investment Group analysis. “I don’t think it’s done,” Liz Young, head of investment strategy at SoFi, told CNBC’s “Squawk Box” on Tuesday. “This ... is a digestion process of a new environment that we’re not conditioned for.” Even after Monday’s comeback, the S&P 500 is down 7.5% in January, one pace for its worst month since March 2020 at the onset of the pandemic. The 10-year Treasury yield has climbed this year as the Federal Reserve tightens its monetary policy and prepares to hike interest rates. Investors have rotated out of high-growth areas of the market in favor of safer bets. The Nasdaq Composite is in correction territory, down 14% from its intraday record. “Downside risks from monetary tightening are higher vs history. The pain has so far been localized to high valuation stocks, but signs of a broader risk-off are brewing,” Barclays’ Maneesh Deshpande said in a note Tuesday. Investors are eyeing the Fed’s two-day policy meeting beginning Tuesday for updates on when the central bank will raise interest rates and by how much. Market participants expect the Fed to signal a rate hike as soon as March and more policy tightening on the table to address high inflation. General Electric fell about 4.8% and Johnson & Johnson was marginally lower in the premarket after both companies beat earnings expectations, but missed revenue estimates. 3M rose 1.1% after the company’s quarterly report topped Wall Street projections on the top and bottom lines. Investors also monitored geopolitical tension at the Russia-Ukraine border. President Joe Biden spoke with European leaders Monday amid fears of a possible Russian invasion of Ukraine. Japan and Hong Kong stocks fell as Asia-Pacific markets tumbled on Tuesday after a volatile session overnight on Wall Street. Japan’s Nikkei 225 closed 1.66% lower to 27,131.34 with auto and tech stocks largely down, and the Topix fell 1.72% to close at 1,896.62. Hong Kong’s Hang Seng index slipped as much as 2.6% earlier, but recovered somewhat to decline 1.67%, closing at 24,243.61. In South Korea, the Kospi ended the session down 2.56% to close at 2,720.39. Mainland Chinese stocks were lower as well. The Shanghai Composite lost 2.58% to close at 3,433.06, and the Shenzhen Component was down 2.83% to 13,683.90. Oil prices climbed on Tuesday, regaining some of the ground lost in the previous day’s sharp losses, on concerns over possible supply disruptions amid rising geopolitical tensions in both Eastern Europe and the Middle East. Brent crude futures rose 48 cents, or 0.6%, to $86.75 a barrel at 0116 GMT, reversing a 1.8% fall in the previous session. U.S. West Texas Intermediate (WTI) crude futures climbed 34 cents, or 0.4%, to $83.65 a barrel, having slid 2.2% on Monday. Oil prices reached seven-year highs last week, bolstered by tight worldwide supply and resurgent global demand. Gold prices were steady on Tuesday, as concerns about a faster pace of U.S. Federal Reserve policy tightening countered safe-haven demand fueled by escalating Ukraine tensions. Spot gold was little changed at $1,840.24 per ounce by 0323 GMT. U.S. gold futures were also steady at $1,840.70.