Market Coverage: Tuesday March 2nd Yahoo Finance

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Stock futures edged lower Tuesday morning as the major indexes retreated slightly after rallying a day earlier.

Contracts on each of the S&P 500, Dow and Nasdaq pointed to a modestly lower open. On Monday, the S&P 500 jumped by 2.4% for its best session since June 2020, while the Nasdaq jumped 3% to recuperate some losses after technology stocks slumped last week. Shares of Zoom Video Communications (ZM), a darling of the "stay-at-home" trade, jumped more than 7% overnight after the company delivered earnings results and guidance that far exceeded expectations, helping assuage fears of a slowdown as more in-person activities resume.

A combination of easing Treasury yields, optimism over Johnson & Johnson's (JNJ) newly authorized COVID-19 vaccine and prospects of another near $2 trillion stimulus package out of Congress helped buoy risk assets following a late February rout. The U.S. Senate is set to begin debating the $1.9 trillion relief package that the House of Representatives advanced over the weekend this week, Senate Majority Leader Chuck Schumer said.

And the benchmark U.S. 10-year yield eased well below 1.5% this week after swiftly climbing to a one-year high of as much as 1.6% just last week. Investors have been closing eyeing the rise in interest rates as a cause for concern for equities, with rates closely tied to borrowing costs for companies and consumers. Rising rates can also divert investor attention away from stocks by offering an alternative source of yield for investors.

Still, many strategists also noted that modestly rising rates from last year's ultra-low levels are not inherently problematic for stocks. And as Federal Reserve Chair Jerome Powell said late last month, rising rates and a steepening yield curve also serve as a sign of increasing optimism about the trajectory of the U.S. economy.

"I don’t think it’ll be an impediment for stocks to move forward as long as we see a move that’s commensurate on the economy," Michael Arone, State Street Global Advisors chief investment strategist, told Yahoo Finance of February's jump in the 10-year Treasury yield. "So as long as the economy continues to accelerate [and] rebound, earnings figures continue to come in solidly, I think that will allow us to tolerate higher interest rates. I think the real concern is that if the economy begins to slow down or the recovery isn’t as robust as expected, I think that’ll be the real challenge."

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7:45 a.m. ET: Kohl's and Abercrombie & Fitch top 4Q earnings estimates as apparel retailers bounce back after difficult 2020
Kohl's (KSS) and Abercrombie & Fitch (ANF) each reported fourth-quarter earnings Tuesday morning that beat consensus expectations, as the consumer shift from service-based to goods-based spending helped lift results at the apparel retailers.

Kohl's adjusted earnings of $2.22 per share grew from $1.99 over last year, and easily topped estimates for 98 cents per share, based on Bloomberg consensus data. More prudent cost-cutting helped the company increase its profitability despite a drop in revenue, with sales down 10% to $5.88 billion during the three months ending in January. For the full year 2021, net sales are expected to return to growth in the mid-teens percentage range over the prior year, and earnings per share will come in between $2.45 and $2.95, the company said. Shares rose slightly in early trading.

Meanwhile, Abercrombie & Fitch posted adjusted earnings of $1.50 per share, also growing over last year and exceeding the $1.24 consensus estimate. Net sales decreased 5% to $1.12 billion, matching estimates. Like many other retailers, Abercrombie saw another jump in digital sales, with e-commerce revenue rising by 34%. Shares jumped more than 2% in early trading.

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7:37 a.m. ET: Target 4Q sales soar past estimates, with big box retailer boosted by consumers' bulk-shopping
Target (TGT) posted fourth-quarter results that handily exceeded expectations, extending a streak of soaring growth as consumers during the pandemic opted for big box stores where they could find all their shopping needs in one spot.

Comparable sales jumped 20.5% in the fourth quarter, coming in multiples above the 1.5% growth posted during the same quarter last year, and topping consensus estimates for 17.5% growth. Comparable digital sales soared 118%, more than doubling for a fourth straight quarter. And on the bottom line, adjusted earnings per share from continuing operations rose to $2.67, exceeding estimates for $2.49.

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