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U.S. stock futures drop on U.S-China trade deal doubt, bond market nerves


By Shreyashi Sanyal

(Reuters) - U.S. stock futures dipped on Tuesday as investors turned skeptical of the chances of a breakthrough in the U.S.-trade talks, while a flattening U.S. yield curve raised fears of a slowing domestic

Wall Street rallied on Monday on that U.S. and Chinese had agreed to hold off on new tariffs for 90 days, offering relief to the stock market that has been clouded for much of the year by the prospect of an all-out trade war.

However, different dates from the regarding start of the three-month trade ceasefire and skepticism over an actual resolution in the agreed negotiating window dampened the mood.

"Although the U.S. agreed not to increase tariffs on for the next three months, the fact that there is a deadline in place rather than an open-ended agreement is capping any attempts at a more serious rally," Fiona Cincotta, at City wrote in a client note.

The short end of the U.S. yield curve also inverted for the first time since 2007, and the yield curve between the benchmark 2-year and 10-year notes remained at the flattest in over a decade. [US/]

Investors typically demand higher yields to commit money for longer periods of time. When short-term yields move higher it can imply doubts about the immediate future, and an inversion of the yield curve has preceded past recessions.

At 7:31 a.m. ET all the three major futures were down about half a percent.

dropped 1.9 percent in premarket trading after leading the rally on Monday. One of the company's suppliers trimmed its revenue outlook, adding to growing evidence that the latest iPhones are not selling well.

fell 7.1 percent after lowering its full-year profit and sales forecast, hit by higher costs related to hurricanes.

dropped 5.6 percent after the reported its first fall in quarterly orders in more than four years on rising interest rates and higher home prices.

Among few bright spots, shares of companies were higher as crude prices rose more than 2 percent, extending gains ahead of expected output cuts by OPEC and a mandated reduction in Canadian supply. [O/R]

(Reporting by Shreyashi in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Shounak Dasgupta)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 19:13 IST