|
The 10-year U.S. Treasury yield <US10YT=RR> recorded its biggest
daily jump since the 2016 U.S. presidential election on
Wednesday after activity in the service sector hit a 21-year
high and ADP private payrolls data for September came in
stronger than expected. [US/]
Comments from Fed Chairman Jerome Powell who said the U.S.
economy can expand for "quite some time" also helped the yield
rise further.
The upbeat views raised expectations for a faster pace of
monetary tightening, with odds for a fourth interest rate hike
in December getting a boost.
Rising bonds yields make stocks less attractive, especially
those of high dividend-paying companies such as real estate and
utilities.
"With valuations still elevated compared to historic levels, it
requires an upbeat earnings season for stocks to maintain their
bullish momentum," said Hussein Sayed, chief market strategist
at FXTM. "Risks are growing with borrowing cost on the rise and
fixed-income markets looking very attractive."
The S&P 500 <.SPX> was less than a point shy of hitting a record
on Wednesday, before rising yields led to a pullback.
Investors will keep a close eye on the U.S. jobs data on Friday
for further clues on the path of interest rate hikes.
"Yields are giving the markets a chance to take a breather at
very high levels. I think we will have a defensive, bumpy
session going into Friday's unemployment data," said Peter
Cardillo, chief market economist at Spartan Capital Securities
in New York.
At 8:37 a.m. ET, Dow e-minis <1YMc1> were down 113 points, or
0.42 percent. S&P 500 e-minis <ESc1> were down 12.5 points, or
0.43 percent and Nasdaq 100 e-minis <NQc1> were down 46 points,
or 0.6 percent.
Out of the 27 stocks trading premarket on the Dow <.DJI>, 24
were lower.
However, Banks stocks, whose profits typically get a boost from
higher interest rates, eked out gains with Citigroup <.C.N>,
JPMorgan <JPM.N> and Bank of America <.BAC.N> rising between 0.4
percent and 0.5 percent.
Constellation Brands <STZ.N> shares jumped 3.6 percent after the
Corona beer maker raised its full-year profit forecast and
topped Wall Street's estimates for second-quarter sales and
profit.
Eli Lilly <LLY.N> rose 3.3 percent after the company's
experimental diabetes drug showed promise in a mid-stage trial.
Snap Inc <SNAP.N> fell 4.5 percent after two brokerages raised
concerns over Snapchat's declining user trends.
Data due at 10:00 a.m. ET include the Commerce Department's
report for factory goods orders, which is expected to rise 2.1
percent in August after a 0.8 percent fall in July.
(Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
 |
|
