US pre-open: Caterrpillar gains help offset rise in Treasury yields
Wall Street is seen starting on a mixed note as higher US Treasury bond yields offset a sizeable earnings beat from heavy equipment manufacturer Caterpillar.
As of 1320 BST, futures on the Dow Jones Industrials were pointing to opening gains of 41 points to 25,455.0, alongside a dip of 4.50 points to 7,296.75 for the Nasdaq-100.
In parallel, the S&P 500 was expected to open flat at 2,817.50.
Commenting on Mondays market backdrop, Craig Erlam at Oanda said: "Stock markets have been gradually rising in recent weeks, making their way back to the record high levels they achieved earlier in the year before the numerous trade conflicts involving the US heated up. The apparent progress made at the White House last week between Donald Trump and Jean-Claude Juncker has eased some concerns for now but the threats generally remain.
"Earnings season has delivered a positive distraction for investors, with companies once again reporting stellar quarterly results aided by the obvious benefit of tax cuts. We’ll get results from another 144 S&P 500 companies this week as US corporates look to continue the positive momentum of earnings season so far and potentially propel the index to a new high."
Nevertheless, 10-year Treasury yields were climbing by three basis points to 2.97% at the start of the week, amid speculation that the Bank of Japan might tweak its bond buying policy when rate-setters in Tokyo met the next day.
Shares in the US finished lower on Friday, weighed down by renewed losses in the technology space, with sentiment souring after Twitter's latest quarterly update sent the company's stock diving.
It followed a sharp drop in Facebook stock the day before, after the social media giant marked down its forecasts for profit margins in 2018.
In a contentious call, on the same day analysts at Bank of America-Merrill Lynch recommended clients 'short' the FAANG stocks, Wall Street's acronym for tech darlings Facebook, Apple, Amazon.com, Netflix and Google.
"FB market cap (still) bigger than India; in the past 10 years tech & internet EPS has risen from $100 to $250, EPS of everything else in world up from $100 to $115 (Chart 5); US EPS up from $100 to $168, rest of world down from $100 to $84; FB shock classic "late-cycle" event…cult leadership becomes volatile & vulnerable as "liquidity" drained," they told clients.
On Monday however Caterpillar was giving the Dow Industrials a boost after the company raised its full-year outlook for its earnings per share.
The company also posted better than expected second quarter EPS of $2.97 (consensus: $2.75).
Tyson Foods on the other hand was under heavy selling pressure after warning that the impact from recent trade tariffs would cuts its full-year EPS to between $5.70 to $6.0, down from the $6.55 to $6.70 it had previously guided towards.
On the economic calendar for later in the day, the NAHB was due to publish its pending home sales index for June at 1500 BST.