U.S. Stock Futures Steady Amid High Treasury Yields
U.S. stock futures were nearly flat early Thursday after the S&P 500 pulled back from its recent peak, coinciding with a surge in yields that reached levels not seen in decades.
Futures for the Dow Jones Industrial Average increased by 48 points, or 0.09%. Meanwhile, S&P 500 futures rose slightly by 0.05%, although Nasdaq-100 futures saw a decrease of 0.07%.
In extended trading, shares of Levi Strauss fell nearly 2% after the company revised its revenue growth forecast for the year downward, although it did raise its profit guidance.
Wall Street experienced a downturn in the previous session. The S&P 500 fell 0.2%, stepping back from an all-time high just a day earlier. The Dow dropped over 340 points, translating to a 0.7% decrease, while the Nasdaq Composite also slipped by 0.2%.
Stocks were pressured as Treasury yields hit new highs. The yield on the 10-year note reached 5.365%, the highest it has been since April 2002. The 30-year yield also rose, reaching 5.732%, the highest since May 2002.
Across Asia, Japan’s Nikkei 225 declined by 1.12%, and South Korea’s Kospi fell by 2.04%. Australia’s S&P/ASX 200 was down 0.64%, and mainland China’s CSI 300 dropped 0.43%. Hong Kong’s Hang Seng Index also experienced a decline, falling by 0.69%.
The rise in yields has dampened interest in equities recently, notably impacting sectors sensitive to borrowing costs, with industrials being the worst performer for the week.
However, many investors still hold a positive view on the stock market. There’s a belief that the forthcoming earnings season could provide the necessary momentum for further gains.
For the third quarter, the S&P 500 is projected to report a blended earnings growth rate around 30%, marking a third consecutive quarter of growth exceeding 25%, according to FactSet.
“If earnings stay robust—and there’s a reasonable expectation they will—if projections are met or exceeded, that should sustain this rally, even with rising rates,” said Courtney Garcia, a senior wealth advisor at Payne Capital Management, during an interview on CNBC’s “Closing Bell.” “I don’t think it will derail the market.”
On Thursday, investors are looking forward to the earnings report from PepsiCo before markets open, along with the latest weekly jobless claims data.
