Equity futures opened mixed after the three major indices fell during the regular session as government bond yields rose again and concerns about rising inflation provoked more volatility in the stock markets.
Contracts The S&P 500 and Dow traded near the flat line, while those on the Nasdaq rose lower. Earlier in the ordinary session, the Nasdaq fell 2.1% for its third consecutive session of steep declines. The recent fall erased the index’s annual gains and brought it within 0.5% of a formal correction, or down at least 10% from a recent record high as a market close. The S&P 500 also briefly deleted its annual gains on an intraday basis on Thursday. CBOE Volatility Index or BUTTON, peaked as high as 31.9 and reached its highest level since early February.
Treasury interest rates jumped again to more than 1.55%, hovering around a year-high after Federal Reserve Chairman Jerome Powell suggested on Thursday that the central bank would remain “patient” in keeping benchmark interest rates close to zero, even in light of an increasing inflationary pressure. Some investors have worried that the huge stimulus passed by Congress – with another $ 1.9 trillion package currently under debate in the Senate – along with ultra-accommodative monetary policy, may promote an even greater faster economic expectation than expected, which may lead to a continuous rise in prices.
“I think what has scared investors is two things: One is the rate at which we came from just under 1% to 1.5%. [in the 10-year Treasury yield] in the first two months of the year. Forecasts were destined to reach this level and up to as high as 2% by the end of the year, but it strengthened quite quickly, “Tony Rodriguez, Nuveen’s head of fixed income strategy, told Yahoo Finance.
“And then I also think it’s the positive information we’ve got in terms of fiscal policy, in terms of actual economic data and in terms of the successful or really accelerated rollout of the vaccine, leading to much much more positive projections for growth. , “he added.” And those are sinister investors as to whether the Fed will have to react by potentially tightening soon. ”
Technology stocks in particular have carried most of the last leg lower in the stock markets as investors liquidate their positions in high-growth stocks in favor of stocks in earnings-related companies that are more closely linked to a strong economic recovery. Management within the S&P 500 has shifted to the energy and finance sector so far this year and away from information technology and consumer discretionary sectors that led the market higher in 2020.
“I’m not so worried about what we’re seeing in the market right now. I’ve been saying for a while that we’re been a little bit expanded in the stock markets and they’s a little bit more vulnerable to these types of setbacks,” Matt said. Orton, Carillon Tower Advisors director and portfolio specialist, to Yahoo Finance. “Growth does not come without risk, and I think that’s what many investors are starting to learn.”
“But on the flip side of this is that we see some significant disadvantages in stocks that look very, very attractive. So some information technology stocks that have very, very good earnings … I think they look attractive to potentially reload if you have missed them or want to redistribute.But the increase in rates also gives and I think it strengthens the case to be in certain more cyclical areas of the economy that we have wanted for some time . ”
18:01 ET Thursday: Stock futures trading mixed
Markets traded here when the overnight session started:
S&P 500 futures (ES = F): 3,765.00, down 0.5 points or 0.01%
Dow futures (YM = F): 30,890.00, up 12 points or 0.04%
Nasdaq futures (NQ = F): 12,435.75, down 19.25 points or 0.15%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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