U.S. Stock Futures Fall as Bond Yields Edge Higher

U.S. stock futures fell at the start of the week, suggesting that the major stock indexes could fall back after last week’s big swings.

Futures on the S&P 500 and the Dow Jones Industrial Average were down 1% in late Asian trade Monday morning, while the tech-focused Nasdaq-100 index was 0.8% lower.

U.S. Treasuries sold off again, pushing yields on 10-year Treasuries to 3.143% in early trading. That takes it on course to settle at a new multi-year high. The 10-year yield has risen 1.6 percentage points since the end of 2021, prompting some investors to reassess the valuation of technology and growth stocks. Bond yields increase when prices fall.

“Yields are rising because investors think inflation is getting out of control,” said Peter Andersen, founder of Boston-based investment firm Andersen Capital Management.

“The reality is that we’ve lived in an unusually low interest rate environment for a long time, and it’s natural for the Fed to raise rates,” he added.

Last Wednesday, US bonds and stocks rallied after the Federal Reserve approved a half-percentage point increase in the benchmark lending rate to a target range of 0.75% to 1%. Fed Chairman Jerome Powell said officials were not considering an even larger increase at the next meeting of the central bank. Mr. Powell also said that inflation is too high and the Fed will urgently proceed to lower the level of inflation. He pointed to the consumer spending price index, which rose 6.6% in March.

The day after Mr. Powell’s comments, stocks fell sharply and the decline continued through Friday, extending a losing streak in the US market, in which the S&P 500 and Nasdaq Composite fell for five weeks. consecutive. As of last Friday, the Nasdaq has lost 22% in the time-to-date, while the S&P 500 is down 13% and the Dow is down 9.5%.

“There is no news from day to day that can cause a significant change in sentiment over a 24-hour period. The volatility of the market shows that there is great uncertainty about where people think we are headed,” said Mr Andersen.

In Asia, Japan’s Nikkei 225 fell 2.2% on Monday, while Australia’s S&P/ASX 200 fell 1.1%.

China’s CSI 300 index, which tracks the largest companies listed in Shanghai or Shenzhen, fell 0.7%. The Hong Kong market was on holiday.

Bitcoin price fell to $33,709, down 6.6% from Friday’s close of $36,073.70. The popular cryptocurrency has lost more than a quarter of its value in the five-to-date period.

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https://www.wsj.com/articles/global-stocks-markets-dow-update-05-09-2022-11652073278?mod=rss_markets_main U.S. Stock Futures Fall as Bond Yields Edge Higher

Edmund DeMarche

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