A trader on the New York Stock Exchange.
Source: The New York Stock Exchange
Stock futures held steady overnight trading on Sunday after the S&P 500 booked its first losing week in three.
Futures on the Dow Jones Industrial Average were flat. S&P 500 futures and Nasdaq 100 futures had also changed little.
The move in futures came after the S&P 500 and Nasdaq Composite broke a two-week winning streak last week with losses of 0.7% and 1.6%, respectively. The blue-chip Dow posted a gain of 0.1% over the same period, supported by Caterpillar and JPMorgan.
Some equity investors have been concerned about the soaring bond yields in recent weeks, as they could especially harm fast-growing companies that rely on easy borrowing and reduce the relative appeal of stocks.
The yield on 10-year Treasury bonds rose 14 basis points to 1.34% last week, close to its highest level since February 2020. So far this month, the reference rate has risen 25 basis points.
“This interest rate move should be something that investors should keep a close eye on,” Matt Maley, Miller Tabak’s chief market strategist, said in a note. “Just because long-term rates have been ultra-low historically, we don’t think they will have to rise as far as most experts think … before they impact the stock market.”
Meanwhile, many on Wall Street believe that the rise in bond yields is a sign of growing confidence in the economic recovery and that stocks should be able to absorb higher interest rates amid strong gains.
“We don’t see the recent interest rate hike as a threat to the bull market,” Keith Lerner, chief market strategist at Truist, said in a note. “As we are in the early stages of an economic recovery, monetary and fiscal policies remain supportive, the sharp earnings recovery and favorable relative valuations remain overweight equities.”
The market enters the last week of February with solid gains. The Dow and S&P 500 are up more than 5% this month, while the Nasdaq is up 6.2%. The small-cap Russell 2000 outperformed this month with a profit of 9.3%.
As for the pandemic, the White House said it expects to ship millions of delayed doses of coronavirus vaccines this week after a sweeping winter storm disrupted logistics. Gov. Andrew Cuomo said on Sunday that a New York resident has tested positive for the Covid-19 variant first identified in South Africa.
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