Nasdaq Futures Down 165 Pts; Rising Bond Yields Weigh

This post was originally published on this site – U.S. stocks are seen opening lower Monday, with the high-profile tech sector in focus amid concerns over rising bond yields and inflationary pressures.  

At 7:05 AM ET (1205 GMT), the Dow Futures contract was down 170 points, or 0.4%, S&P 500 Futures traded 27 points, or 0.7%, lower, and Nasdaq 100 Futures dropped 165 points, or 1.2%. 

The House of Representatives plans to vote as soon as Friday on President Joe Biden’s $1.9 trillion stimulus package, meaning the Senate could vote on it as soon as next week.

The potential for this bill has been boosting Wall Street for a number of weeks, but investors are starting to grow concerned that this additional liquidity, coupled with a very easy policy stance from the Federal Reserve, will result in a rapid rise in inflation.

This has been reflected in the benchmark 10-year Treasury yield rising 16 basis points last week to 1.36%, its highest level in a year. These rising yields could hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks. 

The S&P 500 and the Nasdaq Composite closed with losses of 0.7% and 1.6%, respectively, last week, ending a two-week winning streak. The Dow Jones Industrial Average gained just 0.1% over the same period.

This all puts the focus onto Federal Reserve Chairman Jerome Powell ahead of his two-day testimony to Congress, starting Tuesday, on the economic outlook and the central bank’s monetary policy stance.

“His challenge will be to express confidence in the recovery, but not too much confidence such that the bond market slide turns into a collapse,” said analysts at ING, in a research note.

The corporate earnings season is nearing the end, but this week sees a number of retailers reporting results, including Macy’s (NYSE:M), Home Depot (NYSE:HD) and TJX (NYSE:TJX). As far as Monday is concerned, Berkshire Hathaway (NYSE:BRKa) and DISH (NASDAQ:DISH) are among the highlights.

Oil prices climbed Monday as U.S. production returned only slowly from last week’s severe cold snap, further tightening a global market where inventories have fallen sharply in recent weeks.

It will likely take several more days for oilfield crews to get production fully up again after the cold snap in Texas, the largest crude producing U.S. state, and the surrounding region forced the shut down of an estimated 4 million barrels per day.

U.S. crude futures traded 0.9% higher at $59.78 a barrel, while the international benchmark Brent contract rose 0.9% to $62.87.

Elsewhere, gold futures rose 1% to $1,795.85/oz, while EUR/USD traded 0.1% higher at 1.2134.

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