US stock futures dipped slightly on Tuesday night after a rally from the regular session, as investors applauded upbeat developments in the Russia-Ukraine talks.
Contracts in the S&P 500 traded flat to slightly lower. The blue-chip index rose for the fourth straight day and closed at its highest level since January early Tuesday, recouping some year-to-date losses. Technology stocks led the way higher and helped propel the Nasdaq Composite up almost 2%. The CBOE volatility index, or much loveit fell below 19 to hit its lowest level in more than two months.
Stocks rose as US crude oil prices fell for a straight session amid signs of progress in talks between Russia and Ukraine. Russia said it was easing military action in Ukraine’s capital kyiv and the northern city of Chernihiv and was prepared to schedule a meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky, then of a draft peace agreement.
Investors, meanwhile, nervously watched a flattening of the US Treasury yield curve, with longer-duration bond yields falling much more sharply than those on the short end, as traders bet on higher interest rates. the Federal Reserve in the short term and considered a cloudy macroeconomic outlook over the longer term. The spread, or difference, between 2-year and 10-year Treasury yields, a closely watched part of the yield curve that has typically inverted before recessions, narrowed to less than 1 point basic to reach its lowest level since 2019.
“It’s still a pretty accurate indicator [of a recession] if we go back and look at history, but I have to give you some warnings,” Kristina Hooper, chief global market strategist at Invesco, told Yahoo Finance Live on Tuesday. “First of all, you have to invest for some time, usually three months, to be a very precise indicator. Second, it is a longer-term indicator. So typically after the yield curve inverts, it takes about 18 months on average for a recession to occur. And it’s a terrible sell signal, because typically stocks have room to run and rise significantly after the yield curve inverts.”
The latest batch of US economic data offered a mixed picture on the state of the economy amid still elevated inflation, ongoing geopolitical uncertainty and monetary policy tightening by the Federal Reserve. Job offers remained unchanged by around 11.3 million in March, far outpacing new hires by 6.7 million to reflect persistent labor shortages. And while the most recent monthly index from the Conference Board showed a slight uptick in consumer confidence in March, the index remained below last year’s average. Additionally, consumers’ one-year inflation expectations soared to an all-time high of 7.9%.
“We expect a clear downward shift in inflation expectations in the second half of the year, but they could easily rise further in the near term,” Ian Shepherdson, chief US economist at Pantheon Macroeconomics, wrote in a note on Tuesday. .
“The survey sends contradictory signals about the state of the economy, but always remember that sentiment is not the same as spending, which is what matters,” he added.
6:12 p.m. ET Tuesday: Stock futures open slightly lower
Here’s where major stock index futures opened on Tuesday night:
S&P 500 Futures (EN=F): -4.75 points (-0.1%) at 4,620.75
dow futures (YM=F): -24 points (-0.07%) at 35,166.00
Nasdaq futures (NQ = F): -15.5 points (-0.1%) to 15,222.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.