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U.S. stock futures were relatively unchanged on Tuesday night after the Dow Jones Industrial Average experienced a second day of decline at the start of the quarter. Dow futures rose 9 points, S&P 500 futures climbed 0.03% and Nasdaq 100 futures rose 0.05%. Wall Street faced losses in major benchmarks due to concerns about inflation data and strong economic data, leading investors to worry that the Federal Reserve might postpone interest rate cuts. Treasury yields increased, reaching their highest level since November, and oil prices rose to five-month highs. Despite the recent decline, some market observers are optimistic about the overall equity market, suggesting that stocks are undergoing a period of consolidation after a strong start to the year.

The 30-stock Dow fell nearly 400 points, or 1%, on Tuesday, while the S&P 500 dropped 0.7% and the Nasdaq Composite tumbled nearly 1%. Kristen Bitterly, global wealth head of investment solutions at Citi, noted that the pullback in the market is a normal occurrence following a period of touching or nearing all-time highs. Bitterly emphasized the positive aspects of the fundamental backdrop, stating that the Fed’s trajectory is expected to decline, inflation is decreasing, and earnings have shown improvement. These factors are seen as supportive of risk assets overall. Despite geopolitical concerns resurfacing and yields increasing, some analysts believe that the market will remain on a positive trajectory given the favorable economic fundamentals.

Investors will receive further information on the labor market with the release of the ADP private payrolls report and the ISM services index on Wednesday, ahead of the March jobs data on Friday. Federal Reserve Chair Jerome Powell is scheduled to speak, along with other central bank speakers including Fed Governors Michelle Bowman and Adriana Kugler, Chicago Fed President Austan Goolsbee, and Fed vice chair for supervision Michael Barr. Additionally, Levi Strauss is set to report earnings after the market closes. These events and reports are expected to provide additional insights into the economic landscape and monetary policy outlook.

Despite recent market volatility and concerns about inflation and interest rates, some analysts maintain a positive outlook on equities, citing encouraging economic fundamentals and better-than-expected earnings. While geopolitical tensions and increasing yields have prompted caution among investors, the overall trajectory for risk assets remains constructive based on factors such as declining inflation and a supportive Fed stance. Wall Street continues to navigate through uncertainties and market fluctuations, with earnings reports and economic data providing further clarity and guidance for investors. The resilience of the equity market in the face of challenges underscores the underlying strength of the U.S. economy and the potential for continued growth in the future.

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