U.S. stock futures fell in pre-market trading Tuesday after a profit warning from Target renewed fears about corporate margins.
Futures on the S&P 500 dipped 0.9%, and futures tied to the Dow Jones Industrial Average shed 240 points, or 0.7%. Contracts on the tech-heavy Nasdaq tumbled 1%. Meanwhile, the 10-year U.S. Treasury benchmark held above 3%.
Target (TGT) was in focus during the early trade after the retailer said Tuesday that it’s aiming to trim down excess inventory by offering discounts, canceling orders and reevaluating its expenses – an announcement that comes just weeks after the company shocked investors with a dramatic earnings miss that sent shares down 25%.
Target’s stock fell as much as 10% ahead of the open to a pre-market low of $143.38, the lowest since September 2020. The decline weighed on retail peers. Shares of Walmart (WMT) and Costco (COST) each fell 3%.
“The fear in the market is that earnings estimates, underpinned by weaker net profit margins, could become the next layer of focus,” LPL Financial Chief Equity Strategist Quincy Krosby said in a recent note.
The moves in futures trading Tuesday extend a streak of back-and-forth sessions as investors assess the economic outlook and brace for central bank policymakers to ramp up interest rates in an effort to cool inflation.
All three major indexes closed in the green on Monday, though well off the session’s highs after wavering from a morning rally. The S&P 500 closed up 0.3% after retreating from a jump of more than 1%, the Dow erased a 300-point gain to end just above breakeven, and the Nasdaq climbed 0.4%.
“For now, the market sees a Federal Reserve trying to navigate a painful and bumpy road, yet trying to find a soft exit,” Krosby said. “And the market finds itself between wanting to believe in the rallies but not believing that the Fed can negotiate a soft landing.”
Inflation is top of mind for investors this week, with the Bureau of Labor Statistics’ May Consumer Price Index (CPI) due out Friday. Wall Street will be looking for signs that prices have peaked as it hopes for a pause on monetary tightening in the autumn months.
Outside of Friday’s CPI print, investors face a lighter economic and earnings calendar this week.
7:30 a.m. ET: Stock futures fall as Target issues profit warning
Here were the main moves in futures trading ahead of Tuesday’s open:
S&P 500 futures (ES=F): -36.75 (-0.89%) to 4,083.75
Dow futures (YM=F): -259.00 (-0.79%) to 32,653.00
Nasdaq futures (NQ=F): -142.50 (-1.13%) to 12,462.50
Crude (CL=F): -$0.61 (-0.51%) to $117.89
Gold (GC=F): +$9.70 (+0.53%) to $1,853.40 per ounce
10-year Treasury (^TNX): +8.1 bps to yield 3.0380%
A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 3, 2022. REUTERS/Brendan McDermid
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc