Stock futures turn lower as 10-year yield hits 14-month high
The Fed is very likely to ‘remain friendly’: Portfolio manager
UBS Managing Director and senior portfolio manager Jason Katz discusses the impact of the Fed announcement today and what will be driving the markets.
U.S. stock futures were lower Thursday as investors digested the Federal Reserve’s latest policy decision and bond yields hit their highest level in 14 months.
Dow Jones Industrial Average futures fell 29 points, or 0.09%, while S&P 500 futures and Nasdaq futures were lower by 0.69% and 1.64%, respectively.
The Dow closed at a record high Wednesday after the Federal Reserve held its benchmark interest rate near zero and reiterated its pledge to use all of the tools at its disposal, if necessary. The central bank lifted its growth and inflation forecasts for the current year.
The Fed’s comments caused further selling of U.S. Treasurys on Thursday with the 10-year yield rallying 11 basis points to 1.75%, its highest level since January 2020.
In stocks, the sharp rise in bond yields weighed on technology shares with Tesla Inc., Apple Inc. and Microsoft Corp. all underperforming.
Dow components Goldman Sachs Group Inc. and JPMorgan Chase & Co. outperformed as the selloff in the U.S. Treasury market caused the yield curve to steepen.
In deal news, II-VI Inc. raised its takeover bid for Coherent Inc. to $7 billion, trumping an offer made a day prior by Lumentum Holdings. The new offer would pay Coherent shareholders $220 in cash and 0.91 II-VI shares for each share they own.
Elsewhere, Nikola Motor Corp. said South Korean partner Hanwha Corp. has decided to halve its 5.65% stake in the electric truck maker. The two companies will maintain their strategic partnership.
In earnings, Dollar General Corp. warned same-store sales would be flat to lower from a year ago due to difficult comparisons. Quarterly results were mixed with earnings missing Wall Street estimates and revenue outpacing forecasts.
In commodities, West Texas Intermediate crude oil rose 3 cents to $64.63 a barrel and gold added $7 to $1,734.10 an ounce.
Overseas markets were broadly higher.
Germany’s DAX 30 paced the advance in Europe, trading up 1.17%, while France’s CAC 40 and Britain’s FTSE 100 gained 0.26% and 0.15%, respectively.
In Asia, China’s Shanghai Composite index ticked up 0.51%, Japan’s Nikkei rallied 1.01% and Hong Kong’s Hang Seng index climbed 1.28%.
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