Market Snapshot: S&P 500 futures ease as Treasury yields hit fresh highs, Tesla results loom

by | Oct 18, 2023 | Stock Market

U.S. stock futures fell early Wednesday as benchmark bond yields touched fresh 16-year highs and geopolitical angst hit global sentiment.How are stock-index futures trading
S&P 500 futures
dipped 8 points, or 0.2%, to 4394

Dow Jones Industrial Average futures
fell 18 points, or 0.1%, to 34126

Nasdaq 100 futures
eased 42 points, or 0.3%, to 15199

On Tuesday, the Dow Jones Industrial Average
rose 13 points, or 0.04%, to 33998, the S&P 500
declined 0 points, or 0.01%, to 4373, and the Nasdaq Composite
dropped 34 points, or 0.25%, to 13534.

What’s driving markets The third quarter U.S. corporate earnings season continues to absorb investors, with P&G
Morgan Stanley
and U.S. Bancorp
among those presenting their numbers before the opening bell on Wall Street, while Netflix
and Lam Research
will feature after the close. However, investor sentiment has been soured after reports hundreds had died following an explosion at a Gazan hospital raised fears that the Israel/Hamas war would draw in other forces in the region. Recent hopes that a trip by U.S. President Joe Biden to the Middle East might boost diplomacy have been damped after Jordan cancelled a summit at which Biden was to meet the Jordanian and Egyptian leaders, as well as Mahmoud Abbas, President of the Palestinian Authority. “Overnight we’ve seen a fresh risk-off tone because of the geopolitical situation, and …that has led to a clear reaction in markets, said Henry Allen, strategist at Deutsche Bank. Concerns about compromised oil supplies from the regions helped push Brent crude
back above $92 a barrel, while gold prices
hovered near a one-month high around $1938 an ounce. Previous upsurges in geopolitical anxiety have seen a rush to perceived haven assets such as U.S. Treasurys, pushing down yields which move in the opposite direction to bond prices. But the 10-year Treasury yield
on Wednesday touched its highest level since 2007, around 4.87%, as traders continued to express concern about sticky inflation following news released the day before showing U.S. retail sales growing more than expected in September. “The blistering update on spending could be viewed as a hawkish development and contributed to bearish sentiment in the bond market,” said Stephen Innes, managing partner at SPI Asset Management. The chances of the Federal Reserve hiking interest rates by another 25 basis points after its December monetary policy meeting have risen to 38% from 26% a week ago, according to CME Group’s FedWatch Tool. Data from the U.K. on Wednesday showing inflation in September was stuck at 6.7% was further evidence of price pressures in developed economies. U.S. economic updates set for release on Wednesday include September housing starts and building permits at 8:30 a.m. Eastern, and the Fed Beige Book at 2 p.m. Fed officials due to make comments include Governor Chris Waller at noon; New York Fed President John Williams at 12:30 p.m.; Richmond Fed President Tom Barkin at 1 p.m.; and Philadelphia Fed President Patrick Harker at 3:15 p.m..

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