Stock futures fell on Thursday, putting the major averages on track to give up some of the sharp gains seen in the previous session, as bond yields resumed their upward trajectory.
Futures linked to the Dow Jones Industrial Average were down 324 points, or 1.09%. S&P 500 and Nasdaq 100 futures are down 1.32% and 1.63%, respectively.
The stronger-than-expected jobless claims report didn’t help stock futures Thursday morning, and instead futures extended losses on the numbers on the idea that the Federal Reserve will continue to raise interest rates to fight inflation without worrying that it will hurt the labor market.
The 10-year US Treasury yield rebounded after dropping the most since 2020 the previous day, although it rose briefly by 4%. The yield rose last time to 3.79%.
The moves came on the heels of a broad rally in stocks the previous day, such as Bank England said it would buy bonds in an effort to help stabilize its financial markets and the British pound. The pound sterling fell to Record lows against the US dollar in the last days.
It was a stark departure from the violent tightening campaign many global central banks have taken to deal with rising inflation.
On Wednesday, the Dow Jones rose 1.9%, while the S&P 500 rose nearly 2% after the hit. New bear market decline Tuesday. Both indices cut six-day loss streaks.
“We are skeptical that the calmer mood in the markets on Wednesday marks the end of a recent period of elevated volatility or risk-off sentiment. For a more sustainable rally, investors will need to see convincing evidence that inflation is under control, allowing for a more sustainable rally,” Mark Heffel wrote of UBS said in a note on Thursday that “banks become less hawkish”.
Wednesday’s rally put the major averages on course for small gains for the week, but they are still on track to end their worst month since June. The Nasdaq Composite is leading the monthly losses, down about 6.5%, while the Dow and S&P are closing down 5.8% and 5.9%, respectively.
On a quarterly basis, the Nasdaq is on track to break a streak of consecutive quarterly losses, while the Dow is heading for a third consecutive quarterly loss for the first time since the third quarter of 2015. The S&P is on its way to its third negative. quarter in a row for the first time since its negative six-quarter streak that ended the first quarter of 2009.
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