Stock-index futures were mixed Thursday, with the Nasdaq-100 contract under pressure as a jump in Treasury yields following the previous day’s Federal Reserve policy meeting seen fueling another round of rotation into more cyclically sensitive sectors.
What are major indexes doing?
- Futures on the Dow Jones Industrial Average YM00, +0.07% were up 18 points, or less than 0.1%, at 32,922.
- S&P 500 futures ES00, -0.47% fell 18.85 points, or 0.5%, to 3,944.75.
- Nasdaq-100 futures NQ00, -1.25% dropped 165.75 points, or 1.3%, to 13,023.25.
Stocks rallied Wednesday after the Federal Reserve vowed it would maintain easy monetary conditions. The Dow DJIA, +0.58% closed above the 33,000 milestone for the first time, while the S&P 500 SPX, +0.29% also closed at a record and the Nasdaq Composite COMP, +0.40% reversed a decline to end solidly higher.
What’s driving the market?
The Federal Reserve on Wednesday boosted its outlook for robust economic growth, while Chairman Jerome Powell reiterated that policy makers want to see inflation push above its 2% target, accompanied by significant improvement in the labor market, before it will begin raising interest rates or pulling back on its program of asset purchases.
“You have a rapid economic recovery coming out from an induced coma, a Federal Reserve unwilling to pull back from emergency measures and a large amounts of U.S. fiscal stimulus finding their way into equities by retail investors,” said Hussein Sayed, chief market strategist at FXTM, in a note. “However, this isn’t a ‘buy everything’ situation.”
Powell didn’t push back against a rise in long-term debt yields, which has seen the yield on the 10-year Treasury note TMUBMUSD10Y, 1.749% rise significantly over the past six weeks on expectations an economic recovery boosted by trillions of dollars in fiscal spending by the U.S. government will fuel inflation. The 10-year yield jumped nearly 9 pasis points Thursday morning to trade above 1.72%.
“The higher bond yields move from here, the more challenging it becomes for growth stocks to resume their upward trajectory,” Sayed said. “Highly priced tech stocks trading at elevated multiples compared to historic averages will likely remain under pressure in the short to medium term, so it makes sense to reduce their weight in portfolios.”
Weekly data on applications for unemployment benefits will be released at 8:30 a.m. Eastern. Economists expect first-time claims to fall to 700,000 in the week ended March 13 from 712,000 the previous week. At the same time, the Philadelphia Fed’s March manufacturing survey is expected to come in at 22.0, down from a 23.1 reading in February.
The February Index of Leading Economic Indicators is due at 10 a.m.
Which companies are in focus?
- Shares of Dollar General Corp. DG, -3.12% fell more than 5% in premarket trade after reporting earnings that fell short of expectations.
- Accenture PLC ACN, +0.28% shares rose 1.8% after the company topped earnings and revenue forecasts and raised its outlook, while also increasing what it will return to shareholders and announcing a bonus for employees.