Stock futures remained flat during overnight trading on Thursday after a technology-led defeat on Wall Street amid a surge in bond yields.
Futures on the Dow Jones Industrial Average rose only 30 points, while S&P 500 futures changed little. The Nasdaq 100 futures are down 0.2%.
All eyes will be on the February jobs report, which will be released Friday morning. Economists expect to add 210,000 payrolls in February, compared to just 49,000 in January, Dow Jones said.
The move in futures followed a sharp sell-off triggered by the comments of Federal Reserve Chairman Jerome Powell about rising bond yields. He said the recent run-up caught his eye, but he gave no indication of how the central bank would curb it. Some investors had expected the Fed chairman to indicate that he was willing to adjust the Fed’s buy-back program.
The economic reopening could “put some upward pressure on prices,” Powell said in a Wall Street Journal webinar Thursday. Even if the economy sees “temporary increases in inflation …, I expect we’ll be patient,” he added.
“The market translation of ‘patient’ is that patient doesn’t mean ‘never,’ and that Powell indicates that easy money will end at some point,” said Mike Loewengart, director of investment strategy at E-Commerce Finance. “So while the verbiage isn’t too far from the Fed’s previous stance, it’s enough to move a nervous market south.”
The 10-year Treasury yield jumped back above 1.5% after Powell’s comments. The reference interest rate stabilized earlier this week after peaking to 1.6% last week amid higher inflation expectations.
Technology stocks led to the market downturn as growth-oriented companies are generally more vulnerable to higher interest rates. The Nasdaq Composite fell 2.1% on Thursday, taking losses to 3.6% this week. The tech-heavy benchmark also turned negative for the year, falling into correction area, or 10% below a recent high, on an intraday basis.
The S&P 500 and the Dow both fell more than 1% on Thursday and headed for a losing week. Energy outperformed the previous session with an increase of 2.5% amid a rise in oil prices.
“Prices rallied again, opening the door for more technology stock sales,” said Ryan Detrick, chief market strategist at LPL Financial. “On the bright side, the economy continues to improve and finance and energy leadership is something that suggests that now is not the time to sell it all.”