A broker on the floor of the New York Stock Exchange.
Source: New York Stock Exchange
Stock futures remained stable in Sunday morning trading after the S&P 500 posted its first week of losses in three.
Futures in the Dow Jones Industrial Average were flat. The futures of the S&P 500 and Nasdaq 100 have also changed little.
The movement in the futures came after the S&P 500 and Nasdaq Composite broke a two-week winning streak, with losses of 0.7% and 1.6%, respectively, last week. The Dow blue-chip saw a 0.1% gain in the same period, supported by Caterpillar and JPMorgan.
Some equity investors have been concerned about the rapid rise in bond yields in recent weeks, as they could especially hurt high-growth companies that rely on easy loans, while diminishing the relative appeal of stocks.
The 10-year Treasury yield jumped 14 basis points last week to 1.34%, close to its highest level since February 2020. So far this month, the benchmark rate has gone up 25 basis points.
“This movement in yields should be something that investors keep an eye on,” said Matt Maley, chief market strategist at Miller Tabak, in a note. “Just because long-term rates are extremely low in historical terms, we don’t believe they will have to go up as far as most experts think they will go up … before they impact the stock market.”
Meanwhile, many on Wall Street believe that the jump in bond yields reflects a sign of growing confidence in the economic recovery and stocks should be able to absorb higher rates amid strong profits.
“We don’t see the recent rise in yields as a threat to the bull market,” said Keith Lerner, chief market strategist at Truist, in a note. “Given that we are in the early stages of an economic recovery, monetary and fiscal policy remains favorable, the strong recovery in profits and relative valuations favorable, we maintain our overweight in stocks.”
The market is moving towards the last week of February with solid gains. The Dow and S&P 500 were up more than 5% this month, while the Nasdaq rose 6.2%. The small cap Russell 2000 outperformed with a 9.3% gain this month.
Regarding the pandemic, the White House said it hoped to dispatch millions of late doses of the coronavirus vaccine this week after a winter storm that disrupted logistics. Governor Andrew Cuomo said on Sunday that a New York resident tested positive for the Covid-19 variant first identified in South Africa.
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