US stock index futures slid during Wednesday night trading, accelerating losses from the regular trading session, in which key averages ended in the red across the board.
Futures contracts linked to the Dow Jones Industrial Average fell 62 points. S&P 500 futures and Nasdaq 100 futures fell 0.3% and 0.5% respectively.
Shares suffered heavy losses in regular trading as investors feared rising bond yields. The S&P 500 fell 1.3%, while the Dow Jones Industrial Average closed 119 points or 0.38% lower. The Nasdaq Composite was the relative underperformer, falling 2.7% as tech names declined. The index is on track to post its third consecutive negative week – the longest weekly losing streak since September.
The weakness came when 10-year government bond yields rose significantly more. The benchmark rate climbed to a high of 1.49% on Wednesday, before declining slightly. Last week, yields soared to a high of 1.6% in a move some described as a “flash” spike.
“Our current strategy points to robust economic growth this year with a modest increase in inflation,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute. “In an effort to read the tea leaves, we believe the steeper yield curve reflects the market’s view that growth and inflation should continue to return to appropriate levels as the pandemic wears off. We see this as positive for stocks and other risky assets. like raw materials, ”he added.
A bright spot during Wednesday’s session was companies dealing with the reopening of the economy. Shares of airlines and cruise line operators advanced after President Joe Biden said Tuesday that the US will have enough Covid-19 vaccines for all adults by the end of May.
Additional incentives can also market optimism. The Senate is currently debating the $ 1.9 trillion aid package that the House passed on Saturday.
“Our macro team sees the economy as a resilient economy given the vaccinations and additional stimulus measures,” Keith Lerner, Truist Chief Market Strategist, wrote in a note to customers. “The consumer’s ability and desire to spend on services and experiences should lead to the best economic growth we’ve seen in more than 35 years.”
On Thursday, investors will look to the ongoing economic recovery again when the first unemployment benefit data for the week ending Feb. 27 is released. Economists polled by Dow Jones predict 750,000 new stocks.
In terms of revenues, BJ’s Wholesale and Kroger are among the names reporting before opening, while Broadcom, Costco and Gap are on deck to provide quarterly updates after the closing bell.
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