October 4, 2018 / 11:55 AM / 2 months ago

US STOCKS-Futures point to a lower open as Treasury yields surge

* Futures down: Dow 0.33 pct, S&P 0.38 pct, Nasdaq 0.52 pct

By Medha Singh

Oct 4 (Reuters) - U.S. stock futures pointed to a lower open for Wall Street on Thursday after robust economic data and optimistic views from the Federal Reserve pushed government bond yields to multi-year highs, while curbing the appetite for stocks globally.

The 10-year U.S. Treasury yield posted its biggest daily jump since the 2016 U.S. presidential election on Wednesday after activity in the service sector hit a 21-year high and ADP private payrolls data for September came in stronger than expected.

Comments from Fed Chairman Jerome Powell who said the U.S. economy can expand for “quite some time” also helped the yield rise further.

The upbeat views raised expectations for a faster pace of monetary tightening, with odds for a fourth interest rate hike in December firming further.

Rising bonds yields make stocks less attractive, especially those of high-dividend paying companies such as real estate and utilities.

“With valuations still elevated compared to historic levels, it requires an upbeat earnings season for stocks to maintain their bullish momentum,” said Hussein Sayed, chief market strategist at FXTM. “Risks are growing with borrowing cost on the rise and fixed-income markets looking very attractive.”

The S&P 500 was less than a point shy of hitting a record on Wednesday, before rising yields led to a pullback.

Investors will keep a close eye on the U.S. jobs data on Friday for further clues on the path of interest rate hikes.

At 7:29 a.m. ET, Dow e-minis were down 90 points, or 0.33 percent. S&P 500 e-minis were down 11 points, or 0.38 percent and Nasdaq 100 e-minis were down 39.75 points, or 0.52 percent.

Data due at 10:00 a.m. ET include the Commerce Department’s report for factory goods orders, which is expected to rise 2.1 percent in August after a 0.8 percent fall in July.

Among stocks, Citigroup, JPMorgan and Bank of America rose between 0.3 percent and 0.6 percent in premarket trading.

Eli Lilly gained 3.2 percent after the company’s experimental diabetes drug showed promise in a mid-stage trial.

Snap fell 3.2 percent after two brokerages raised concerns over the Snapchat-owner’s declining user trends. (Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below