Stock futures fall as investors await earnings season kickoff

U.S. stock futures fell in early morning trading on Tuesday as investors waited for the first batch of corporate earnings and looked for updates on a stimulus package.

Dow futures fell 143 points. S&P 500 futures and Nasdaq 100 futures both traded in mildly negative territory.

Futures got a lift as Disney rallied more than 5% in after hours trading after announcing a major company reorganization with streaming at the forefront of its business. Disney said it centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.

Third-quarter earnings season kicks off on Tuesday with several major banks slated to report their results, including JPMorgan Chase, Citigroup and Delta Air Lines. Third quarter results are expected to decline significantly; however, traders are hoping for surprise to the upside.

On Monday, investors rotated out of cyclicals and into technology names after little updates on a fiscal aid package were revealed. The Dow Jones Industrial Average climbed 250 points and the S&P 500 gained 1.64%, both helped by a 6.4% jump in Apple’s stock.

Apple’s long awaited iPhone launch, which was pushed to October due to Covid-19, occurs on Tuesday and the company is expected to launch its first ever 5G iPhone.  It will be “the most significant iPhone event in years,” Morgan Stanley’s Katy Huberty told clients.

With technology stocks leading the way, the Nasdaq Composite gained 2.56% on Tuesday, for its best day since September 9.

Investors also weighed the possibility of a second coronavirus relief package from Washington. Over the weekend, the Trump administration called on Congress to pass a smaller $1.8 billion coronavirus relief bill as negotiations on a bigger package continue to run into roadblocks. However, House Speaker Nancy Pelosi In a letter to colleagues, said the proposition has insufficient offers on healthcare issues.

“This hardly seems about ‘stimulus’ anymore,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. The S&P 500 index rallied back near all-time record highs today led by growth — the technology, communications, and consumer discretionary sectors.”

“Recently, the stock market has been rising whether news surrounding an additional stimulus package is good or bad, suggesting stocks are already responding to what will likely prove to be a wonderful quarterly earnings season,” Paulsen added.

BlackRock and Johnson & Johnson also report quarterly earnings before the bell on Tuesday.

Amazon‘s Prime Day starts on Tuesday and the two-day event could mark the biggest online shopping day of the year, according to NPD, with 57% of consumers planning to do some if not all of their holiday shopping this week.

The Labor Department will release September’s consumer price index on Tuesday at 8:30 a.m. ET. Economists polled by FactSet are expecting prices to increase 0.2%. Price rose 0.4% in August, helped by gains in the cost of gasoline.

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