Dow futures and Nasdaq futures both inched down on Tuesday ahead of a slew of fresh quarterly earnings reports from several major companies. Texas Instruments (NASDAQ:TXN) will be among a host of businesses unveiling their latest results, with traders keen to see if the semiconductor firm provides more insight into the outlook for chip demand during a surge in excitement around artificial intelligence. Elsewhere, four Federal Reserve officials voice their support for more interest rate cuts, but appear to differ on the pace of the reductions.

1. Futures mostly lower

US stock futures pointed mostly lower on Tuesday as investors geared up for a raft of corporate earnings reports.

By 03:30 ET (07:30 GMT), the Dow futures contract had shed 82 points or 0.2%, S&P 500 futures were unchanged, and Nasdaq 100 futures had dipped by 44 points or 0.2%.

The Nasdaq Composite rose in the prior session following a late rally in megacap tech names, including artificial intelligence-chip designer Nvidia (NASDAQ:NVDA). The benchmark S&P 500 and 30-stock Dow Jones Industrial Average both ended lower, pulling back from record high closes touched on Friday, with traders gauging elevated valuations ahead of quarterly returns from many major companies.

Meanwhile, the benchmark 10-year US Treasury yield climbed to a 12-week high.

"The persistent rise in yields exacerbated the equity valuation problem while the bar for the balance of the [third-quarter] earnings season is higher than before thanks to solid results over the last week – the combination of these two factors helped spur some profit taking following the recent rally," analysts at Vital Knowledge said in a note to clients.

2. Texas Instruments to report

The stream of corporate earnings is set to accelerate on Tuesday.

Aircraft engine supplier GE Aerospace, life sciences conglomerate Danaher Corporation (NYSE:DHR), tobacco group Philip Morris International (NYSE:PM), and telecoms business Verizon Communications (NYSE:VZ) are all due to report before the opening bell on Wall Street.

Figures from semiconductor company Texas Instruments will also likely be in focus, as markets attempt to assess the outlook for chip demand amid a boom in enthusiasm around the applications of AI.

Chip shares tumbled last Tuesday after equipment maker ASML (AS:ASML), Europe's biggest tech firm, projected lower-than-expected 2025 sales and bookings. But the sector rebounded on Thursday after Taiwan Semiconductor Manufacturing Co., which produces advanced chips used in AI applications, reported a forecast-beating 54% jump in quarterly profit and delivered an upbeat demand forecast.

3. IMF's updated global economic outlook ahead

The International Monetary Fund is expected to update its outlook for the global economy on Tuesday.

In April, the IMF predicted that worldwide growth would be slow but steady this year, with strength in the US helping to offset sluggish activity in China and Europe as well as the impact from two regional wars.

Global real gross domestic product growth was seen at 3.2% for both 2024 and 2025, matching the rate in 2023. IMF Managing Director Kristalina Georgieva said on Monday she expects the latest forecast to be above 3%, but did not provide a specific figure.

Georgieva also warned that the pain from higher prices is "here to stay" and flagged an "unforgiving combination" of tepid growth and elevated debt levels.

Last week, the IMF said global public debt is tipped to exceed $100 trillion by the end of this year, driven by the US and China. High debt levels can spark adverse market reactions and limit budgetary efforts to react to economic shocks, the IMF said.

4. Four Fed officials back rate cuts

Four Federal Reserve policymakers on Monday backed further reductions in interest rates following the central bank's decision to cut borrowing costs by an outsized 50 basis points in September.

However, comments from these officials seemed to indicate some lingering disagreement over the pace of the drawdowns.

Three of them said a "modest" or "gradual" lowering in rates may be warranted due to an uncertain outlook despite ongoing resilience in the US economy. Yet San Francisco Fed President Mary Daly suggested rates remain "very tight", adding that a strong economy should not preclude more cuts.

From Friday, Fed officials will observe a communications blackout period that will prevent them making more public statements on monetary policy until the end of their next gathering on Nov. 7.

5. Crude slips

Oil prices dipped lower Tuesday as uncertainty clouded the global demand growth, particularly in top crude importer China.

By 03:29 ET, the Brent contract dropped 0.7% to $73.77 per barrel, while U.S. crude futures (WTI) traded 0.7% lower at $69.53 per barrel.

International Energy Agency head Fatih Birol warned on Monday that economic weakness in China will continue to stunt global oil demand in the coming years.

Birol’s comments -- made in an interview with Bloomberg -- came after both the International Energy Agency and the Organization of the Petroleum Exporting Countries recently slashed their demand growth forecasts on concerns over China.

The tensions in the Middle East remain in focus, as US Secretary of State Antony Blinken headed to the oil-rich region seeking to revive talks to end the conflict which has seen traders attach some risk premium to crude prices.

Source : Economy News by Investing.com - Oct 22, 2024