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A trader on the floor of the New York Stock Exchange.
Source: New York Stock Exchange
Stock futures were flat in overnight trading on Sunday after the S&P 500 posted its first losing week of three.
Futures contracts on the Dow Jones Industrial Average were flat. The S&P 500 and Nasdaq 100 futures contracts were also little changed.
The move in futures came after the S&P 500 and Nasdaq Composite broke a two-week winning streak with a loss of 0.7% and 1.6%, respectively, last week. The blue chip Dow gained 0.1% over the same period, supported by Caterpillar and JPMorgan.
Some equity investors have worried about the rapid rise in bond yields in recent weeks, as they could particularly hurt high-growth companies reliant on the ease of borrowing while decreasing the relative appeal of stocks.
The 10-year Treasury yield jumped 14 basis points last week to 1.34%, near its highest level since February 2020. So far this month, the benchmark rate has risen 25 basis points.
“This shift in returns should be something investors are watching closely,” said Matt Maley, chief market strategist at Miller Tabak, in a note. “Just because long-term rates are ultra low on a historic basis, we don’t think they’ll have to rise as far as most experts think they do … before they impact the market. stock market.”
Meanwhile, many on Wall Street believe the rise in bond yields reflects a sign of growing confidence in the economic recovery and that stocks should be able to absorb higher rates amid strong earnings.
“We don’t see the recent surge in yields as a threat to the bull market,” said Keith Lerner, chief market strategist at Truist, in a note. “As we are in the early stages of an economic recovery, monetary and fiscal policy remain favorable, strong earnings rebound and relative valuations favorable, we are maintaining our overweight position in equities.”
The market is heading into the last week of February with solid gains. The Dow Jones and S&P 500 rose more than 5% this month, while the Nasdaq climbed 6.2%. The small-cap Russell 2000 outperformed with a 9.3% gain this month.
On the pandemic front, the White House has said it plans to ship millions of delayed doses of the coronavirus vaccine this week after a severe winter storm disrupted logistics. Governor Andrew Cuomo said on Sunday that a New York resident had tested positive for the Covid-19 variant first identified in South Africa.
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