Friday March 19th


Stock futures rebound after Thursday’s sell-off as yields pull back

U.S. stock index futures pointed to a slight rebound on Friday as yields reversed some of the gains which caused a sell-off for tech stocks in the prior session. Futures contracts for the Dow Jones Industrial Average implied an opening gain of about 41 points. Futures for the S&P 500 rose 0.2%. Futures for the tech-heavy Nasdaq 100 bounced 0.5%. The moves come after the stock market struggled on Thursday, with tech stocks being particularly hard hit. The Nasdaq Composite fell 3%, with Apple and Amazon seeing slightly larger losses. The Dow and S&P 500 slipped 0.5% and 1.5%, respectively. The 10-year Treasury yield fell 3 basis points to 1.69%, retreating from a 14-month high a day earlier (1 basis point equals 0.01%). Shares of Zoom Video and Peloton, speculative tech shares that have been hit by valuation fears, rebounded by more than 1% in early premarket trading. The weakness in stocks Thursday was caused by a spike in bond yields, with the benchmark 10-year Treasury yield breaking above 1.7%, its highest level since January of last year. Yields move inverse of prices. Rising bond yields, which can signal confidence about the economic recovery and fears about inflation, can also make high growth stocks look less attractive to investors. The underperformance of tech and other growth stocks on Thursday resembles a trend seen in recent months as value stocks have surged. However, growth stocks have had a few strong days over the past two weeks and this is muddying the waters, said Michael Mullaney, director of global markets research at Boston Partners. “If you look at the price pattern on a day-to-day basis for the last now seven days, we’ve got a ping-pong match going on. One day it’s been growth, one day it’s been value,” said Mullaney. “I’m not sure if that’s indicating we’re at some kind of inflection point where growth might get a bounce here.” Energy stocks were also hit hard on Thursday, with the price of West Texas Intermediate crude sliding by more than 7%. The slow rollout of vaccines and rise in Covid cases in Europe have weighed on the near-term demand outlook for oil. Shares of FedEx jumped 3% in premarket trading after the delivery company beat expectations on the top and bottom lines for its fiscal third quarter. Nike’s stock slipped by 2% in early trading after third-quarter revenues were weaker than anticipated. For the week, the Dow is up about 0.3%, while the S&P 500 is off by 0.7% and the Nasdaq Composite is down 1.5%. Asia-Pacific markets mostly fell Friday as investor sentiment turned cautious, following an overnight selloff stateside. The Nikkei 225 in Japan declined 1.41% to 29,792.05 while the Topix index reversed losses to close up 0.18% to 2,012.21. South Korea’s Kospi fell 0.86% to 3,039.53 while the Kosdaq turned around losses to gain 0.24% to 952.11. In Hong Kong, the Hang Seng index fell 1.76% in late-afternoon trade while Taiwan’s Taiex was declined 1.34% to 16,070.24. Chinese mainland shares also declined: The Shanghai composite closed down 1.69% at 3,404.66 and the Shenzhen component lost 2.56% to 13,606. Oil prices edged up on Friday, but were still down more than 8% for the week as a new wave of COVID-19 infections across Europe spurred fresh lockdowns and dampened hopes that an anticipated recovery in fuel demand would come soon. Prices plunged 7% on Thursday, falling for a fifth day in a row amid concerns about slowing vaccination programs in Europe, even if infections have plummeted in the United States, the worst-hit country and biggest crude consumer. U.S. crude was up 44 cents, or 0.73%, at $60.36 a barrel. Brent crude was up 25 cents, or 0.4%, at $63.53 a barrel. Gold prices fell on Friday, pressured by a surge in U.S. Treasury yields and a rebound in the dollar, but the metal’s jump to a two-week high in the previous session set it on track to record a small weekly gain. Spot gold fell 0.5% to $1,728.63 per ounce by 0121 GMT, after hitting its highest since March 1 in the previous session. U.S. gold futures were down 0.3% at $1,728.00 per ounce.