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U.S. stock index futures were moving lower on Wednesday, as bond yields remained elevated and oil prices inched toward $121 a barrel.
-
S&P 500 futures
ES00,
-0.50%
fell 0.2% to 4,149 -
Dow Jones Industrial Average futures
YM00,
-0.55%
fell 112 points, or 0.3%, to 33,055 -
Nasdaq-100 futures
ES00,
-0.50%
fell less than a percent to 12,703
On Tuesday, the Dow industrials
DJIA,
climbed 264.36 points, or 0.8%, to close at 33,180.14. The S&P 500
SPX,
rose 1% to 4,160.68. The Nasdaq Composite
COMP,
gained 113.86 points, or 0.9%, to end at 12,175.23.
What’s driving markets?
A follow-up to Tuesday’s gains could be a tough order for U.S. stocks as Treasury yields and oil prices rise, and as investors looked ahead to Friday’s consumer price data for May. Wholesale inventories are the only data on tap for Wednesday and due at 10 a.m. Eastern.
The Organization for Economic Cooperation and Development cut its global economic growth forecast for this year to 3% from 4.5%, and predicted growth would slow to 2.8% in 2023, as it cited “a new set of adverse shocks” from Russia’s invasion of Ukraine and China’s COVID-related lockdowns.
The OECD’s forecast is close to the 2.9% growth the World Bank predicted for this year on Tuesday.
“The unmistakable contrast between downbeat global growth assessments and central banks’ monetary-tightening push could be a significant headache for stock pickers,” said Stephen Innes, managing partner at SPI Asset Management.
“With monetary policy feeding lower growth expectations, there is an elevated level of negative circulation here. Central banks continue to surprise to the hawkish side with no end in sight until inflation moves convincingly toward its target,” said Innes. “And while those tighter financial conditions are the obvious path toward lower inflation, they are also analogous to lower asset prices.”
The Central Bank of India followed up Tuesday’s bigger-than-expected hike in interest rates from the Reserve Bank of Australia, with an increase in its repo rate to curb rising inflation. The European Central Bank will meet Thursday, but is expected by some to hold off any hike until July.
The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose 5 basis points to 3.016%, while the 2-year Treasury note
TMUBMUSD02Y,
rose 3 basis points to 2.749%.
And U.S. crude oil prices
CL.1,
rose 1.1% to $120.74 a barrel, while global benchmark Brent crude
BRN00,
rose 1.1% to $121.92 a barrel.
Read: Here’s why the stock market gets ‘squirrelly’ when bond yields rise above 3%
What companies are in focus?
-
Novavax Inc.
NVAX,
+6.21%
shares are up 10% after an advisory committee to the U.S. Food and Drug Administration recommended its COVID-19 vaccine. -
Shares of U.S.-listed Chinese tech names were rising in premarket, with stock in AlibabaGroup Holding Ltd.
BABA,
+5.36%
up nearly 4%, with Pinduouo Inc.
PDD,
+10.12%
up 4.4%, Tencent Music Entertainment Group
TME,
+4.69%
rising 3.8% and Bilibli Inc.
BILI,
+9.96%
gaining nearly 8% on signs of easing regulatory pressure after China’s regulatory body approved a number of video-game titles. -
U.S.-listed shares of Credit Suisse Group AG
CS,
-0.43%
tumbled 6%, tracking losses in Europe after the Swiss bank said that it expected post a loss for the second quarter.
How are other assets trading?
-
The ICE U.S. Dollar Index
DXY,
+0.16%
was flat at 102.36 -
Gold futures
GC00,
+0.10%
were little changed at $1,853.50 an ounce -
Bitcoin
BTCUSD,
-3.72%
was up nearly 3% to $30,392 -
In European equities, the Stoxx Europe 600 index
SXXP,
-0.89%
fell 0.7% and the FTSE 100 index
UKX,
-0.52%
dropped 0.5% -
In Asia, the Shanghai Composite
SHCOMP,
+0.68%
rose 0.6%, Hong Kong’s Hang Seng Index
HSI,
+2.24%
jumped 2.2%, and the Nikkei 225 index
NIK,
+1.04%
rose 1%
