US stock futures tumbled slightly on Tuesday as investors awaited the testimony of Federal Reserve Chairman Jerome Powell in Congress on the health of the economy.
Futures linked to the S&P 500 fell 0.1%. Monday’s benchmark stock gauge fell for the fifth consecutive day, the longest losing streak since February. Contracts for the Nasdaq-100 fell 0.6%, suggesting that technology stocks will continue to lead the market lower.
A surge in US Treasury yields in recent days has diminished investor interest in riskier assets, including equities. Shares in technology companies, which have boosted the broader market for most of the past year, are considered particularly vulnerable. That’s because many tech companies’ valuations are related to their future earnings potential. Those gains are less valuable today when investors apply a higher discount rate.
The rise in bond yields “is of course causing investors and markets to rethink their view of equities,” said Paul Jackson, global head of Asset Allocation Research at Invesco. Investing in government bonds is starting to look more attractive for the first time in months, he said.
But “the level at which bond yields become really problematic for stocks is a long way from where we are today,” added Mr. Jackson.