S&P 500 futures were little changed after a late-day rally and ahead of Fed minutes

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Traders on the floor of the New York Stock Exchange, June 28, 2022.

Source: NYSE

U.S. stock futures were marginally higher on Tuesday night after the market staged a big midday reversal as falling bond yields gave growth stocks a boost, and ahead of a batch of economic data.

Futures contracts linked to the Dow Jones Industrial Average edged up 33 points, or 0.1%. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.2%.

In regular trading, the Dow fell 129 points to start the shortened holiday week, paring larger losses from the start of the session. The S&P 500 rallied after a 2% loss in the last hour of trading and ended the day up 0.2%. The tech-heavy Nasdaq Composite outperformed, jumping 1.75%.

Whether the market is on the verge of a recession continued to worry investors after the benchmark 10-year US Treasury yield fell below the 2-year yield. The so-called inverted yield curve has always been a warning sign that the economy may be falling or has already fallen into recession.

Oil prices fell below $100 a barrel on Tuesday, further reflecting a potential economic slowdown. Energy stocks were the main decliners on Tuesday. The sector as a whole fell 4%. It was the best-performing sector on the S&P 500 in the first half of the year, the benchmark’s worst first half since 1970.

However, Wall Street analysts say a recession could be mild. On Tuesday, Credit Suisse said it saw the United States dodging a recession by cutting its year-end S&P 500 target to reflect the effect of the rising cost of capital on stock valuations.

“[The market] got ready for [a recession], and now he can actually embrace it, the idea being: let’s get it over with, we’re going to have a recession, let’s do it. Let’s clean up the excess and start over,” Yardeni Research’s Ed Yardeni said on CNBC’s “Closing Bell: Overtime.”

“The market is starting to look ahead to next year and it could very well be a year of recovery, regardless of that recessionary environment,” he added. “We’re all having a Hamlet recession – to be or not to be. I sort of think there’s going to be a mild recession.”

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Cameron Dawson, chief investment officer of NewEdge Wealth, echoed that sentiment.

“Do we have some sort of decline that seems to be in that 30% range, which is the average of recessions, or something more like a 50% decline, which we saw in the early 2000s and in 2008 when we had two debt crises?” she says. “We don’t see a debt crisis. We think we might start to find value around that 3,400-3,500 level because that’s what brings us back to pre-Covid highs.”

No major earnings report is scheduled for Wednesday, but a slew of economic reports will be released, including the minutes of the Federal Reserve’s June meeting in the afternoon.

Investors are also eagerly awaiting the latest reading of the Mortgage Bankers Association’s Mortgage Buy Index at 7:00 a.m. ET on Wednesday. The latest manufacturing PMI data from Markit and the Institute for Supply Management will be released at 9:45 a.m. and 10:00 a.m. respectively. The Job Openings and Labor Turnover Survey, or JOLTS, will also be released at 10:00 a.m.

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