U.S. stock futures slipped early Thursday after the S&P 500 pulled back from its record close as Treasury yields jumped to multidecade highs. The Dow lost more than 340 points in the prior session, and fresh Federal Reserve minutes pointed to another rate hike before year-end. Investors are now counting on earnings season to reignite the rally.
S&P 500 futures dipped 0.15% early Thursday. Dow Jones Industrial Average futures fell 132 basis points, or 0.26%, and Nasdaq-100 futures were 0.21% lower. The moves followed a losing Wall Street session in which the S&P 500 dipped 0.2%, pulling back from an all-time high it had reached just one day earlier.
Yields spike as Fed signals more tightening
The Dow fell more than 340 points, or 0.7%, while the Nasdaq Composite slid 0.2% in the same session. The declines came as the 10-year Treasury note yield was last seen 4 basis points higher at 5.3178%, with the 30-year yield up 4 basis points at 5.7064%, a multidecade high.
Minutes from the Federal Reserve's latest meeting, released Wednesday, showed most policymakers believed another interest rate increase would likely be appropriate before the end of the year, with inflation remaining stubbornly above the central bank's 2% target. The minutes, however, offered no indication of timing for the next rate hike, with officials saying future decisions would depend on incoming data. Higher yields have curbed investor appetite for equities in recent weeks, and industrials have been the worst-performing sector week to date.
Still, Wednesday's $39 billion sale of 10-year notes drew solid demand: indirect bidders, including global central banks, took more than 80% of the auction, above a 10-auction average of 72.4%. The Treasury is set to sell $22 billion of 30-year bonds later Thursday.
Earnings season could offer the next catalyst
Despite the pressure from rising yields, many investors are maintaining an optimistic view of the market. They expect the start of earnings season could supply the fuel needed for the next leg higher, with the third quarter expected to post a blended earnings growth rate of roughly 30%, which would mark a third straight quarter of above-25% earnings growth, according to FactSet.
Investors will watch results from PepsiCo before Thursday's open, along with weekly jobless claims data.
Source: CNBC
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