US stock index futures were mixed in early morning trading on Thursday after the Dow closed at a record high.
Futures contracts linked to the Dow Jones Industrial Average hit 50 points. S&P 500 futures hovered around the flatline, while Nasdaq 100 futures traded negative territory.
The move comes after the Dow jumped 425 points on Wednesday, closing at a record high in a volatile session that saw the average of 30 stocks fall by more than 110 points at one point. The S&P 500 was up 1.1%, while the Nasdaq Composite gained 1%. Earlier in the session, the tech-heavy index fell 1.3%.
Rising interest rates weighed on equities at the start of the session as 10-year US Treasury yields reached 1.4%, reaching their highest level since February 2020. Higher interest rates may prompt investors to switch from stocks to bonds. The growth-oriented technology sector could also hit higher interest rates.
“Our base case scenario is that interest rates will continue to rise as a result of rising growth and inflation expectations and, ultimately, Federal Reserve normalization,” said Ryan Detrick, lead market strategist at LPL Financial. “We also believe that if interest rates move too fast, the Fed will step in to ensure that rising interest rates do not become too restrictive and disrupt stock markets or the real economy,” he said.
Yields fell from their peak after Federal Reserve Chairman Jerome Powell continued to downplay the threat of inflation.
“It seems pretty clear to us that the interest rate hike was driven by growing optimism about economic growth, and interest rates are finally ‘catching up’ with the optimistic growth outlook for equities,” said David Lefkowitz, head of Americas equities at UBS Global Asset Management. . “So equity investors don’t have to worry too much.”
As for the data, the first unemployment benefit figures will be released Thursday at 8:30 a.m. ET, with economists polled by Dow Jones expecting a printout of 845,000. Also at 8:30 a.m. ET, the U.S. Department of Commerce will release its second estimate for fourth-quarter GDP.
It’s also going to be a busy day for earnings, with a number of companies publishing quarterly results. Best Buy, Papa John’s and Domino’s Pizza are some of the names on the deck for the opening bell. After the market closes, Salesforce.com, Beyond Meat, Etsy, and Caesars Entertainment are among the names to report.
New listed companies Airbnb and DoorDash will also report revenues Thursday after the closing bell.
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