Stock futures falter after Dow record

Contracts tied to the Dow Jones industrial average faltered between gains and losses, suggesting that the blue-chips index may be silenced after closing Wednesday at an all-time high.

Recent data on Thursday showed that weekly unemployment claims fell to 730,000 in the week ended February 20, a decline from the previous week and lower than economists expected. The US economy grew in the fourth quarter at an annualized rate of 4.1%. New durable goods rose 3.4% in January for the ninth consecutive month as manufacturing continued to rebound.

Investors ’fondness for risky assets had picked up on Wednesday in comments by Federal Reserve Chairman Jerome Powell that the central bank will keep interest rates low for a while.

However, the recent sharp rise in bond yields – which closed at a one-year high on Wednesday – has made some money managers more cautious. These investors are weighing the transformation of funds into less risky assets, such as bonds, and into stocks with lower valuations than technology companies.

“The market is nervous. Rising bond yields are putting pressure on equities, especially growth stocks, “said Sebastien Galy, a macro-strategist at Nordea Asset Management.

Optimism about the economic recovery is causing investors to shift funds into stocks that are likely to benefit from a rebound this year. This is weighing on technology stocks, which drove much of last year’s rally.

“Rising bond yields trigger this rotation, away from growth stocks and more in favor of value stocks,” said Sophie Chardon, Lombard Odier’s cross-asset strategist. “Rising yields are favorable to banks, higher energy prices to energy. It’s a change of leadership.”

The yield on the 10-year benchmark rose to 1.460% from 1.388% on Wednesday. The yield on government bonds has been rising as investors cut their holdings of safer assets.

Investors are also watching closely for signs of a jump in inflation after large doses of monetary and fiscal stimulus. At the same time, markets have also become cautious, as recent economic data showed that the rebound is likely to be slow and to stop.

Profit season is over: Airbnb,

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DoorDash and Salesforce.com are scheduled to post their results on Thursday.

Popular stocks among Reddit users on the WallStreetBets forum soared in the last hour of trading on Wednesday, with volatility reminiscent of last month’s activity. In premarket trading, GameStop was up 55% and AMC Entertainment was up 11%.

The moves show that “there is still liquidity and there is a lot of access to speculative betting,” Chardon said. “We need to be prepared to live with these types of specific bubbles, but I wouldn’t see it as a threat to the global equity market.”

Before opening the market, Moderna gained more than 3% after announcing a plan to increase its Covid-19 vaccine manufacturing capacity. Best Buy fell 5.4% after saying it predicts a slowdown in sales growth in 2021.

Oil prices continued to rise, and Brent crude rose on the fourth day. The international oil indicator added 0.5% to $ 66.51 a barrel, near its highest level since January 2020.

Abroad, the Stoxx Europe 600 pancontinental fell 0.1%.

Among individual stocks, brewery Anheuser-Busch InBev fell nearly 5% after its fourth-quarter profit fell below estimates. British packaging company DS Smith jumped more than 6% when it reported that rival Mondi is exploring an acquisition.

Investors have also been selling European government bonds in recent weeks as they are looking for higher returns. The yield on ten-year French bonds, which is moving inversely to the price, was above zero for the first time since June and reached 0.024%.

In Asia, most important landmarks ended the day. The Shanghai Composite Index added 0.6% and the Hong Kong Hang Seng Index rose 1.2%. South Korea’s Kospi index rose 3.5% after the central bank kept interest rates at historic lows.

Write to Anna Hirtenstein to [email protected]