Dow set for muted action Tuesday as investors await Yellen remarks, parse earnings from CVS, Pfizer

U.S. stock-index futures were indicated mostly lower on Tuesday, a day after the S&P 500 index and the Dow Jones Industrial Average put in a strong start to May, pushing the equity benchmarks near records.

Investors will watch for comments from a live-streamed interview with Treasury Secretary Janet Yellen hosted by The Wall Street Journal later in the day, as they assess earnings from Pfizer and CVS and economic data that has recently helped to power a rotation into energy and banking assets.

How are stock benchmarks performing?

On Monday, the Dow
DJIA,
+0.70%

advanced 238.38 points, or 0.7%, ending at 34,113.23, its third-highest close in history; the S&P 500
SPX,
+0.27%

added 11.49 points, or 0.3%, to close at 4,192.66, its second-highest finish ever; while the Nasdaq Composite
COMP,
-0.48%

fell 67.56 points, or 0.5%, finishing at 13,895.12, extending its losing streak to 2 days.

What’s driving the market?

With stocks inching up near all-time highs, investors are weighing the strength of corporate earnings and the economic resurgence from the COVID pandemic against worries about inflation and concerns that prices for equities don’t have much further room to run higher given current valuations.

MarketWatch’s Mark Hulbert notes that by one measure stock valuations are higher than 98% of monthly readings since 1881, and more than double the 140-year average, suggesting an extremely overvalued market.

“Given the particularly strong run-up from November to April, investors could begin to see this as a good time to reduce exposure,” wrote Sophie Griffiths, market analyst at Oanda in a daily note.

Still, Griffiths said that optimism may persist among investors because they“see light at the end of the Covid tunnel. “As a result, investors are more prepared to buy into riskier assets, boosting stocks,” she wrote.

One sector that continues to see higher prices is transportation stocks as U.S. cities and towns loosen from COVID restrictions, with the Dow Jones Transportation Average
DJT,
+1.77%

on Monday registering a record close on Monday.

Later in the day, Yellen may provide more insights about the economic outlook and President Biden’s infrastructure spending plan at 4 p.m. Eastern, during a virtual summit hosted by the WSJ.

On Monday, a closely watched manufacturing report from the Institute for Supply Management for the U.S. disappointed, falling to 60.7% in April from a 38-year high of 64.7% in the prior month. Economists surveyed by Dow Jones and The Wall Street Journal had forecast the ISM index to edge up to 65%.

In U.S. economic data Tuesday, a report on international trade in goods and services is due at 8:30 a.m., and is 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., are likely to show orders rebounded in March from the previous month.

On the public health front, the U.S. Food and Drug Administration is expected to authorize Pfizer’s COVID-19 vaccine for ages 12 to 15 by next week, according to the Associated Press, citing a federal official and a person familiar with the process, setting up shots for many before the beginning of the next school year.  Meanwhile, India is second to the U.S. by cases at 20.3 million and third by fatalities at 222,408.

Which companies are in focus?
  • Shares of CVS Health CorpCVS rallied toward a 2 1/2-year high in premarket trading Tuesday, after the drugstore chain and healthcare services company reported first-quarter profit and sales that rose above expectations, with growth in all segments, and raised its full-year outlook.

  • Shares of Pfizer IncPFE jumped toward a near five-month high in premarket trading Tuesday, after the drug giant beat earnings expectations and raised its full-year outlook, as revenue expectations for its COVID-19 vaccine jumped 73%. 

  • Precipio Inc.’s stock PRPO, +171.98% soared in premarket trade Tuesday, adding to gains of more than 170% on Monday, after the specialty diagnostics company, said its COVID-19 rapid antibody test is now available on Amazon.com’s AMZN business platform.

  • Shares of DuPont IncDD rose in premarket trading Tuesday after the specialty materials, chemicals and agricultural products company reported first-quarter profit and sales that beat expectations, with all of its business segments showing growth, and raised its full-year outlook. 

  • Arconic Inc. ARNC shares rose in premarket trade Tuesday, after the company posted better-than-expected first-quarter earnings and raised guidance, citing higher aluminum prices and strong orders from the aerospace sector. 

  • Shares of ConocoPhillips COP climbed in premarket trading Tuesday, after the oil-and-gas company reported first-quarter earnings that beat expectations, and announced the resumption of share repurchases and plans to start selling off its Cenovus Energy Inc. CVE stake.

How are other assets faring?
  • In Europe, the Stoxx Europe 600 SXXP was gaining 0.3%, while London’s FTSE 100
    UKX,
    +0.69%

    was rising 0.8%.

  • The 10-year Treasury note yield TMUBMUSD10Y added 1.1 basis points to 1.61%.

  • The greenback was stronger, trading up 0.4% based on the ICE U.S. Dollar Index DXY.

  • Prices for gold futures GC00 finished retreated $9.50, or 0.5%, to $1,782.40 an ounce on Comex. U.S. crude futures CL.1 traded 1.7% to $65.59 a barrel on the New York Mercantile Exchange.

  • In Asian trade, Hong Kong’s Hang Seng Index HSI rose 0.7%. Bourses in Shanghai and Tokyo were closed.