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U.S. stock index futures turned higher on Wednesday, hinting at a rebound for Wall Street after a bruising session fueled by a relentless rise in Treasury yields. Banks will be again in the spotlight, with Morgan Stanley and Bank of America earnings reports ahead.
How are stock-index futures trading?
-
S&P 500 index futures
ES00,
+0.26%
rose 0.1% to 4,579 -
Dow Jones Industrial Average futures
YM00,
+0.18%
flat at 35,274 -
Nasdaq-100 futures
NQ00,
+0.42%
climbed 0.2% to 15,242
On Tuesday, the Dow industrials
DJIA,
dropped 543.34 points, or 1.5%, to close at 35,368.47, the S&P 500
SPX,
declined 1.8% to 4,577.11, while the Nasdaq Composite
COMP,
tumbled 386.86 points, or 2.6%, to finish at 14,506.90, below its 200-day moving average.
What’s driving markets?
Surging Treasury yields have been weighing on stocks, particularly yield-sensitive technology and other growth stocks. The yield on the 10-year Treasury note
TMUBMUSD10Y,
on Wednesday was up another 2 basis points to 1.887%, a level not seen since roughly January 2020.
The yield on the 2-year Treasury note
TMUBMUSD02Y,
more sensitive to Federal Reserve policy expectations, rose another 2 basis points to 1.055%, the highest levels since February 2020. The selloff in bonds helped push the German 10-year bund yield
TMBMKDE-10Y,
into positive territory for the first time in three years.
“The market keeps focused on the tightening agenda of the Fed, and it is now pricing four interest rate increases for this year,” said Althea Spinozzi, senior fixed income strategist at Saxo Bank, in a note to clients.
She added that the focus Wednesday will be on a 20-year US Treasury auction, “a tenor not loved by investors. Weak demand could cause rates to go further up in the long part of the yield curve.”
The Fed is scheduled to meet next Tuesday and Wednesday, though many think January will be too soon to pencil in the first interest-rate hike. But “there’s a very good chance that policy makers will indicate a hike is on the way when the QE program draws to a close in two months time,” said Matthew Ryan, senior market analyst at Ebury, in a note.
U.S. data ahead includes building permits and housing starts for December, due at 8:30 a.m. Eastern Time.
Investors will get earnings updates from Morgan Stanley
MS,
Bank of America
BAC,
UnitedHealth
UNH,
and Procter & Gamble
PG,
ahead of the market’s open. Disappointing results from Goldman Sachs
GS,
on Tuesday also weighed on investor sentiment on Wednesday.
Crude oil prices
CL00,
BRN00,
were once again climbing, after reaching levels not seen since 2014 on Tuesday. Oil extended gains late in that session amid reports that an explosion disrupted flow through the Kirkuk-Ceyhan pipeline between Iraq and Turkey.
On Wednesday, the International Energy Agency predicted global oil demand will exceed pre-pandemic levels this year due to increased vaccination against COVID-19 and milder recent waves of the virus.
West Texas Intermediate crude for February delivery
CLG22,
was last up 1.5% to $86.77 a barrel.
Read: RBC analyst says was wrong on Exxon as oil giant upgraded to sector perform
Which companies are in focus?
-
ASML Holding shares
ASML,
-3.94%
rose more than 2% in premarket trading after the Dutch semiconductor-equipment maker reported better-than-forecast fourth-quarter earnings, predicted a 20% rise in sales this year and doubled its dividend to €5.50. -
SoFi Technologies Inc. shares
SOFI,
-8.64%
climbed 19% after the financial-technology group said that it won regulatory approval to become a bank holding company. -
Shares of Zogenix Inc.
ZGNX,
-1.82%
surged 60% in premarket trading after the biopharmaceutical company agreed to a deal to be acquired by Belgian peer UCB in a deal worth up to $1.9 billion.
