US STOCKS-Dow futures up on UnitedHealth boost; bond yields, Mideast tensions weigh

BY Reuters | TREASURY | 04/16/24 07:49 AM EDT

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.)

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UnitedHealth (UNH) gains on Q1 profit beat

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Fed Chair Jerome Powell to speak at 1:15 pm ET

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Futures: Dow up 0.48%, S&P up 0.08%, Nasdaq down 0.02%

(Updated at 7:24 a.m. ET/1124 GMT)

By Shashwat Chauhan and Shristi Achar A

April 16 (Reuters) -

Futures tracking the Dow outshone peers on Tuesday on robust results from UnitedHealth (UNH), while elevated Treasury yields amid heightened tensions in the Middle East kept a lid on gains.

Dow Component UnitedHealth Group advanced 6.8% in premarket trading after the health insurer beat expectations for first-quarter profit.

Financial firms were also in the spotlight, with Bank of New York Mellon (BK) gaining 2.0% after the lender beta Wall Street estimates for first-quarter results.

Pressuring equities, however, the yield on the 10-year government bond last stood at 4.655% a day after data showed U.S. retail sales increased more than expected in March amid a surge in receipts at online retailers. This was further evidence that the economy had ended the first quarter on solid ground.

Wall Street closed sharply lower in the previous session, pressured by a jump in Treasury yields and concerns about rising geopolitical tensions between Iran and Israel.

Meanwhile, Israelis awaited word on how Prime Minister Benjamin Netanyahu would respond to Iran's first-ever direct attack, as international pressure for restraint grew over fears the conflict could escalate.

"So far, markets appear rather sanguine to the rising tensions, and cautiously optimistic that Israel's response will be restrained, and that an all-out war will be sidestepped," Matthew Ryan, head of market strategy at global financial services firm Ebury, said in a note.

Several policymakers including Federal Reserve Chair Jerome Powell are slated to speak later in the day, and investors will be watching for clues on where the central bank stands on policy easing.

San Francisco Fed President Mary Daly said on Monday that with the economy and the labor market strong and inflation still above the Fed's 2% target, there was "no urgency" to cut U.S. interest rates.

Traders see an about 47% chance of the Fed kicking off its easing cycle in July, according to the CME FedWatch tool.

Among other earnings, Johnson & Johnson (JNJ) slipped 0.6% as the drugmaker's first-quarter revenue missed analysts' estimates after sales from its blockbuster psoriasis drug, Stelara, fell short of expectations.

Bank of America (BAC) edged 0.1% lower as the lender's first-quarter profit fell on less earnings from customer interest payments.

U.S. equities have sold off recently as investors sharply readjusted their expectations of how much the Fed would cut rates this year, with bets now showing only 43 basis points of expected easing, according to LSEG data. This is down from about 150 bps seen at the start of the year.

At 7:24 a.m. ET, Dow e-minis were up 181 points, or 0.48%, S&P 500 e-minis were up 4.25 points, or 0.08%, and Nasdaq 100 e-minis were down 3.25 points, or 0.02%.

Tesla shed 2.8% in premarket trading after falling over 5% in the last session, when an internal memo seen by Reuters showed the EV marker was laying off more than 10% of its global workforce. (Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Pooja Desai and Maju Samuel)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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