Futures U.S. stock markets rose, with technology stocks poised to lead the rebound as bond markets calmed down and Treasury yields fell to 10 years from a 14-month high.
S&P 500 futures rose 0.2%, leaving the broad market index on track for a warm low this week. The indicator closed 1.5% on Thursday. Nasdaq-100-related contracts rose 0.6%, suggesting technology stocks would stop their losses. Dow Jones Industrial Average futures rose 0.1%, leaving the blue-chips index on track to advance for the third consecutive week.
In the bond market, the 10-year Treasury benchmark yield fell to 1.682% after ending Thursday at 1.730%, the highest since January 2020.
Major indices have been upset this week, affected by the bright economic outlook on the one hand, and bond investors’ concern that interest rates will rise sooner than expected on the other. Investors are betting that inflation will rise as growth picks up and enough time is maintained to force the Federal Reserve to tighten monetary policy. These concerns on Thursday led to strong sales in the government bond market and prompted investors to abandon technology and other high-growth stocks.
“After a few major sales, investors tend to lick their wounds and wake up and say, is this a real sales mistake or a temporary mistake?” Said Gregory Perdon, co-investment director of private bank Arbuthnot Latham.
Friday’s futures gains on stocks are “indicative that investors think it’s just a shock.”
Treasury yields have risen over the past three consecutive days as investors sold bonds in anticipation of higher inflation. A jump in treasury supply as the government funds billions of dollars in Covid-19 relief spending, combined with uncertainty over whether the Fed will extend temporary regulatory relief for large banks, has also quenched appetite for the good.
“Investors believe that there will be some inflation, which tends to be bad for bonds: it tends to lose money if there is an inflationary environment and it owns government bonds,” Perdon said. “So, ultimately, investors have been trying to move this movement forward.”
In premarket trading, FedEx rose 3.5% after the package giant declared its quarterly profit nearly tripled. Nike fell 2.6% after the sneaker company reported lower-than-expected analyst revenue due to shipping delays caused by container shortages and congestion at ports.
Abroad, the Stoxx Europe 600 pancontinental fell 0.4%. Delays in vaccine deployment in Europe are weighing on growth expectations in the region, investors said.
“From a macro sense, it’s hard to see how Europe will outperform,” said Seema Shah, chief strategist at Principal Global Investors.
Travel companies in Europe shrank after France announced a new closure for the Paris area and several other regions. TUI fell 6.3%, Aeroports de Paris fell 4.5% and Deutsche Lufthansa fell 4.4%.
In Asia, most major benchmarks fell when closing the negotiation. Shanghai’s composite index fell 1.7% and Hong Kong’s Hang Seng retreated 1.4%.
Early high-level talks between the Biden administration and Chinese officials continue in Alaska, with both sides marketing criticism. Investors are nervous about continued tensions between the two major economies.
“The tone suggests that the relationship between the U.S. and China will be as strained as with the previous U.S. administration,” Ms. Shah said. “As we have seen in recent years, this strained relationship has meant that they will have a few more struggles than otherwise, and it also affects those around them and within their supply chains.”
Major indices have been chopped up this week.
Photo:
Courtney Crow / Associated Press
Write to Anna Hirtenstein to [email protected]
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