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US stock futures reverse losses as bond yields retreat

U.S. stock index futures reversed losses on Monday as Treasury yields eased on hopes of a less aggressive Federal Reserve, while investors braced for a busy week of earnings dominated by Big Tech companies.

Wall Street’s main indexes rallied on Friday after a report said the U.S. central bank will likely debate on a smaller interest rate hike in December, spurring expectations that it may be poised to dial down its ultra-hawkish stance on fighting inflation.

U.S. Treasury yields slipped following the report, with the 10-year yield last seen at 4.16% after hitting 2007 highs at 4.34% on Friday.

All the three major indexes notched their biggest weekly percentage gains in four months on Friday, also supported by better-than-expected earnings reports.

Of the 99 companies in the S&P 500 that reported third-quarter earnings through Friday, 74.7% had beat analysts’ expectations, according to Refinitiv IBES estimates. The long-term average is 66.2%.

Google-parent Alphabet Inc and Microsoft Corp will report on Tuesday, followed by Apple Inc and Inc on Thursday.

The earnings reports from the four biggest U.S. companies by market capitalization could test a nascent rally on Wall Street as stocks claw their way back from the latest lows.

The benchmark S&P 500 is up nearly 5% from its Oct. 12 closing low for the year. Despite the recent rebound, the index is down 21% so far in 2022, on track for its biggest decline since 2008.

Meanwhile, U.S.-listed shares of Chinese companies such as Alibaba Group Holding Ltd and Baidu Inc suffered sharp losses in premarket trading, down more than 12% each, as President Xi Jinping’s new leadership team heightened fears that growth will be sacrificed for ideology-driven policies.

Tesla fell 2.4% after the electric-car maker cut starter prices for its Model 3 and Model Y cars by as much as 9% in China, reversing a trend of increases across the industry amid signs of softening demand in the world’s largest auto market.

At 7:17 a.m. ET, Dow e-minis were up 122 points, or 0.39%, S&P 500 e-minis were up 13 points, or 0.35%, and Nasdaq 100 e-minis were up 20.25 points, or 0.18%.

Investors will be watching S&P Global’s flash survey on U.S. business activity in October, due at 9:45 a.m. ET, for clues on the health of the U.S. economy amid rapidly rising interest rates.

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