Dow Jone’s futures gain

Futures on the Dow Jones Industrial Average rose after Walmart and Home Depot reported better-than-expected earnings.

Futures contracts linked to the Dow Jones Industrial Average, which includes the two major retailers, gained 56 points, or 0.1 percent. Home Depot’s third-quarter earnings exceeded expectations, thanks to a 9.8 percent increase in sales. In premarket trading, the stock rose 1.2 percent.

On Tuesday, a slew of economic data will be released, including October retail sales figures. Dow Jones economists expect sales to have increased by 1.5 percent last month, compared to 0.7 percent in September.

Industrial production figures, as well as the NAHB housing market index survey, will be released.

The Dow fell about 13 points, or 0.04 percent, during regular trading Monday, marking its fourth negative session in the last five. The 30-stock index gained nearly 136 points at the day’s high. The S&P 500 closed the day unchanged at 4,682.87 points. The benchmark index fluctuated between gains and losses during the session, gaining 0.3 percent at one end and falling 0.21 percent at another. The Nasdaq Composite was down 0.04 percent. The Russell 2000 was the underperformer, falling 0.45 percent.

Inflation and major averages

Stocks rose as interest rates rose, with the 10-year Treasury note yielding more than 1.62 percent and the 30-year Treasury bond yielding more than 2 percent. Fears of inflation are weighing on the market, following the consumer price index’s most significant annual increase in more than three decades last month. Wells Fargo Investment Institute’s Paul Christopher, head of global market strategy, believes inflation will moderate in 2022. Still, the path to lower inflation begins with higher inflation in the first half of the year.

According to our base case, the stickier inflation drivers are likely to persist. However, they will not outweigh the improvement in transitory elements.

President Joe Biden signed the $1 trillion bipartisan infrastructure bill into law on Monday afternoon. Transportation, broadband, and utility funding are all included in the package.

The major averages experienced their first negative week in six, but stocks remain near all-time highs. Some Wall Street strategists, such as Morgan Stanley’s Michael Wilson, believe the picture is bleak for 2022.

With financial conditions tightening and earnings growth slowing, the 12-month risk/reward for the broad indices at current prices appears unappealing. However, strong nominal GDP growth should continue to provide plenty of good stock-level investment opportunities for active managers.