Wall Street weighs possibility of imminent interest rate hikes, Nasdaq plunges

The U.S. stock futures fell sharply Tuesday morning as investors geared up for a holiday-shortened week rife with quarterly earnings reports from companies across all three major indexes.

Contracts on the tech-heavy Nasdaq plunged 1.82% to 15,311 in early trading. Wall Street continued to weigh the possibility of imminent interest rate hikes, as Wall Street continued to weigh the possibility of imminent interest rate hikes. Futures on the Dow Jones Industrial Average were down about 0.73%, or 263 points, in early trading, while the S&P 500 declined more than 1%. The yield on the benchmark 10 year Treasury rose to its highest level in two years — up to 1.818%.

Wall Street was closed on Monday in honor of Martin Luther King Jr. Day but will resume trading Tuesday amid a flurry of corporate results unveiled ahead of the session: Goldman Sachs GS PNC Bank PNC and Bank of New York Mellon BK will release earnings reports for the last three months of 2021 before market open.

With earnings season in high gear, investors will shift their focus on company profits and other corporate metrics to a more relaxed focus on the Federal Reserve monetary policy and economic uncertainty that has rattled stocks in recent weeks.

OANDA market analyst Craig Erlam told Yahoo Finance Live that a lot of rationality tends to come back around earnings season. That is when people start to get a better grasp, or at least start to look at markets through a more rational lens, and we could start to see a bit of normality return for the markets. Equity markets have been weighed down by worries over sooner-than-expected interest rate increases in 2022, due to concerns over sooner-than-expected interest rate increases. The S&P 500 is down 2.79% year-to-date, while the Dow has lost 1.84%. The Nasdaq has lost 5.93% since the beginning of this year, with more than one-third of companies in the index at least 50% from their 52 week highs, according to Bloomberg data.

The outlook for 2022 remains positive, according to strategists who think that stocks are in good shape for solid returns ahead, even though the year is unlikely to match the blockbuster returns of 2021.

According to Charlie Ripley, senior investment strategist for Allianz Investment Management, the outlook for 2022 will be like a moderated version of last year, but investors should be cognizant that the prevailing tailwinds are beginning to calm. The threat from COVID 19 will continue to fade, but the long-term effects from the pandemic are likely to bleed into 2022, but the outright threat from the COVID 19 will still affect the economy. He stated that risk assets will likely have positive returns in the post-COVID economy, but headwinds are picking up and performance will be choppier than in past years.

Investors will be interested in the new York Federal Reserve's Empire Manufacturing Index and the National Homebuilders Association's Housing Market Index, as well as fresh readings on the New York Federal Reserve's Empire Manufacturing Index and the National Homebuilders Association's Housing Market Index, as well as fresh readings on the New York Federal Reserve's Housing Market Index.

The Department of Treasury is expected to report its latest print on Net Long-Term TIC flows, which tracks the flow of Treasury and agency securities, corporate bonds and equities, into and out of the United States.

ET Tuesday: Contracts on all three major indexes decline ahead of the open.

Here are the major moves in futures trading Tuesday morning: