US open: Stocks mixed, off lows despite wave of government debt auctions

Wall Street was trading on a mixed note early on Tuesday, amid some upwards pressure on bond yields as investors awaited a slate of government debt sales scheduled for later in the day and throughout the week, together with the release, on Wednesday, of the minutes of the Federal Reserve's last policy meeting.

At 1759 GMT, the Dow Jones Industrial Average and S&P 500 were down 0.32% and up 0.10%, respectively, alongside an advance of 0.71% for the Nasdaq Composite.

In parallel, the yield on the benchmark 10-year US Treasury note was gaining three basis points to 2.90%.

Earlier, the US Treasury had auctioned $96bn-worth of very short-term debt maturing in 13 and 26 weeks, with the sale of a further $55bn in 4-week bills and $28bn in two-year notes still ahead.

Following that, on Wednesday the Treasury was set to sell $64bn of notes maturing in five years' time followed by $29bn of seven-year notes on Thursday.

Against that flood of Treasury issuance, and with a significant level of technical resistance close to current levels for the S&P 500, in the form of the 61.8% Fibonacci retracement at 2,743 points, investors were seemingly finding few reasons to keep pushing share prices higher.

That followed a six-day long rally that ended in the biggest single week of gains for indices in years, with a further bounce in the US dollar doing little to help sentiment.

Like climbing bond yields, it held the potential to make equities appear less attractive, despite strong macroeconomic conditions and corporate earnings.

The US dollar spot index was up 0.63% at 89.66.

David Morrison, chief market analyst at GKFX, said, "The US stock market reopens this afternoon after being closed yesterday for Presidents’ Day. A couple of hours ahead of the open the major stock indices were indicating initial weakness. The Dow futures were down over 100 points, although well above lows posted earlier in the day. Once again, investors are keeping a close eye on US Treasury bonds which have sold off recently on fears that inflation is picking up.

"The yield on the US 10-year note is back above 2.90% and dangerously close to breaking through the key 3.0% level. There are concerns that investors will rush to dump equities should borrowing costs push much higher from current levels.

"Traders will be keeping a close eye on technical levels this week for clues to where the market is heading next. If the S&P 500 can hold above 2,700 (previously resistance) then there’s a good chance of further gains. However, a break below the 100-day moving average around 2,670 opens up the possibility of a retest of support around 2,600. A break below here raises the probability of a retest of the correction low of 2,530."

In corporate news, Walmart shares were shedding 8.96% after its quarterly earnings missed analysts' forecasts, while Gannett was also down 5.24% after posting fourth-quarter adjusted earnings per share of 55 cents versus a consensus forecast of 46 cents.

Home Depot was ticking higher by 0.64% after its fourth-quarter earnings and sales beat expectations, while Qualcomm fell 3.73% following a Wall Street Journal report that it was ready to sweeten its bid for NXP Semiconductors to around $44bn.

Elsewhere, Rite Aid grew 4.46% after Albertsons Cos said it would buy the rest of the company that Walgreens Boots Alliance wasn't buying.

No major economic reports were due on Tuesday, but Wednesday sees the release of the latest FOMC minutes, along with Markit's manufacturing PMI and existing home sales figures for January.