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Stock Futures Edge Lower With Tech Retreating

05/04/2021 | 02:59am EDT

By Will Horner

U.S. stock futures ticked down Tuesday as investors awaited data that will likely show the trade deficit widened to a fresh record in March.

Futures tied to the broad S&P 500 index slid 0.2%. The benchmark advanced 0.3% on Monday, despite declines in giant technology stocks. Futures linked to the technology-heavy Nasdaq-100 fell 0.3% Tuesday.

The major indexes are hovering close to record levels as investors weigh strong economic data and robust corporate earnings against inflation concerns and rising coronavirus cases in parts of the world. Some money managers say brightening prospects for the economy and for businesses' profits has been baked into stocks' valuations.

"The market has already priced in a strong recovery and earnings season over-delivered, but it was still not enough to drive indexes much higher, " said Sophie Chardon, cross-asset strategist at Lombard Odier. "The market is now focusing on the next steps, especially on policy. The next step will be to see how the Fed shifts its monetary policy outlook."

The improving economic picture is encouraging some investors to step up bets on companies that stand to benefit the most from the recovery. That is leading to a rally in energy and banking stocks, while technology shares have slowed their gains.

"The rotation trade is back and it will gain momentum over the next few weeks," said Florent Pochon, head of cross-asset strategies at French bank Natixis. "As long as central banks stay dovish and you combine that with the reopening of the economy, then that should be a perfect dynamic for stocks."

Earnings reports from CVS Health, KKR and Pfizer are due ahead of the opening bell. T-Mobile US and Lyft are scheduled to post results after markets close.

Data due at 8:30 a.m. ET are expected to show that the trade gap for goods climbed to a new high in March as American demand for foreign-made products surged alongside rising incomes and a reopening economy. Figures on U.S. factory orders, scheduled for 10 a.m. ET, are likely to show orders rebounded in March from the previous month.

U.S. government bond yields edged higher after declining for two consecutive days. The 10-year Treasury yield rose to 1.621%, from 1.606% on Monday. Bond yields rise as prices fall.

Overseas, the pan-continental Stoxx Europe 600 was relatively flat.

In Hong Kong, the Hang Seng Index rose 0.7% by the close of trading. Markets in Japan and mainland China were closed for public holidays.

Write to Will Horner at William.Horner@wsj.com

(END) Dow Jones Newswires

05-04-21 0459ET

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