By Ankika Biswas and Shashwat Chauhan (Reuters) -Wall Street’s key indexes were set to open lower on Tuesday as prospects of an extended restrictive monetary policy pushed Treasury yields to multi-year highs, while investors awaited crucial employment data to gauge the U.S. interest rate outlook. Yields on 10-year and 30-year U.S. government bonds hit their […]
Wall St set for weak open as Treasury yields surge; jobs data in focus
By Ankika Biswas and Shashwat Chauhan
(Reuters) -Wall Street’s key indexes were set to open lower on Tuesday as prospects of an extended restrictive monetary policy pushed Treasury yields to multi-year highs, while investors awaited crucial employment data to gauge the U.S. interest rate outlook.
Yields on 10-year and 30-year U.S. government bonds hit their highest since 2007, pushing megacaps Apple, Tesla, Alphabet and Microsoft lower between 0.7% and 1% in premarket trading.
After a stellar first half this year driven by the Artificial Intelligence (AI) hype, some investors believe megacap stocks could lose momentum as yields continue to rise.
“We’re in the middle of a historic move in the 10-year treasury (yield) … the curve had been historically inverted and in many ways we’re just playing catch up,” said David Russell, global head of market strategy at TradeStation.
Investors will closely monitor the Job Openings and Labor Turnover Survey (JOLTS), due at 10 a.m. ET, while a slew of other data including the ADP National Employment numbers and the more comprehensive non-farms payrolls will also be on their radar later this week.
The S&P 500 ended flat on Monday with utilities, often considered as a bond proxy, falling sharply on uncertainty over the interest rate trajectory, as the 10-year Treasury yield surged following a funding deal that averted a government shutdown.
Fed officials reiterated the need to keep interest rates restrictive for “some time” with indications of another likely hike this year.
Traders’ bets for at least a 25-basis-point rate hike in November stood at close to 26%, while they have priced in a 45% chance for such a move in December, according to the CME Group’s FedWatch Tool.
At 8:36 a.m. ET, Dow e-minis were down 148 points, or 0.44%, S&P 500 e-minis were down 24.5 points, or 0.57%, and Nasdaq 100 e-minis were down 104.75 points, or 0.7%.
Oil prices extended their decline in early trading after falling to a three-week low on Monday due to strength in the dollar, rising bond yields and mixed supply signals.
Among individual stocks, Airbnb fell 2.8% after Keybanc downgraded the vacation lodging platform’s stock to “sector weight”.
HP gained 2.4% after BofA Global Research upgraded the PC maker to “buy” from “underperform” and raised its price target.
Point Biopharma Global surged 84.4% as Eli Lilly and Co was set to buy the cancer therapy developer for $1.4 billion. The latter was down 0.4%.
McCormick dropped 5.1% after the spice maker missed third-quarter sales estimates.
(Reporting by Ankika Biswas and Shashwat Chauhan in BengaluruEditing by Vinay Dwivedi)