Wall Street Prepares for Subdued Start Amid Escalating Middle East Tensions

Wall Street's primary indices are poised for a cautious start on Tuesday, as concerns heighten over escalating tensions in the Middle East. Additionally, U.S. Treasury yields have eased following dovish remarks from Federal Reserve officials overnight.

Key figures within the Fed have suggested that rising yields on long-term U.S. Treasury bonds might deter the central bank from further adjustments to its short-term policy rate.

Following Columbus Day, also recognized as Indigenous Peoples' Day, the 10-year Treasury yield saw a decline from its 16-year high on Tuesday.

According to CME's FedWatch tool, traders estimate an 86% likelihood of interest rates remaining steady in both November and December.

Attention will be directed towards statements from several Fed officials, including Raphael Bostic of Atlanta, Neel Kashkari of Minneapolis, Mary Daly of San Francisco, and Board Governor Christopher Waller throughout the day.

Israel announced the restoration of control over the Gaza border, launching intensive air strikes on the enclave. Simultaneously, the nation summoned hundreds of thousands of reservists.

Israeli media reported a death toll of 900 from Saturday's Hamas assaults, while Gaza's health ministry stated that Israel's retaliatory strikes resulted in at least 770 casualties.

"If the conflict remains contained, its impact may be limited. Investors will closely monitor inflation data this week, as well as the commencement of banking earnings on Friday," remarked Peter Cardillo, Chief Market Economist at Spartan Capital Securities.

On Monday, all three major U.S. stock indices concluded with gains, with energy stocks leading the surge as Middle East tensions stoked concerns about supply, consequently propelling crude oil prices.

In the upcoming week, investors will scrutinize inflation indicators, including September's producer price and consumer price indexes, along with the Fed's meeting minutes from September.

Towards the end of the week, prominent U.S. banks JPMorgan Chase, Wells Fargo, and Citigroup are scheduled to release their quarterly reports.

At 8:40 a.m. ET, Dow e-minis displayed an increase of 53 points, or 0.16%, S&P 500 e-minis were up 2.5 points, or 0.06%, and Nasdaq 100 e-minis exhibited a rise of 4.5 points, or 0.03%.

In individual stock movements, PepsiCo experienced a 0.9% surge after the company revised its annual profit forecast for the third time this year. Rival Coca-Cola also observed an uptick of 0.8%.

Truist Financial saw a 4.4% increase following reports of discussions about the potential sale of its insurance brokerage unit to private equity firm Stone Point for approximately $10 billion.

Rivian Automotive made strides with a 2.9% advance, prompted by reports of UBS upgrading the EV maker's stock from "neutral" to "buy".

Conversely, Corning faced a 2.7% decline after J.P. Morgan downgraded the specialty glass maker's shares from "overweight" to "neutral".

Chip companies Skyworks Solutions and Qorvo experienced respective dips of 3.8% and 3.7% following Citigroup's downgrades.

Arm Holdings, following the conclusion of its initial public offering's "quiet period," received a surge of "buy" ratings, resulting in a 1.7% climb.

Also Read: Global Stocks with Israel Ties Witness Decline after Hamas Attack