Stock futures under pressure as bond yields resume rise

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Stock futures under pressure as bond yields resume rise


Stock-index futures edged lower Tuesday, with tech-related shares seen likely to come under pressure as Treasury yields saw a renewed rise.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.11%

    fell 32 points, or 0.1%, to 33,000.

  • S&P 500 futures
    ES00,
    -0.32%

    were off 11.40 points, or 0.3%, at 3,947.50.

  • Nasdaq-100 futures
    NQ00,
    -0.69%

    declined 92.25 points, or 0.7%, to 12,852.25.

On Monday, the Dow
DJIA,
+0.30%

flipped positive in afternoon trade to end the day up 98.49 points, or 0.3%, to close at a record 33,171.37. The S&P 500
SPX,
-0.09%

ended the session down 0.1%, while the Nasdaq Composite
COMP,
-0.60%

dropped 0.6% and the small-cap Russell 2000
RUT,
-2.83%

dropped 2.8%.

What’s driving the market?

A renewed selloff in Treasurys appeared to be driving activity across markets Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.764%

early Tuesday traded above 1.77% for the first time since January 2020 and remained up nearly 6 basis points near 1.769%, according to FactSet. Yields and bond prices move in opposite directions.

Rising yields were lifting the dollar, and appeared set to weigh on tech stocks and other growth-oriented shares.

“The latest moves seem tied to resurgent concerns around inflation. Market-based inflation measures have shot higher as well, perhaps as investors brace for Biden’s multi-trillion infrastructure announcement tomorrow,” said Marios Hadjikyriacos, investment analyst at XM, in a note. President Joe Biden is slated to unveil details of his infrastructure plan in a speech in Pittsburgh on Wednesday.

“Coming on top of the latest avalanche of federal spending, such an enormous investment package could turbocharge economic growth and by extension inflationary pressures,” he said.

Growth stocks are more sensitive to rising rates and inflation worries because their valuations are based on expectations for futures earnings growth. Inflation can erode those future flows.

Biden’s infrastructure plan, meanwhile, is expected to cost as much as $3 trillion to $4 trillion, offset by tax hikes of up to $3 trillion.

Read: Here’s what tax hikes could mean for the stock market as Biden pushes infrastructure plan

Meanwhile, investors were on the lookout for any further fallout from a margin call on Archegos Capital Managment that forced an estimated $30 billion in stock sales, triggering plunges in shares of widely held media companies whose stocks were liquidated. Big bank shares were also dented due to worries about their exposure to Archegos.

Read: Here are the complex bets at the heart of ‘unprecedented’ Archegos-linked $30 billion margin call

The economic calendar features the Case-Shiller home-price index for January at 9 a.m. Eastern. A March consumer-confidence index is due at 10 a.m.

Randal Quarles, Fed vice chair for supervision, is scheduled to deliver remarks at 9 a.m., while New York Fed President John Williams is slated to speak at 2: 30 p.m.

Which companies are in focus?
  • Shares of ViacomCBS Inc.
    VIAC,
    -6.68%

    were up more than 1% in premarket trade after falling nearly 7% Monday and suffering steep losses last week in moves tied to the Archegos liquidation.

  • Shares of Goldman Sachs Group Inc.
    GS,
    -0.51%

    and Morgan Stanley
    MS,
    -2.63%

    were up slightly in premarket action. The banks moved large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to The Wall Street Journal, helping to limit their losses amid the stock liquidation.

  • PayPal Holdings Inc.
    PYPL,
    -2.22%

    shares edged higher after the payments company said it would start letting U.S. customers purchase items with cryptocurrencies.



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