U.S. stock futures are indicating a downward trend on Thursday, as the market continues to grapple with rising bond yields. Here’s a breakdown of the futures:
- Dow Jones Industrial Average futures (YM00) fell 38 points, or 0.1%, to 34,441.
- S&P 500 futures (ES00) dropped 17 points, or 0.4%, to 4,455.
- Nasdaq 100 futures decreased 112 points, or 0.7%, to 15,288.
Yesterday, the Dow Jones Industrial Average (DJIA) fell 199 points, or 0.57%, closing at 34,443. The S&P 500 (SPX) declined 31 points, or 0.7%, closing at 4,465. The Nasdaq Composite (COMP) dropped 148 points, or 1.06%, closing at 13,872.
What’s Impacting the Market?
The unusually strong reading of the ISM services index on Wednesday is a major factor driving market movements. This has led to an increase in bond yields and a rise in the U.S. dollar (DXY).
The rise in yields negatively impacts the appeal of stocks, while a stronger dollar makes U.S. assets more expensive for foreign investors. Additionally, a strong dollar reduces the value of overseas sales for U.S.-based companies and can also harm economies dependent on dollar-based goods.
According to senior analyst Ipek Ozkardeskaya at Swissquote Bank, “The U.S. dollar’s appreciation adds an additional layer of complexity for the rest of the world, as not only crude prices rise, but the U.S. dollar used to trade oil gains in value as well.”
The Brent crude oil contract (BRN00) has seen gains in nine out of the last ten sessions, reaching its highest level in almost 11 months on Wednesday.
The yield on the 10-year Treasury (BX:TMUBMUSD10Y) stands at 4.27%, which is the fourth-highest level of the year.
Upcoming Factors
Investors are keeping an eye on next week’s release of the consumer price index (CPI). Additionally, on Thursday, weekly jobless claims data will be released, along with a revised look at productivity.
Positive News for GameStop
One positive note comes from video game retailer GameStop (GME), which reported another quarter of losses, albeit lower than expected. This was partly offset by strong sales in Europe.
