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Stock futures were lower in early Friday morning after a technology rout on Wall Street amid a surge in bond yields.
Futures contracts on the Dow Jones Industrial Average fell 129 points. The S&P 500 and Nasdaq 100 futures contracts also traded in negative territory. Previously, Dow futures had fallen 200 points.
All eyes will be on the February jobs report, which is expected to be released on Friday morning. Economists expect 210,000 payrolls to have been added in February, down from just 49,000 in January, according to Dow Jones.
The movement in futures followed a sell-off sparked by remarks by Federal Reserve Chairman Jerome Powell on rising bond yields. He said the recent surge caught his attention, but gave no indication of how the central bank would curb it. Some investors expected the Fed chairman to signal his willingness to adjust the Fed’s asset purchase program.
The economic reopening could “create some upward pressure on prices,” Powell said in a Wall Street Journal webinar Thursday. Even if the economy sees “transitory increases in inflation … I think we will be patient,” he added.
“The market’s translation of ‘patient’ is that patient doesn’t mean ‘never’, and Powell says the easy money will end at some point,” said Mike Loewengart, Managing Director of Investment Strategy at Financial E-Commerce. “So while the verbiage isn’t too far removed from the Fed’s previous stance, it’s enough to move a nervous market south.”
The 10-year Treasury yield rose above 1.5% on Powell’s comments. The benchmark rate stabilized earlier this week after peaking at 1.6% last week amid higher inflation expectations.
Tech stocks led the market decline, with growth-oriented companies tending to be more vulnerable to higher interest rates. The Nasdaq Composite fell 2.1% on Thursday, bringing its losses this week to 3.6%. The high tech benchmark also turned negative for the year and fell into corrective territory, or down 10% from a recent high, on an intraday basis.
The S&P 500 and the Dow Jones both fell more than 1% on Thursday, heading for a losing week. Energy outperformed with a 2.5% gain in the previous session amid rising oil prices.
“Rates skyrocketed again, which opened the door for increased selling of tech stocks,” said Ryan Detrick, chief market strategist at LPL Financial. “The silver lining is that the economy continues to improve and the leadership in finance and energy suggests now is not a time to sell everything.”
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