U.S. stock futures fell on Thursday, despite a flood of data showing that the economy continues to recover slowly.
Futures linked to the S&P 500 fell 0.3%. Nasdaq-100 futures fell by almost 0.8%, suggesting sharp declines in technology stocks after the opening bell.
Contracts linked to the Dow Jones Industrial Average fluctuated between gains and losses, suggesting that the blue-chip index could be silenced after closing Wednesday at an all-time high.
New data on Thursday showed that weekly unemployment claims fell to 730,000 in the week ending February 20, down from the previous week and less than economists expected. The US economy grew in the fourth quarter at an annualized rate of 4.1%. New durable goods increased 3.4% in January for the ninth consecutive month, with manufacturing continuing to recover.
Investors’ appetite for risky assets recovered on Wednesday with comments from Federal Reserve Chairman Jerome Powell that the central bank will keep interest rates low for a while.
Still, the recent sharp rise in bond yields – which closed on Wednesday at their highest level in a year – has made some money managers more cautious. These investors are evaluating the transfer of funds for less risky assets, such as bonds, and for stocks with lower valuations than technology companies.
“The market is agitated. The increase in bond yields is putting stocks, especially growth stocks, under pressure, ”said Sebastien Galy, macro strategist at Nordea Asset Management. “There is a certain risk reduction in general,” he added.
Optimism about the economic recovery is driving investors to direct their funds towards stocks that are likely to benefit from a recovery this year. This is weighing on technology stocks, which boosted much of last year’s rally.
“The increase in bond yields triggers this rotation, moving away from growth stocks and favoring value stocks,” said Sophie Chardon, cross-asset strategist at Lombard Odier. “The rise in earnings is favorable for banks, higher oil prices are favorable for energy. It is a change of leadership. ”
The yield on the 10-year reference Treasury note rose to 1.460%, from 1.388% on Wednesday. Yield on government bonds has increased as investors cut their positions on the safest assets.
Investors are also watching closely for signs of rising inflation after large doses of monetary and fiscal stimulus. At the same time, markets have also been cautious, as recent economic data has shown that the recovery is likely to be slow and tentative.
The earnings season is ending: Airbnb,
Beyond meat,
DoorDash and Salesforce.com are due to release their results on Thursday.
Shares popular among Reddit users on the WallStreetBets forum skyrocketed in the last hour of trading on Wednesday, in a volatility reminiscent of the activity seen last month. In the pre-trading market, GameStop rose 55% and AMC Entertainment rose 11%.
The moves show that “there is still liquidity and a lot of access to speculative bets,” said Chardon. “We have to be prepared to live with this type of targeted bubble, but I would not see it as a threat to the global stock market.”
Faced with the opening of the market, Moderna gained more than 3% after announcing a plan to increase its capacity to manufacture Covid-19 vaccines. Best Buy fell 5.4% after announcing that it anticipates a slowdown in sales growth in 2021.
Oil prices continued to rise, with Brent oil rising for the fourth day. The international indicator for oil added 0.5% to $ 66.51 a barrel, close to its highest level since January 2020.
Abroad, the Pan-Continental Stoxx Europe 600 fell 0.1%.
Among individual stocks, beer maker Anheuser-Busch InBev fell nearly 5% after fourth-quarter earnings were below estimates. British packaging company DS Smith jumped more than 6% with reports that rival Mondi is exploring an acquisition.
Traders worked on the New York Stock Exchange on Wednesday.
Photograph:
Nicole Pereira / Associated Press
Investors have also been selling European government bonds in recent weeks, looking for higher returns. Yield on French 10-year bonds, which moves inversely in price, rose above zero for the first time since June and reached 0.024%.
In Asia, most of the main benchmarks ended the day. The Shanghai Composite Index rose 0.6% and the Hong Kong Hang Seng Index rose 1.2%. South Korea’s Kospi Index rose 3.5% after its central bank kept interest rates at historic lows.
Write to Anna Hirtenstein at [email protected]
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