Author: Don Obrien

U.S. stock futures turn mostly lower as Treasury yields extend rise

U.S. stock futures gave up early gains Monday, with tech-related shares under pressure, as Treasury yields extended a rise to the highest levels in months.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average

    largely erased a triple-digit gain, trading up 33 points, or 0.1%, at 34,707.

  • Futures on the S&P 500

    fell 0.3% to 4,433.25.

  • Futures on the Nasdaq-100

    dropped 0.8% to 15,189.

On Friday, the Dow Jones Industrial Average

rose 33 points, or 0.1%, to 34798, the S&P 500

increased 7 points, or 0.15%, to 4455, while the Nasdaq Composite

dropped 5 points, or 0.03%, to 15048.

What’s driving markets?

A continued selloff for Treasurys boosted yields, with the rate on the 10-year rate pushing back above 1.5% for the first time since June 29, according to FactSet. Rising yields can be a headwind for tech-related stocks and other equities more sensitive to interest rates.

The global energy crisis was also in focus on Monday. Power shortages led to forced factory production cuts in China, while in the U.K., a shortage of truck drivers led to hoarding and declining inventories at gas stations.

Analysts at Goldman Sachs hiked their oil-price forecast to $90 a barrel, citing the impact of what it said was the most bullish hurricane in U.S. history on supply.

These energy disruptions highlight what’s been a growing issue for the global economy, namely that supply has not recovered as fast as demand in a variety of markets. Costco Wholesale

last week said it imposed limits on purchases of toilet paper and water.

Orders for durable goods surged 1.8% in August largely thanks to more demand for Boeing jetliners, but ongoing supply shortages held back auto makers and remained a drag on the U.S. economic recovery. Economists surveyed by The Wall Street Journal had forecast a 0.6% rise.

Investors continued to cast a wary eye on the impact of China Evergrande’s

debt troubles on the world’s number-two economy, while elections in Germany, the number-one European economy, have so far failed to produce a decisive results in what’s expected to be months of coalition talks.

There are a number of Federal Reserve officials due to speak this week. Chicago Fed President Charles Evans, in a speech Monday morning, said he was more worried that the economy wouldn’t produce enough inflation rather than run too hot. New York Fed President John Williams and Fed Gov. Lael Brainard were also due to speak Monday.

“The lack of a clear winner in Germany’s election combined with a new batch of speeches from most central bankers may slow the rally down,” said Pierre Veyret, technical analyst at ActivTrades, in a note. “In addition, investors’ eyes are cautiously monitoring the situation in China where both the energy and liquidity crises are worsening, increasing worries of a knock-on impact on other economies.”

Which companies are in focus?
  • Swedish electric car maker Polestar Performance AB said Monday it would go public via a merger with special purpose acquisition company Gores Guggenheim Inc.

     in a deal with an implied enterprise value of about $20 billion. Shares of Gores Guggenheim rose 2% in premarket trade.

  • In a Monday blog post, Facebook Inc.

    that it was putting a “pause” on efforts to create a version of Instagram for kids under 13. 

How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y rose to around 1.50% Monday.

  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of rivals, was little changed.

  • Oil futures climbed, with the U.S. benchmark CL00 traded 1.9% higher at $75.26 a barrel. Gold futures GC00 added 0.1% to around $1,753.60 an ounce.

  • In Asia, Hong Kong’s Hang Seng Index HSI rose 0.1%, while China’s CSI 300 index 000300 climbed 0.6%. The Nikkei 225 index NIK closed marginally lower.

  • In Europe, the Stoxx Europe 600 SXXP, -0.20% closed down 0.9% but notched a 0.3% weekly gain, while the FTSE 100 index UKX was trading closed 0.1% lower.

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Oliver Bolt

Oliver Bolt

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