Stock futures were flat in Thursday night trading after a technology-led defeat on Wall Street amid an increase in bond yields.
Futures in the Dow Jones Industrial Average were up just 30 points, while futures for the S&P 500 changed little. Nasdaq 100 futures were down 0.2%.
All eyes will be on the February job report, which will be released on Friday morning. Economists expect to see that 210,000 payrolls were added in February, compared to just 49,000 in January, according to Dow Jones.
The movement in the futures followed a strong sale triggered by comments by Federal Reserve Chairman Jerome Powell about increasing bond yields. He said the recent run caught his eye, but gave no indication of how the central bank would control it. Some investors expected the Fed chairman to signal his willingness to adjust the Fed’s asset purchase program.
The economic reopening may “create some upward pressure on prices,” Powell said in a Wall Street Journal webinar on Thursday. Even if the economy sees “transitory increases in inflation … I hope we are patient,” he added.
“The market translation of ‘patient’ is that patient does not mean ‘never’ and that Powell is indicating that easy money will come to an end at a certain point,” said Mike Loewengart, managing director of investment strategy at E-Commerce financial. “So while the verbiage is not too far from the Fed’s previous stance, it is enough to move a bustling market south.”
The 10-year Treasury yield jumped above 1.5% after Powell’s comments. The basic interest rate stabilized earlier this week, after a 1.6% increase last week, amid higher inflation expectations.
Technology stocks led the market’s decline, as growth-oriented companies tend to be more vulnerable to higher interest rates. The Nasdaq Composite fell 2.1% on Thursday, bringing its losses this week to 3.6%. The high-tech benchmark was also negative for the year and fell in correction territory, or 10% below a recent high, on an intraday basis.
The S&P 500 and Dow fell more than 1% on Thursday, heading for a week of defeats. Energy performance outperformed with a 2.5% gain in the previous session, amid a jump in oil prices.
“Rates have skyrocketed again, which has opened the door to more technology stock sales,” said Ryan Detrick, chief market strategist at LPL Financial. “The bright side is that the economy continues to improve and the leadership of the financial and energy sector is something that suggests that this is not a time to sell everything.”