Stock futures point to another sell off on Wall Street

Contracts for the tech-focused Nasdaq-100 fell 1.5% on Wednesday, suggesting tech stocks could take further losses at the opening bell. Futures contracts for the Dow Jones Industrial Average fell 1.1%.

US government bonds extended a recent selloff. Yields on 10-year Treasuries, which move in the opposite direction to bond prices, rose to 1.547% from 1.528% on Tuesday.

A surge in energy prices has added a new element of uncertainty for investors already nervous about the prospect of a reduction in pandemic stimulus by the Federal Reserve. Rising oil and gas prices could fuel inflation, introduce bottlenecks in supply chains and slow the global economy as it recovers from shutdowns, analysts said.

This mix of forces forced government bond yields to rise. Higher returns can hit tech stocks whose future earnings are worth less in today’s currency when discount rates rise. It has also raised fears that inflation, seen as transient, will persist longer than previously thought.

“At what point do central banks have to say, wait, two years, maybe that requires some policy adjustment?” Said Jane Foley, head of currency strategy at Rabobank. She pointed the finger at the Bank of England, which said it could hike rates in the coming months as energy price inflation rises.

Oil prices retreated somewhat on Wednesday but remained close to multi-year highs. Brent crude oil futures fell 0.4% to $ 82.24 a barrel and contracts for West Texas Intermediate, the main grade of U.S. crude, fell 0.5% to $ 78.55 the barrel. WTI prices have not exceeded $ 80 per barrel intraday since November 2014.

European natural gas prices, meanwhile, have risen again, presenting a major challenge for the region, which depends on fuel for electricity, home heating and industrial uses. Reference gas futures jumped 28% to € 148.50, or $ 171.52, one megawatt hour. European gas prices have jumped 59% this week alone, and almost eight times this year as energy-hungry countries in Europe and Asia bid for limited supplies ahead of the cold winter.

Overseas markets retreated. The Stoxx Europe 600 slipped 2%, led lower by shares of travel, auto and tech companies. Aircraft maker Airbus and Jeep owner Stellantis fell more than 3%. In Asia, the Hong Kong Hang Seng fell 0.6%.

In pre-marketing, shares of American Airlines Group lost nearly 4% and Delta Air Lines more than 2%, weighed down by concerns about fuel costs and slowing economic growth. Palantir Technologies jumped about 9% pre-market after it said it won a data and analytics contract with the U.S. military.

Going forward, investors will analyze ADP’s employment survey at 8:15 a.m. ET for clues about the health of the labor market.

Write to Joe Wallace at [email protected]