U.S. Stock Futures Pull Back Ahead of Data

U.S. stock futures pulled back ahead of data on manufacturing and home sales and testimony from the heads of the Federal Reserve and Treasury Department on their agencies' responses to the pandemic.

Futures on the S&P 500 slipped 0.4% and futures on the Dow Jones Industrial Average fell 0.4%. The contracts don't necessarily predict market moves after the markets open.

In Europe, the Stoxx Europe 600 was down 0.6% in morning trade, dragged lower by declines in the information- technology and real-estate sectors.

Hammerson rose 2.5% snapping a four-day losing streak.

The U.K.'s FTSE 100, which is dominated by large international businesses, shed 0.7%. Other stock indexes in Europe also mostly fell as France's CAC 40 declined 0.6%, the U.K.'s FTSE 250 lost 0.4% and Germany's DAX was down 0.7%.

The Swiss franc, the euro and the British pound were down 0.5%, 0.2% and 0.1% respectively against the U.S. dollar.

In commodities, international benchmark Brent crude slipped 1.5% to $63.64 a barrel. Gold also slipped 0.1% to $ 1,736.50 a troy ounce.

German 10-year bund yields declined to minus 0.334% and 10-year U.K. government debt known as gilts yields slipped to 0.792%. 10-year U.S. Treasury yields fell to 1.656% from 1.682% on Monday. Yields move inversely to prices.

Stocks in Asia mostly slipped as Hong Kong's Hang Seng fell 1.4%, Japan's Nikkei 225 index declined 0.6% after gaining 0.8% during the session, and China's benchmark Shanghai Composite was down 0.9%.

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U.S. stock futures edged lower Tuesday ahead of testimony by Federal Reserve Chairman Jerome Powell, who plans to say that the U.S. economy's recovery remains far from complete.

Futures tied to the S&P 500 ticked down 0.3%, suggesting a pullback for the broad market index after the opening bell. Futures linked to the Nasdaq-100 slipped 0.2%, while Dow Jones Industrial Average futures edged down 0.3%.

Mr. Powell plans to reiterate in a hearing before Congress that the central bank will continue providing support to the economy through loose monetary policy. He and Treasury Secretary Janet Yellen will begin two days of testimony at 12 p.m. ET. But optimism about the speed of the recovery and the possibility of rising inflation have left investors skeptical about the Fed's plans for interest rates and bond purchases.

Investors are also reassessing their expectations for a fast and widespread global recovery, which had led to rising bets earlier this year that companies sensitive to an economic recovery would benefit. Rising Covid-19 cases in Europe and recent extensions to lockdowns in Germany, France and Italy are also weighing on sentiment.

"It feels like the reflation theme is running into a few roadblocks," said Sebastian Mackay, a multiasset fund manager at Invesco. "We are probably in a cyclical recovery, but we may have gotten ahead of ourselves. This is a pause for thought: how rapid is this recovery actually going to be?"

The bond market is stabilizing, with the 10-year Treasury note yield easing down for a third straight day to 1.670% , from 1.682% on Monday. Still, investors are looking to see if Mr. Powell will shift his stance on the recent rise in bond yields and whether the Fed will consider slowing bond purchases to tamp down inflation.

"The major story is still what's happening in bond yields," said Edward Park, chief investment officer at Brooks Macdonald. "Inflation expectations have markedly risen, so the big question in the market has been: what will the Fed do?"

Overseas, the pan-continental Stoxx Europe 600 edged down 0.3%, led by losses in travel stocks. The German government imposed another four-week lockdown, with restrictions over the Easter holiday.

In Asia, most major benchmarks declined by the close of trading. The Shanghai Composite Index dropped 0.9% and Hong Kong's Hang Seng fell 1.3%. The U.S. and its allies placed sanctions against Chinese officials over the treatment of the Uyghurs, a mainly Muslim ethnic group.

The New Zealand dollar depreciated 1.5% against the U.S. dollar after the government put forward a plan to cool the housing market through changes to tax incentives. House prices have seen double-digit growth this past year, but these measures could slow the economy.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com


  (END) Dow Jones Newswires
  03-23-21 0459ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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