U.S. stock index futures were lower early Thursday, pointing to the third straight decline for major averages.
Futures contracts tied to the Dow Jones Industrial Average pointed to a loss of more than 130 points at the open. S&P 500 futures fell 0.5% and Nasdaq 100 futures lost 0.6%.
The moves in futures came even after a recent rise in bond yields eased, with the benchmark 10-year Treasury yield was last down one basis point 1.46%.
Stocks posted heavy losses during Wednesday’s regular trading as rising bond yields spooked investors. The S&P 500 dipped 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 straight negative week — the longest weekly losing streak since September.
Tech stocks were weak again in the premarket Thursday with shares of Tesla, Apple and Twitter lower.
Investors will get another look at the ongoing economic recovery when first-time jobless claims data for the week ending Feb. 27 is released. Economists surveyed by Dow Jones are forecasting 750,000 first-time filers.
Federal Reserve Chair Jerome Powell is set to speak at The Wall Street Journal Jobs Summit on the economy later Thursday.
The Wednesday weakness came as the 10-year Treasury yield extended gains. The benchmark rate climbed to a high of 1.49% on Wednesday before retreating slightly. Last week, the yield surged to a high of 1.6% in a move that some described as a “flash” spike.
Major averages started the week with a surge with the Dow jumping 600 points on Monday, but the rally failed to carry through amid lingering concerns about higher interest rates and tech valuations.
“Our current strategy work suggests robust economic growth this year with a modest increase in inflation,” noted Scott Wren, senior global equity strategist at Wells Fargo Investment Institute. “In attempting to read the tea leaves, the steepening of the yield curve, in our opinion, reflects the market’s belief that growth and inflation should continue to move back toward appropriate levels as the pandemic eases. We view this as a positive for stocks and other risk assets, like commodities,” he added.
During Wednesday’s session, one bright spot was companies tied to the economy’s reopening. Shares of airline and cruise line operators advanced after President Joe Biden said Tuesday that the U.S. will have enough Covid-19 vaccines for all adults by the end of May.
Additional stimulus measures could also inject optimism into the market. The Senate is currently debating the $1.9 trillion relief package passed by the House on Saturday.
“Our macro team sees the economy as spring-loaded given the vaccinations and additional stimulus,” Keith Lerner, Truist chief market strategist, wrote in a note to clients. “The ability and desire of the consumer to spend on services and experiences should lead to the best economic growth we have seen in over 35 years.”
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