In the early hours of Thursday, U.S. stock index futures increased slightly after previously dropping to a low point of six weeks due to the increase in bond yields.
How are stock-index futures trading
- The S&P 500 futures, with a 0.20% increase, went up by 6 points or 0.1%, reaching a total of 4426.
- The futures for the Dow Jones Industrial Average, ticker symbol YM00, rose by 50 points or 0.1%, reaching a total of 34871.
- The Nasdaq 100 futures, with a gain of 29 points or 0.2%, reached a level of 14971.
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all experienced losses on Wednesday. The DJIA fell by 181 points, the S&P 500 declined by 34 points, and the Nasdaq Composite dropped by 156 points.
What factors are influencing market movements?
The stock market has been influenced by the rise in bond yields, causing uncertainty in equity futures. Following the release of the Federal Reserve’s meeting minutes, which indicated a potential increase in borrowing costs to control inflation, government bond yields reached their highest point in 15 years, leading to the S&P 500 index closing at a six-week low. This has caused investors to reconsider the timing of inflation concerns and whether higher interest rates will persist for longer than expected. Technology stocks, namely the Nasdaq and S&P 500, have been particularly affected by the selling wave due to their sensitivity to higher interest rates. However, the overall performance of the market remains positive, with the Nasdaq up 29%, S&P 500 up 15%, and Dow Jones Industrial Average up 5% for the year.
Shares of Cisco Systems, a network equipment maker, are expected to boost the technology sector on Thursday with a premarket increase of over 2%. This comes after the company announced impressive quarterly results that were released after the market closed on Wednesday.
On Thursday, there will be several economic updates in the United States. These include the release of the weekly report on initial jobless benefit claims and the August Philadelphia Fed manufacturing survey, both scheduled for 8:30 a.m. Eastern time. Additionally, the leading economic indicators report will be released at 10 a.m.
Mark Newton, the head of technical strategy at Fundstrat, suggests that it is important to closely monitor Treasury yields, similar to the way a “Hawk-eye” closely observes its prey. He states that the recent increase above 4.00% in both TNX and TYX happened at the same time when stock prices began to decline rapidly.
The TNX XX:TNX and TYX XX:TYX represent the CBOE indices for 10-year and 30-year Treasury bond yields.
Newton said that the support target of SPX 4350-4400, which was discussed in late July, will be tested earlier than expected. He still believes that this is just a temporary decline and that a rally will continue afterwards. However, this rally might be postponed until after the Jackson Hole summit.
The Jackson Hole Economic Symposium, where Federal Reserve Chair Jay Powell is anticipated to deliver a speech, is scheduled to take place from August 24th to 26th.
Companies in focus
- Walmart Inc.’s stock, with the ticker symbol WMT, increased by 2% before the market opened on Thursday, following the release of second-quarter earnings that surpassed expectations.
- Shares of Cisco Systems Inc. initially dropped in after-hours trading on Wednesday, but later rose by 4% following the release of their fiscal fourth-quarter results. The company’s cautious full-year 2024 guidance unsettled a portion of investors.
- Hawaiian Electric Industries Inc. experienced a 13% decrease in its stock value following a report by the Wall Street Journal. The report disclosed that the company has been discussing with consultants specializing in restructuring about the necessary actions to take following the devastating wildfires in Maui.
