CVS - Slow Start to Second Quarter Continues
S&P 500 futures pointed to a second day of losses to start the new quarter as bond yields increased and traders lowered the odds that the Federal Reserve would cut interest rates in June.
Futures for the Dow Jones Industrials tumbled 203 points, or 0.5%, to 39,691.
Futures for the S&P 500 faded 19 points, or 0.4%, to 5,276.25.
Futures for the NASDAQ Composite retreated 88.75 points, or 0.5%, to 18,408.50.
The second quarter for stocks is off to a rough start as sticky inflation data to end last week and some strong economic data Monday sends yields higher and reduces odds the Fed will cut rates in June. February's core personal consumption expenditures price index released Friday showed a 2.8% annual increase, about even with December and January's 2.9% rate and still a way to go from the Fed's 2% inflation target.
On Monday, the Institute for Supply Management's manufacturing gauge showed expansion after contracting for 16 straight months. The 10-year Treasury yield was last at 4.34%, the highest in two weeks and almost the highest levels of the year. Odds for a June rate cut based on fed futures trading are now down to about 58.8%, off from about 70% a week ago. The question now is if the momentum to start 2024 can continue if the Fed stands pat on rates.
Health insurers slid in the premarket after the Centers for Medicare & Medicaid Services finalized the 2025 rate announcement for Medicare Advantage and prescription drug coverage. In 2025, payments from the government toward these plans are expected to rise 3.7% year over year, unchanged from an earlier proposed rate. Humana lost 9%, while UnitedHealth dropped 4% and CVS Health tumbled 5.5%.
On the economic front, traders will be looking for the Job Openings and Labor Turnover Survey from February, out Tuesday at 10 a.m. ET.
Durable orders for February are also on deck Tuesday morning. The main event this week will be March's big payrolls report due Friday.
In Japan, the Nikkei 225 nicked up 0.1% Tuesday, while in Hong Kong, the Hang Seng jumped 2.4%.
Oil prices gained $1.15 to $84.86 U.S. a barrel.
Gold prices picked up $23.20 to $2,280.30 U.S. an ounce.