Stock futures falter after Dow record

Contracts pegged to the Dow Jones Industrial Average staggered between gains and losses, suggesting that the blue chips index may have dampened after closing at a record high on Wednesday.

New data from Thursday showed that weekly unemployment claims fell to 730,000 for the week ending February 20, down from the previous week and less than what economists expected. The US economy grew 4.1% year-on-year in the fourth quarter. New durable goods were up 3.4% in January for the ninth month in a row, while the manufacturing sector recovered.

Investor interest in risky assets was restored on Wednesday to the comment by Federal Reserve Chairman Jerome Powell that the central bank will keep interest rates low for a while.

Still, the recent surge in bond yields – which closed at its highest level in a year on Wednesday – has made some money managers more cautious. Those investors weigh in on shifting funds to less risky assets, such as bonds, and to stocks with lower valuations than technology companies.

“The market is nervous. The rise in bond yields is putting pressure on equities, especially growth stocks, ”said Sebastien Galy, macro strategist at Nordea Asset Management. “In general, there is a bit of a risk reduction,” he added.

Optimism about the economic recovery is prompting investors to shift funds to stocks that are likely to benefit from a recovery this year. That weighs on technology stocks, which supported much of last year’s rally.

“The rise in bond yields is driving this rotation away from growth stocks and more in favor of value stocks,” said Sophie Chardon, cross asset strategist at Lombard Odier. “The rise in revenues is supportive for banks, higher oil prices are supportive for energy. It’s a change of leadership. ”

The return on the benchmark 10-year Treasury paper was 1.460% on Wednesday, against 1.388%. Government bond yields have increased as investors reduced holdings of the safest assets.

Investors are also watching closely for signs of rising inflation following high doses of monetary and fiscal stimulus. At the same time, markets have also become cautious as recent economic data showed that the recovery is likely to be slow and stagnant.

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DoorDash and Salesforce.com are expected to publish their results on Thursday.

Stocks popular with Reddit users on the WallStreetBets forum rose in the last hour of trading on Wednesday, in volatility reminiscent of last month’s activity. In premarket trading, GameStop was up 55% and AMC Entertainment up 11%.

The moves show “there is still liquidity and a lot of access to speculative bets,” said Ms. Chardon. “We have to be willing to live with this kind of targeted bubble, but I wouldn’t see it as a threat to the global stock market.”

Ahead of the open market, Moderna gained more than 3% after announcing a plan to increase the production capacity of Covid-19 vaccines. Best Buy tumbled 5.4% after it said it expects sales growth to slow down in 2021.

Oil prices continued to rise, with Brent oil rising for the fourth day. The international oil meter added 0.5% to $ 66.51 a barrel, almost the highest level since January 2020.

Abroad, the pan-continental Stoxx Europe 600 fell by 0.1%.

In individual stocks, beer maker Anheuser-Busch InBev fell nearly 5% after its fourth-quarter profit fell below estimates. British packaging company DS Smith jumped more than 6% on reports that rival Mondi is investigating a takeover.

Investors have also sold European government bonds in recent weeks as they were looking for higher yields. The yield on French 10-year bonds, moving inversely with price, tipped above zero for the first time since June, reaching 0.024%.

In Asia, most of the important benchmarks closed the day. The Shanghai Composite Index added 0.6% and the Hang Seng Index in Hong Kong was up 1.2%. South Korea’s Kospi index rose 3.5% after the central bank kept interest rates at historic lows.

Write to Anna Hirtenstein at [email protected]