US stock futures point to a losing streak of seven after Treasury yield hit 4%

US stock futures on Wednesday showed Wall Street was at risk of a seven-day losing streak as concerns about rising bond yields continued to dampen investor risk appetite.

How are stock index futures traded?
  • S&P 500 Futures ES00,
    fell 25 points, or 0.6%, to 3636

  • Dow Jones Industrial Average Futures YM00,
    fell 134 points, or 0.5%, to 29069

  • Nasdaq 100 Futures NQ00,
    down 120 points, or 1.1%, to 11214

On Tuesday, the Dow Jones Industrial Average DJIA,
down 126 points or 0.43% to 29135, the S&P 500 SPX,
down 8 points or 0.21% to 3647 and the Nasdaq Composite COMP,
up 27 points, or 0.25%, to 10830. The Nasdaq Composite fell 32.6% from its record high in November last year.

What moves the markets

Stock futures fell after 10-year US Treasury bond yields TMUBMUSD10Y,
it broke through 4% for the first time since the 2008 crisis early Wednesday.

Bond markets have been leading stocks of late as investors fear that the Federal Reserve’s determination to fight inflation will further push up borrowing costs and hurt the economy and corporate profits.

“Our key market view has been that the push for tighter US financial conditions is unlikely to end until the economy either enters a clear recession or shows sustained inflationary progress,” wrote Dominic Wilson, economic analyst at Goldman Sachs.

“Equity market lows in previous policy corrections have always been fairly closely preceded by a peak in 10-year yields, a threshold that has not yet been reached,” he added.

The market has to deal with another barrage of Fed speakers on Wednesday. Between 8:35 am and 2:00 pm Eastern, various topics will be addressed by Atlanta Fed President Raphael Bostic; Chairman Jay Powell; Governor Michelle Bowman; Tom Barkin, President of the Richmond Fed; and Chicago Fed President Charles Evans.

A 3% decline in Apple shares AAPL also put pressure on futures.
Amid reports, the tech giant halted plans to ramp up production of its new iPhones. However, Jim Cramer dismissed the significance of the message.

The S&P 500 fell for the sixth straight day on Tuesday, down 6.5% over the period and posting its longest losing streak since the COVID-19 pandemic began in February 2020.

In fact, the benchmark stock index has lost ground in eight of the past nine sessions, keeping its 14-day relative strength momentum gauge at 27, with a read below 30 considered oversold territory.

Around 45% of S&P 500 stocks were oversold, Tier 1 Alpha found, the most since the COVID-19-induced market slump in early 2020.

Source: Tier1 Alpha

US economic updates due for release on Wednesday include August’s expanded goods trade report due at 8:30 am and pending home sales index at 10 am US stock futures point to a losing streak of seven after Treasury yield hit 4%

Brian Lowry

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