Investing.com - Wall Street futures pointed to a slightly lower open on Monday as market participants geared up for the “unofficial” kick-off to the third quarter (Q3) earnings season.
The blue-chip Dow futures lost 22 points, or 0.12%, by 6:46AM ET (10:46GMT), the S&P 500 futures fell 4 points, or 0.17%, while the tech-heavy Nasdaq 100 futures traded down 5 points, or 0.10%.
Earnings season unofficially kicks off Tuesday with Alcoa (NYSE:AA)'s quarterly results set for release before the market open.
That said, the climax truly arrives on Friday with earnings from major banks, including the first component of the Dow Jones to report JPMorgan Chase (NYSE:JPM) along with Citigroup (NYSE:C)and recently battered Wells Fargo (NYSE:WFC).
Analysts expect third-quarter earnings will show a 0.7% decline from a year ago, while revenue for the past quarter is expected to have increased 2.5%, which would be the first year-over-year sales increase for S&P 500 companies since the end of 2014.
In a calendar day with no major economic releases, attention will continue to focus on comments from Federal Reserve (Fed) officials as investors attempt to set the timing on the continuation of policy tightening.
Chicago Fed president Charles Evans gave a particularly dovish stance early Tuesday at an event in Sydney Australia, suggesting that the U.S. economy was not in fact at full employment and that the U.S. central bank could allow inflation to overshoot the 2% target.
Even so, Evans appeared to hint that a portion of his colleagues at the monetary authority were pushing for a rate increase in December and admitted that he would be “fine” with a hike by the year end as long as economic data continued to be solid and inflation showed signs of acceleration.
Markets themselves seemed ready for a December hike as the Fed fund futures pushed the odds above the 70% threshold on Tuesday.
In the run-up to the last Fed meeting in September, many pundits pointed to 70% odds as a necessity for the central bank to make a move as history suggests that, in the last 25 years, the probability had been at or above this level in 90% of the cases wherein the Fed tightened.
According to Investing.com's Fed Rate Monitor Tool, odds rose to 70.2% on Tuesday, just passing the aforementioned threshold when compared to the 69.9% registered a day earlier.
Chances for a November move continued to hover at around just 10%.
The increase in odds was pushing the dollar higher to hit an 11-week high on Tuesday.
The U.S. dollar index, which measures the greenback's value against a basket of six major currencies, was up 0.55% at 97.44 early Tuesday. It rose to a session high of 97.45 earlier, the most since July 27.
Minneapolis Fed chief Neel Kashkari was scheduled to participate in a town hall discussion on “too-big-to-fail” at 11:00AM ET (15:00GMT) on Tuesday, though market players were looking forward to Friday’s appearance by Fed chair Janet Yellen to speak on "macroeconomic research after the crisis" at the Federal Reserve Bank of Boston’s Annual Research Conference at 1:30PM ET (17:30GMT).
Meanwhile, oil prices moved lower on Tuesday as the International Energy Agency (IEA said that OPEC's oil production rose to record highs in September, underscoring the challenges the group faces as it seeks to curtail its output.
In its closely-watched monthly report, the IEA said OPEC crude output rose by 160,000 barrels a day to a record 33.64 million barrels in September, due to increased production in Iran, Iraq, Libya and Nigeria.
Crude prices rallied on Monday, with Brent climbing to a one-year high after Russian President Vladimir Putin said the country would support the Organization of the Petroleum Exporting Countries’ attempt to cut its collective output.
However, Russian energy minister Alexander Novak said on Tuesday that Moscow was not currently considering a reduction in production, according to a Reuters’ report.
U.S. crude futures traded down 0.72% to $50.98 by 6:50AM ET (10:50GMT), while Brent oil fell 0.68% to $52.78.